Lowell Deeds

This blog was created on December 23, 2003. Almost from the beginning, one of our regular topics has been the rise and fall of the housing market. Revisionists will say that no one could see the current financial crisis coming, but a review of our posts on the topic show some felt unease about housing years ago. A compilation of these posts is here and some highlights follow:

January 12, 2004 - “I’m no economist, but something about this economic “recovery” just hasn’t seemed right.
February 29, 2004 - “Lately, however, things have been quite slow . . . due almost entirely to the collapse of the refinance market that began last fall.”
May 20, 2004 - “Economists predict that this will cause a slight slow down in home sales and will begin to depress the value of real estate.”
October 12, 2004 - “The problem with this approach is that it makes it twice as likely that you will lose your home to foreclosure.”
October 20, 2004 - “This could spell trouble if housing prices fall.”
December 6, 2005 - “The problem with both of these situations is that heavily-leveraged homeowners have no equity cushion.”

The problem was apparent more than four years ago. Recent events should come as no surprise.

Today’s paper reads like a who’s who of the mortgage industry: Lehman Brothers, Washington Mutual, AIG or all in financial death spirals with the only question being whether potential buyers of the companies will balk unless there’s some kind of backing by the federal government. With the earlier governmental takeover of Fannie Mae and Freddie Mac, the US government has become the nation’s largest property owner. There’s no telling how this is going to end.

The Merrimack Valley Housing Report is an electronic newsletter produced by the University of Massachusetts Lowell and the Middlesex North Registry of Deeds. The newsletter is typically distributed mid-month to allow the inclusion of the prior month’s statistics. While most other reporting agencies (including the mainstream media) usually disclose statistics sixty days after the period being examined, the MV Housing Report has numbers that are just two weeks old.

Here’s a summary of the stories in the August edition:

Housing Prices: How Low will they go?

The bursting of the housing bubble caused real estate prices to decline, but by how much? To help answer that question, I researched 570 properties in the city of Lowell…

Rising Heating Costs

Merrimack Valley households heating with oil will pay approximately 46% more in 2008 than they paid in 2007, according to an UMass Donahue report released earlier this month.

2008 Foreclosures by Property Type for Haverhill and Methuen

The data for Haverhill and Methuen shows that once again foreclosures are distressing people across the housing spectrum. Although similar to Lowell and Lawrence with single family homes hit hardest; Condominiums were second hardest hit by foreclosures in Haverhill and Methuen.

Also Mortgage, Deed and Foreclosure figures for June and July.

To subscribe to the MV Housing Report, send an email to David Turcotte.

Here are the numbers of key documents recorded this August compared to August of 2007 for the entire ten town registry district:

In August 2007, 648 deeds were recorded. In August 2008, just 495, a drop of 24%.
In August 2007, 1311 mortgages were recorded. In August, 2008, just 798, a drop of 39%.

There may be some good news on the foreclosure front, however:

In August 2007, 54 foreclosure deeds were recorded. In August 2008, there were 47, a 13% decline.
In August 2007, 83 orders of notice were recorded. In August 2008, there were 63, a 24% decrease.

Based on a Warren Group report, the Herald today reported that the median sales price for a home in Massachusetts dropped 12.5% this July compared to July of 2007. With tomorrow being the last business day of August, we’ll try to post our August to August comparisons by the end of the day. As for the decline in this region, my preliminary research showed that if a home sale involved a foreclosure somewhere in the process, the decline in price was substantially more than 12.5%, but if there was no foreclosure involved, the decline was less. My study, however, was based on multiple sales of the same property during the past five years which might lead to misleading conclusions given the rapid ascent and equally rapid decline in values during that very period. I have to scrutinize the figures more closely to validate my findings. Those results will come next week.

One of the most frequent inquiries I receive from the email link on our website is from those interested in researching house histories. Unfortunately, the Registry of Deeds is more interested in who owns the land and not what is built upon it, so our records are of limited use in that area. Still, inferences can often be drawn. For example, if a lot was purchased for $1000 and then a year later was sold for $5000, you can reasonably conclude that something was built upon it. But to get more precise information about a house’s age and architectual lineage, outside reference sources are needed. Two useful books are “A Guide to Tracing the Genealogy of Your Home” by Sally Light and “Discovering the History of Your House and Your Neighborhood” by Betsy Green is another. The website About.com also has a useful section on house histories.

These days I’m often asked if it’s time to start buying property. Like most questions related to real estate, it’s tough to give a yes or no answer to that one. One observation I am comfortable sharing, however, is that properties that have already undergone the foreclosure process and are now owned by lenders are the best bargains around. A variety of statistics show that homes that have a foreclosure in their recent history sell for an average of 25% less than the price realized at the previous sale. Homes that have sold in non-distressed transactions have seen far less price depreciation (which is one of the reasons I’m hesitant to say overall prices have reached bottom). Today’s Globe has a front page story exploring the bargains that can be had in purchasing recently foreclosed properties. As the story suggests, getting new owners into these troubled houses is the first essential step to stemming the decline and stabilizing neighborhood prices.

