HomeInsurance.com found that homeowners are paying, on average, 19 percent more per year for new homeowners insurance policies than they were at the beginning of the year. Twelve-month home insurance premiums for policies written in December 2011 were $810 nationwide, a $128 increase from January 2011 at $682. HomeInsurance.com’s data represents approximately 15,000 policies sold across the United States with such top-rated carriers as Travelers, Safeco, The Hartford, and ASI/Ark Royal.

Some state premium increases were much higher than the national average. New policies in December 2011 were carrying roughly 29-39 percent higher premiums than those sold a year earlier in Mississippi, Montana and New Mexico.

With the overwhelming increases in 2011, there were some bright spots where policyholders saw lower rates towards the end of 2011 such as Washington D.C., where homeowners were paying about 7 percent less for new policies. Likewise, new policies sold in December 2011 in Vermont, Virginia, West Virginia and California decreased in price as compared to earlier in the year when they were 1 to 3 percent higher.

“Rate fluctuations are normal and can be caused by a variety of factors,” said Carlos Lagomarsino, founder of HomeInsurance.com. “The best thing homeowners can do is to comparison shop and ask their agents to qualify them for all eligible discounts, such as a home-auto package, which can provide substantial savings.”

The HomeInsurance.com RateReport is released quarterly and shows average premiums paid by homeowners across the United States for home and auto insurance.

“One of the most important developments in the past year for the residential real estate market has been the significant decline in the inventory of homes for sale. Nationally, the number of homes currently listed are down 21 percent from a year ago,” said Tom O’Grady, president and CEO of Pro Teck Valuation Services. “This month’s HomeValueForecast.com shows that for a number of widely followed markets, the declines in housing stock are even greater.  It’s noteworthy that Phoenix, Miami, Atlanta, Orlando, and Riverside-San Bernardino, some of the hardest hit metros with regard to price declines since the market peak in 2006, are topping the list.”

O’Grady also reported that nationally, the months of remaining inventory (similar to months’ supply) is 6.3 months and is at the lowest level since 2006.  This indicates that the overall U.S. market is stabilizing according to the monthly update.  “Also, the months of housing inventory (MRI) remaining nationally was at or below the 5 month threshold throughout the 2002 to 2005 period when nationwide home prices were experiencing their largest gains,” he said.

This month’s HomeValueForecast.com included a listing of the 10 best and 10 worst performing metros as ranked by our market condition ranking model. The rankings are run for the single family home markets in the top 200 CBSAs on a monthly basis to highlight the best and worst metros with regard to a number of leading real estate market indicators, including: number of active listings, average listing price, number of sales, average active market time, average sold price, number of foreclosure sales, and number of new listings.

“In May, contrary to other housing reports, the “Rust Belt” states including Michigan and Illinois are seeing positive trends due to significant declines in active listing counts over the past year,” said Michael Sklarz, Principal of Collateral Analytics and contributing author to HomeValueForecast.com.  “This has led to most of these markets having balanced or tight markets based on their Months of Remaining Inventory values.”

May’s top CBSAs include:

Boise City, Nampa, ID

Dallas-Plano-Irving, TX

Warren-Troy-Farmington Hills, MI

West Palm Beach-Boca Rotan-Boynton Beach, FL

Detroit-Livonia-Dearborn, MI

Peoria, IL

San Jose-Sunnyvale-Santa Clara, CA

Salt Lake City, UT

Cape Coral-Ft. Myers, FL

Fayetteville-Springdale-Rogers, AR-MO

“On the flip side, a high percentage of the bottom-ranked metros are located in the Northeast. All of these locations have double digit Months of Remaining Inventory,” added Sklarz.  “Also, prices in these metros have held up much better since the market peak in 2005-2006 compared to the current top ranked markets.  We believe that the relative rankings in the bottom ranked metros are not offering the same bargains - in terms of compelling prices and high rental yields - as the top ranked ones.”

The bottom CBSAs for May were:

Winston-Salem, NC

Virginia Beach-Norfolk-Newport News, VA-NC

New York-White Plains-Wayne, NY-NJ

Norwich-New London, CT

Hartford-West Hartford-East Hartford, CT

Newark-Union, NJ-PA

Duluth, MN-WI

Nassau-Suffolk, NY

Poughkeepsie-Newburgh-Middletown, NY

New Haven-Milford, CT

Highlighting HomeValueForecast.com’s belief that all real estate trends are local, May’s analysis also shows that the West Palm Beach-Boca Raton-Boynton Beach, FL CBSA, which is currently in the list of the Top 10 metros is no exception to have experience significant price declines since the market peak in 2005-2006.  According to HomeValueForecast.com, the price peak in this metro occurred in the 4th quarter of 2005 and prices have since declined 52 percent.

