Blame poverty, age for weak North County home market

Source: St.迷你倉沙田 Louis Post-DispatchAug. 19--FERGUSON --Barbara Bandy has been trying to sell her house for nearly a year, with no luck. Could the problem be that it's in north St. Louis County?She was optimistic when she started. It's a nice Cape Cod with four bedrooms and two baths, built in the 1950s. In 2011, the St. Louis County assessor put its value at $117,500. She says she spent $20,000 fixing it up for sale."I'm up to here on credit," she says, holding her hand up to her nose.But when Bandy put it on the market, it sat. It wouldn't sell at $98,000.She cut the price to $94,000. She switched real estate agents, cut the price to $84,500 and still it sits."Now they want me to strike the price down again. Do you think that's fair?" asks the elderly widow, who lived in the house for 40 years.Her real estate agent also wants her to offer to finance part of the buyer's mortgage. "What do they think I am? A bank?"Her problem may be location. Her house is in Ferguson.Ferguson is a picture of pleasant suburbia, a town of tree-lined streets and well-kept homes, much of them built for the middle class at mid-century.But Ferguson is in north St. Louis County, and the area is suffering from one of the region's weakest real estate markets. That's worrying county officials, who fear it may reflect deeper economic problems in parts of North County.Prices throughout the St. Louis area have stabilized after a long slide, and may have begun rising. CoreLogic, a real estate data company, says prices in June were up 4.9 percent from a year earlier in metro St. Louis.In North County, however, prices remain weak and may be sinking still."We see a continuing decline in home prices in North County, and it's been steeper than in the rest of the county," said County Assessor Jake Zimmerman.County officials and real estate pros give these reasons:--The spread of poverty into a wider area of North County.--The hangover from the subprime lending spree of the last decade. That, combined with a loss jobs, left North County with an abundance of foreclosed houses selling cheap, usually to landlords who turn them into rentals.--An older stock of housing, much of it small and out of fashion.North County is a big place, and it can't be painted with one brush. Much of Hazelwood, Florissant, Overland, Ferguson and other towns are solidly middle class. Some neighborhoods are monuments to stability.Click the image below to view interactive maps of home values and foreclosures in St. Louis County.But poverty is expanding out from long-suffering inner-ring suburbs toward areas north and west. Two of the area's school districts -- Normandy and Riverview Gardens -- lost their accreditation, making families with children look elsewhere.The result of all that is a weak real estate market, even in many middle-class neighborhoods in untroubled school districts.According to the assessor, the median value of residential property in the county dropped 7 percent in the two years ending January of this year. But the losses were highest in the north.Six of the county's seven school districts with more-than-average value declines were north of Page Avenue. Losses topped double digits in districts bordering the city of St. Louis -- 12 percent in Jennings, 15.4 percent in Normandy, and 23.9 percent in Riverview Gardens. Losses were 13.4 percent in Ritenour, 9.2 percent in Ferguson-Florissant, 9 percent in Hazelwood and 6.2 percent in Pattonville.The median price reflects the point at which half of homes are worth more and half less.Getting a handle on price movements since January is tricky. Houses vary widely, and prices can swing block by block. Zillow, the real estate website, takes a stab at it, using its own formula to measure home value changes by town.The north accounted for eight of the county's 10 cities with the highest losses in home values in the first five months of this year, by Zillow's estimate. Ferguson, for instance, was off by 6 percent in May; Bellefontaine Neighbors by nearly 10.Some real estate agents say they've spotted signs of a turnaround recently. Agent Nelleke Maxwell, who both owns and sells property in North County, says she's seeing rising prices among homes priced under $100,000, and some are drawing multiple offers.A drop in property values does have its bright side -- more people can afford bigger homes.Ferguson Mayor James Knowles got married last year and moved into a 3,200-square-foot house bought out of foreclosure. The price was $57,000, for a house that was assessed at $161,000 in 2008. The couple spent $14,000 fixing it up, and may spend a few thousand more."It looks brand new. It's amazing," he said. "I will have $70,000 into a house that should be worth $200,000."Cheap houses should be an opportunity for young people. Knowles is disappointed that more