Here are some numbers for July 2008 compared to the same month in 2007:

In July 2008, we recorded 531 deeds. In July 2007, there were 593.
In July 2008, we recorded 926 mortgages. In July 2007, there were 1366.
In July 2008, we recorded 52 foreclosure deeds. In July 2007, there were 50.
In July 2008, we recorded 78 orders of notice. In July 2009, there were 79.

As far as foreclosure activity is concerned, it looks like we’re no worse off than we were last summer. Since last summer was bad, that’s not saying much, but at least it’s not getting any worse. The number of deeds recorded remains stable but there’s a major drop in the number of mortgages - a 32% decline.

Citing Lowell and Brockton as the primary examples, today’s Globe reports that communities that have suffered the highest rates of foreclosure saw a significant increase in the volume of home sales in June. That people are buying and sellers are selling in higher numbers is certainly good news. The downside of the story is that the sales are for greatly reduced prices. For example, as shown on a chart that accompanies the paper-based version of the story, the average sales price of a property in Lowell was 29% lower than it was a year ago. The particulars of the sale of a four-bedroom home in the Upper Highlands section of Lowell is actually featured in the story. The realtor involved seemed to speak positively about how there were ten bidders for this one property. But this sale involved a home that went for $317,000 just two years ago and only $179,000 today - by my math, that’s a 44% drop in value in just two years, certainly not a good omen for those sitting on mortgages that haven’t been reduced at a comparable rate.

I often wonder what it was like for most people on October 29, 1929. Were our predecessors here at the registry of deeds sitting around talking about the lack of recording activity, the high volume of recording activity, the weather, the upcoming city election? Today’s one of the days I’m thinking about this. Will our successors 79 years from now be asking “I wonder what was going on at the registry of deeds on July 11, 2008, the day the world’s financial system imploded?” Of course I’m being overly dramatic, but nothing in the news today excites confidence in our economy, especially the news from minutes ago that shares in Fannie Mae and Freddie Mac, the two giant corporations that own or guarantee half of this nation’s $12 trillion in mortgages have already lost half their value today on Wall Street. And it’s only 11 a.m. Stay tuned.

The July issue of the Merrimack Valley Housing Report (now available) features an article about the physical and financial damage caused to innocent homeowners who have the misfortune to live near foreclosed properties. Another article asks why if our population growth is stagnant or decreasing, the amount of land in the Commonwealth that is developed has increased by more than 40% in the last twenty years. The Merrimack Valley Housing Report is a joint venture between Umass Lowell and the Middlesex North Registry of Deeds. The report is issued monthly in electronic format. To begin receiving your free subscription, visit our website and follow the instructions on activating a new subscription.

The lead story in yesterday’s Lowell Sun examined the ever increasing number of foreclosures in Lowell and the surrounding towns. Besides statistics from this registry, the story also contained interviews with a family who narrowly missed having their house foreclosed and a number of people in local government and non-profits who are trying to curtail foreclosures and to minimize the adverse effects on neighborhoods of properties that have been foreclosed.

This week’s Banker & Tradesman has an article about the sudden plunge in the number of foreclosure petitions being filed in the Land Court. After averaging nearly 3000 new filings per month for the first four months of 2008, the number filed in May dropped to just 390. The article suggests this reduction is due to the Commonwealth’s new “right to cure” statute which gives borrowers 90 days to resolve a default before the lender can proceed with foreclosure. The law is unclear as to what exactly “proceed with foreclosure” means, so it’s likely that lenders are holding off on filing new petitions to foreclose until 90 days have passed from the notice of default or until the law is interpreted by appellate decisions.

The first issue of the Merrimack Valley Housing Report was launched yesterday at Congresswoman Niki Tsongas’s Regional Housing Summit. A monthly electronic newsletter that is a joint venture of UMass Lowell and the Middlesex North Registry of Deeds, the Merrimack Valley Housing Report will provide statistics, analysis and news items related to housing in the Merrimack Valley. While the rising volume of foreclosures and related property sales statistics are the dominant topics now, the Report will also cover broader areas such as transportation, energy and the environment as they all relate to housing in this region of New England. While the monthly newsletter will be the primary delivery system of this information, a companion website will provide additional material. To subscribe to the newsletter, please send an email to co-editor David Turcotte.

This coming Monday, June 2 from 8 am to noon at the Wannalancit Mills, 600 Suffolk Street, Lowell, Congresswoman Niki Tsongas will host a Merrimack Valley Regional Housing Summit. The keynote speach will be delivered by Barry Bluestone, the Dean of the School of Social Sciences at Northeastern and the Director of that school’s Center for Urban and Regional Policy. Four separate panels will then discuss (1) Energy Implications; (2) State of Housing in the Merrimack Valley; (3) Housing Production adn Affordable Housing; and (4) Housing Foreclosures. This event is open to the public and should be very informative.