“Like any market, bargain prices will bring out buyers - this is clearly happening in the West Palm Beach CBSA,” added Sklarz.  “Nearly all of the important market indicators are showing positive trends on a year-over-year basis including declining inventory, declining market times and less distressed sales activity to name a few.”

On Realtor.com, year-over-year inventories are down 21.48 percent through March. NAR reports first quarter inventories existing homes are down 21.8 percent nationally. At the end of the first quarter there were 2.37 million existing homes available for sale, a 41 percent decline since the summer of 2007 when inventories set a record of 4.04 million homes.

“We now have broad shortages of lower priced homes in much of the country, with very tight supply in Western states for homes through the middle price ranges. This is good news for many sellers who wish to list now, or for those waiting for prices to improve,” said Lawrence Yun, NAR’s chief economist last week.

Reports of multiple bids, price increases, slim pickings and discouraged buyers leaving the market are popping up in in a few markets, largely the nation’s hottest markets where inventory declines exceed the national averages but also major foreclosure centers like Phoenix where have been falling until recently. In others, unique local conditions such as the opening of factories or military facilities, natural gas booms in Pennsylvania and North Dakota, and seasonal shortages in university communities are causing market tightness.

In the Washington DC market, perennially one of the top ten nationally in price increases, evidence is strongest that the pendulum may be shifting towards a seller’s market for the first time in five years.

“Even though there’s a glut of homes throughout parts of the country, the Washington region seems to have the opposite problem, especially in the lower price ranges.

“Many of the outer suburbs still have plenty of houses in the lower price ranges. But less-expensive homes are very hard to find closer to central D.C.: 68 percent of homes offered for less than $350,000 are located in the outer suburbs beyond Montgomery County, Arlington and Alexandria. In the District, Redfin counts only 862 listings for less than $350,000,” reported the Washington Post May 4.

California markets like San Diego and Irvine where home building has been at a virtual standstill and is strictly controlled, population growth is creating new demand for housing.

“We’re going to grow by a million people, over that period of time. And that represents a demand of over a quarter million units of housing or more. And we have to supply them as an industry. What’s going to change is what we supply and where we build,” San Diego developer Gary London, president of the London Group Realty Advisers, recently told KPBS radio.

Most reports from Realtors reporting tight markets around the nation on the ActiveRain website focus on difficulties finding affordably priced, entry-level homes.

“Thinking of buying a home in Spring Lake (NJ) in the entry level pricepoint? Your choices are extremely limited this Spring season. Currently, there are only 6 active listings in this pricepoint,” reports Diane Glander of Diane Turton Realtors.

“This morning I was taking look at some of our local housing statistics. The first very noticeable thing is that the number of single family homes for sale in Palm Coast now stands 844. When I first began selling home in Palm Coast in 2007 there were over 3,000 home for sale. The current inventory of salt water canal homes in Palm Coast now stands at 89. This is down from 150 just two years ago,” reports Kendall Caputo of Real Living/ Palm West Home Realty.

“Inventory increasing at a pace roughly a month earlier than normal. We are seeing signs of a housing shortage with phone calls and emails from agents looking for specific criteria which are not found on the MLS. This is a phenomenon not seen since 2007. Extraordinarily encouraging,” reports Tim Moncrief of Austin.

“We are starting to see some real strong areas and price points in the hottest neighborhoods and areas of Atlanta - Buckhead, Sandy Spring and East Cobb real estate markets for 2012. All have been highly desirable areas for schools, area amenities and location. So, not surprising that Buckhead, Sandy Springs, East Cobb Real Estate would be the first to improve. Having said that, homes in these area run the full gamut of pricing and it’s at their lower price points - below 750k and below 1Million that we are seeing more of a recovery,” Michelle Francis, Buckhead Atlanta Homes for Sale & Lease.

Even Phoenix, where the Case-Shiller Home Price Index lost more than half its value from 2006 to 2010, is experiencing tighter conditions. Since January, Mike Orr, director of the Arizona State University Center for Real Estate Theory and Practice, has been predicting a housing shortage in the Phoenix market, especially in the crunch is expected to be more pronounced in the East Valley, where some subdivisions are approaching build-out and other builders are raising prices.

A growing demand and shrinking supply has driven home prices up in recent months, he said. Orr thinks that’s gone unnoticed to people who will enter the market this spring, in what is typically the peak time for sales activity.

In fact, in February the supply of houses for sale in Phoenix was down 42 percent compared to the year before. Some Realtors in Maricopa and Pinal counties are starting to call around to ask people whether they would consider selling homes in desirable neighborhoods. “Supply is tight, in a pretty extreme way, and it looks likely to stay that way for months, Orr told KPHO news in March.