aren't buying. After all, the region has a strong employment base, which ought to attract buyers. Emerson, the global manufacturer, is based in Ferguson. The University of Missouri-St. Louis, Express Scripts, Mallinckrodt, Christian Hospital and Boeing pay good wages in North County.But much of North County was built for the middle class 40 and 50 years ago."We have a lot of homes that are functionally obsolete for today's families," said Knowles. "People want three bedrooms, and we have lots of two-bedroom homes."SUBPRIME LENDINGSt. Louis County officials trace the area's problems to the rash of risky lending that drove up home prices in the middle of the last decade, before the big drop."This whole thing started with predatory lending," said Lori Fiegel, the county's comprehensive planning manger.In a swath of inner-ring suburbs, more than half the mortgages made from 2004 to 2007 were subprime -- high-interest loans made to borrowers with incomes too low or credit to poor to qualify for prime mortgages. The area extends from Pagedale east to Spanish Lake, and extending west into parts of Ferguson and Berkeley and north to Black Jack.The subprime boom set up a cycle of financial destruction for residents and neighborhoods. The housing price bubble burst, shutting off much new lending. Then came the Great Recession and job loss, leading to rising defaults."Foreclosures hit -- not the very poorest communities. It hit the next rung up. That was really a blow to north St. Louis County," said Todd Swanstrom, professor in Community Collaboration and Public Policy at UMSL, who advises North County community groups.Then came waves of foreclosures, which drove down prices.In all of St. Louis County, the number of foreclosures equaled one for every 21 dwellings from 2010 to 2012, according to calculations by the Post-Dispatch.The rate through most of North County was roughly double that, with foreclosures equaling one in 11 dwellings in the Ferguson-Florissant, Hazelwood and Normandy school districts, one in seven in Jennings, one in eight in Riverview Gardens and one in 12 in Ritenour. Only Pattonville bested the county, losing one in 23."You can't deny a racial component to this as well," said Fiegel.In the county, a map of areas with heavy subprime lending mirrors a map of areas with a large black population.This problem wasn't just local. The Justice Department reached multimillion-dollar settlements with major lenders, including Wells 迷你倉價錢argo and Bank of America's Countrywide Financial, accusing the banks of steering blacks and Hispanics into subprime mortgages and charging them higher fees.This subprime boom occurred during a shift in the county's racial composition.St. Louis County saw a 21 percent increase in black population during the last decade, census figures show, while the white population dropped 10 percent.Much of that demographic shift was reflected in North County. Ferguson, for example, went from 52 percent black in 2000 to 67 percent in 2010.That increase may play into perceptions of real estate values. Walking streets in Ferguson, and speaking randomly to residents of both races, a reporter found two white residents who volunteered that they felt the large black population meant lower real estate prices.But others didn't mention race, and some prefer a mixed neighborhood."I think it's good that we have such a variety of people," said Cathy Foushee, a 40-year Ferguson resident, who is white. "It's a wonderful area in which to live. You know your neighbors. You get a sense of family and community."LANDLORD RECOVERYAs foreclosures rose and property prices fell, in marched landlords, buying up small houses at distressed prices. Landlords, called "investors" in real estate speak, have become prime customers for North County real estate agents."People are looking to buy cheap so they can get the cash flow," said Keith Yuede, who is both a landlord and a real estate agent. "We're not selling to a lot of owner-occupants right now."But investors take a cold eye toward pricing. Unlike would-be homeowners, they don't get carried away in bidding wars.Meanwhile, banks have tightened up lending standards, meaning fewer families can get loans. So, unless families with income and good credit become interested in a neighborhood, prices will stay down.Foreclosure sales were going mainly to landlords throughout much of North County, according to real estate agents and the county assessor. In Bellefontaine Neighbors, for instance, the county assessor determined that 48 foreclosures were sold to investors and only three to families in 2011, although it is often difficult to determine from records if a buyer is a landlord.The transition from homeowners to renters can be a mixed bag.Landlords can improve communities, says Maxwell."These (foreclosures) are dumps that nuisance-up the neighborhood. We get them