“They’re going to be surprised that it’s so hard to buy a house. They’ve been hearing for so long that there’s a glut of homes,” Orr said. “They’ll go out and find there’s not a lot to choose from and every time they bid, there’ll be three or four other offers.”

Morality and Mortgages

By Homer Guthrie

Expert Homeowner

So I was reading in the newspaper that now there’s a government program where I can refinance and get a cheaper rate even if I’m deeper underwater than the Titanic.  Which I am.

I called the first mortgage guy who found in my spam file on my email and he was happy to hear from me.  He told me that it was called HARP 2.0 and that I qualified since Freddie Mac owned my mortgage.  Isn’t that something? You learn something new every day.

Except there’s a problem, he said.  “You’ve been paying your mortgage on time.”

He was the first mortgage person I had ever talked to who agreed with me.  For ten YEARS I’ve been paying the mortgage on time.  When Countrywide and Washington Mutual bailed out after ripping off thousands of borrowers, I paid my mortgage on time.  Goldman Sachs and Lehman Brothers can go bankrupt , but not me.  First of the month and my check is in the mail.

I didn’t think it was fair but Felicity, my wife, said that just because those companies were bums didn’t mean we should be.  We had to set a good example.  (For who, I wondered, since the kids are grown.)  And then there’s our credit in case we want to buy something, she said.   (And you-know-who frequently does.)

So she found some government bureaucrat somewhere on the Internet who said we have a moral imperative to pay our mortgage no matter what.    He was probably the same guy who invented HARP 2.0.  Just like the government to put out a press release about a great new program and then tell honest working people who pay their mortgages on time that it’s not for them.

“Moral imperative?  You’ve got to be kidding,” I said. “There wasn’t much moral imperative going around when all those people got sold subprime loans they couldn’t afford.”

But I wasn’t worried.  I had a real live mortgage EXPERT who agrees with me.  You need to quit paying your mortgage for three months before you can get into the HARP program, he told me.  The mortgage expert said the program was for people who were having a hard time paying their mortgages.  I figured I qualified.  Writing that check every first of the month is awfully hard on me, that’s for sure.  I wasn’t alone.  He said he had lots of other customers like me who weren’t behind on their payments until they talked to him.  Then they wised up and got cheaper mortgages.  Sounded good to me, but Felicity hit the roof.

“That’s crazy,” she said.  “What happens if we don’t get approved?”

“That’s an easy one.  We save three months of mortgage payments.”

“No we don’t, you dunce. We will still have to make those payments plus interest and we will probably lose one hundred points off our credit score.  Besides, it’s the right thing to do.”

So I did a little more research about this moral imperative thing, which wasn’t very hard.  What about the government itself?  Does the local tax assessor’s office feel a moral imperative to lower your property taxes pronto when home values take a pasting?  I don’t think so.  Who cares if suffering homeowners have to keep paying property taxes for years as if they lived in mansions when Zillow values their home as if they were rotting foreclosures?  When they finally get around to lowering assessments, they raise taxes somewhere else to make up the difference-like it’s our fault that home values tanked.

“So you’re going to stop paying our taxes too?” asked Felicity.  “Good luck with that.”

Well, then I found out that there are thousands of people just like us could care less about their moral imperative.  They are walking away from their mortgages because continuing to pay them is just throwing good money after bad.  They even have a name for it.  It’s called “strategic default” and there’s even a college professor in Arizona who says it’s the right way to go.

Felicity laughed at that one.  “When we lose our home can we move in with the professor?  He probably lives in a trailer park in the crappiest part of Tucson.”

It was clear she didn’t have an open mind so I decided I would find a way to prove to her that forgetting about moral imperative now and then just isn’t such a big deal.  Credit cards came to mind.  I never could figure out what I got in return for the money I sent in every month to credit card companies so I stopped paying one of them.  As soon as the due date passed, they started calling and emailing like I was a long-lost relative.  At first they said patronizing things like “we’ve always treasured our relationship with you because we know you are a coward and pay on time.” As time passed, they got meaner.  They sent me big ugly envelopes plastered with black type that said “OVERDUE” and “ACCOUNT SUSPENDED” just to embarrass me in front of my mailman.  When they called, at first they were nice people in India with lilting accents like in Bollywood movies.  After I was 60 days past due, the robo-call machines called incessantly.  At 90 days, Felicity found out about my little experiment when her card was rejected at Kmart.

Felicity was so mad at me that she nixed the whole HARP thing and ordered me never to talk to my mortgage friend again.  So it was no surprise to me at all when I read in the paper the other day that the HARP program wasn’t getting many takers.  The article said the experts couldn’t figure out what the problem was.  How could so many homeowners pass on such a great deal, they wondered?