up to code and get decent tenants," she said.Indeed, landlords often pay cash for the property, and count fix-up costs into their calculation. By contrast, banks are reluctant to lend more than a property is worth, making it hard for families to buy a house that needs big repairs.However, the transition isn't always popular with neighboring homeowners."People move out, and then they rent the house to people who can't really afford to live here," says Jesse Hollis, a black man who has owned a house on Millman Drive in Ferguson since 1990. "The more they move here, the more you have to watch out."Local officials, meanwhile, complain of foreclosure properties that aren't sold at all. They sit vacant.Mary Kay Mitchell recently took a long walk around Glasgow Village, a poor neighborhood of tiny homes near the Mississippi River south of I-270. She counted 200 empty houses out of roughly 1,700 in the village.She reported the addresses so that the county would mow the lawns. "Four to six feet high the grass was," said Mitchell, who is president of the homeowners association.She prefers landlord ownership to such abandonment. "You can pay $10,000 to $20,000 (for a house) and collect $700 to $800 in rent," she says.In Ferguson, Mayor Knowles says the federal government is slow to sell its own foreclosures. "HUD takes them and sits on them for two years," he complains. One such home sits near City Hall. "The city trims the grass," he says.PAST AS PROLOGUELocal officials are fighting back. Ferguson has a "major effort" in code enforcement, says Knowles. "We want people to improve their homes and keep up standards, but we don't want it to be punitive. We want it to be friendly criticism," he says. "If you have a hole in your roof, then you'll have water damage, and mold, and then the house goes back to the bank."Ferguson is using tax-increment financing to improve New Florissant Road, attracting a wine bar and a brew pub to join the retailers. Knowles sees "a destination for art and entertainment."St. Louis County officials are worried over North County."If you look at St. Louis County, you see the city (of St. Louis) in 1960," said Mike Jones, senior policy adviser to St. Louis County Executive Charlie A. Dooley. Back then, the city was the economic center of the region, but "starting to show major structural wear."What followed was falling population as middle-class city dwellers headed for the suburbs. As they fled, the city plowed down blocks of abandoned homes, until some parts of north St. Louis appeared almost rural."We're seeing concentrations of poverty develop in North County, in much the same way it did in the city," said Glenn Powers, county planning director.In 2000, St. Louis County had no census tracts with "extreme poverty," meaning that 40 percent or more were poor. Now there are two -- in Wellston and the area known as Spanish Lake. There are 24 high-poverty tracts -- defined as over 20 percent poor -- up from 10 in 2000."Concentrated poverty in St. Louis County has expanded to the northeast from its historic location in the inner-ring communities of North County," said a county planning report issued this spring. "Bellefontaine Neighbors, Riverview and the unincorporated areas known as Spanish Lake, Glasgow Village and Castle Point all experienced a precipitous rise in residents living in poverty."The recession and slow recovery are part of the reason. So is migration -- low-income people are moving from the city of St. Louis to St. Louis County, while middle-class people move from St. Louis County to St. Charles County.The county government wants to get into the urban redevelopment business and is considering how. Unlike the city, the county has no mechanism for assembling vacant properties into tracts for development."Whatever you say about the city, it does have a larger government and larger capacity," notes Swanstrom, the professor. "The county does not have those institutional structures on the ground."St. Louis has more than 40 groups working on housing issues. The county has two.Meanwhile, North County is divided into dozens of different municipalities, most too small to have economic development staffs; other parts rely on county government. The Normandy School District alone covers 24 different suburbs.Jones' vision for impoverished areas of North County looks somewhat like development in the city, where builders have planted new housing where slums and high-rise public housing projects once stood. They are one- and two-story mixed-income developments, with both subsidized and market-rate apartments.That takes government effort."The laissez-faire market will not do it," said Jones. The problem, he says, is getting the money to pay for it.Copyright: ___ (c)2013 the St. Louis Post-Dispatch Visit the St. Louis Post-Dispatch at .stltoday.com Distributed by MCT Information Services迷你倉庫