Well, duh.  I’m an expert homeowner and take it from me, all they need to do to make the program work is get rid of this moral imperative thing.  In fact, if Congress would just pass a law saying morality and mortgages make about as much sense as morality and politics, we probably wouldn’t have a housing problem at all.

Read House Poor every Monday on Real Estate Economy Watch.

To contact Homer or to inquire about posting House Poor columns on your site every week, write him at admin@realestateeconomywatch.com or post a comment.

Copyright 2012 by Reecon Advisors LLC. All Rights Reserved.

Historically, foreclosures have been discounted 10 percent or more.  Now, as short sales become more popular, the difference between and short-sale discounts and foreclosure discounts is shrinking, according to the latest LPS Home Price Index.

In April 2007, as the housing bubble burst, foreclosures sold at a 19 percent discount and short sales sold at a discount of 10 percent.  As the volumes of both forms of distressed sales have increased, so have the discounts, but short sale discounts have increased more.  Today foreclosures sell at a 29 percent average discount and short sales at an average discount of 23 percent, a difference of only 6 percent.   The National Association of Realtors reports the difference is even less.  NAR reports foreclosures are discounted 18.8 percent as of March 2012 while short sales have been selling at a 15.8 percent discount.

The shrinking discount may make short sales more attractive to buyers than foreclosures.  In general, home sellers undergoing short sales are motivated to do so to protect their credit to the extent possible and they tend to maintain better condition of their properties than borrowers undergoing foreclosure.  Foreclosures also may be vacant for long periods of time.  Today’s average processing timeline for foreclosures is about a year, and substantially higher in some judicial states.  With a short sale, the property may not be vacated at all during the sales process.

LPS suggests that the task of managing the large number of distressed properties in the market today is immense, which may, in some cases, contribute to suboptimal pricing of some distressed properties.  Since 2007, discounts for both foreclosures and short sales have increased, but short-sale discounts increased a bit faster.

That prediction from Fiserv, the analytics company the publishes the Fiserv Case-Shiller Indexes, estimates that at the bottom, or “trough” of the peak-to-trough fall, prices will be 35 percent lower than their peak level in the first quarter of 2006.

“After years of large declines, the housing market is showing signs of stabilization. In the fourth quarter of 2011, home prices in 70 markets, representing 18 percent of the 384 metro areas tracked by Fiserv Case-Shiller, were unchanged or had increased compared to the fourth quarter of 2010. In 32 percent of the markets (122 metro areas), the price declines were under two percent. In the fourth quarter of 2011, the average price of a U.S. single-family home fell to a new post-bubble low, declining four percent from the year-ago period. Fiserv Case-Shiller projects a further modest decline of 0.8 percent by the end of 2012,” estimates Fiserv.

Markets rebounding off very large price declines include Detroit, Mich. (+9.8 percent), Cape Coral, Fla. (+3.5 percent) and Port St. Lucie, Fla. (+1.1 percent). However, prices dropped by more than two percent in nearly one-half of metro areas (191), including double-digit decreases in Atlanta (-12.8 percent), Reno, Nev. (-10.8 percent) and Tucson, Ariz. (-10 percent).

“We expect that home prices, which generally lag changes in sales activity by nine to 12 months, will stabilize by the end of this summer and then rise at an annualized rate of 3.9 percent over the next five years,” says David Stiff, Fiserv’s chief economist.

“The precipitous drop in home prices was an immediate cause of the last recession and the financial crisis. Falling home equity has cut into household consumption and has further constrained the economic recovery,” Stiff added. “However, very low prices have also started to draw in more buyers. As demand for houses ramps up, construction activity will increase and residential investment will begin to make a substantial contribution to the recovery and GDP overall.”

Due to the unprecedented price decline and record-low mortgage rates, affordability has improved dramatically. The relationship between home prices and rents has returned to 1998 levels. The ratio of median single-family home price to median family income is lower than any time since 1991. For a conventional mortgage, the payment for a median-priced home represents just 12 percent of median-family income, the lowest percentage on record (since 1971). Fiserv Case Shiller projects this record-level affordability will eventually bring more first-time and trade-up buyers back into the housing market, especially as apartment rents continue to increase and new households are formed, making buying a cheaper option than renting. Growing demand from first-time and trade-up buyers will finally put a floor under home prices, ending the nearly seven-year collapse of the housing bubble.

Other highlights from the latest Fiserv Case-Shiller Indexes include:

• Some of the hardest-hit markets are expected to experience the fastest growth during the recovery. Six of the 10 markets where annualized prices are expected to rise the most over the next five years have experienced price declines of more than 50 percent from their peaks.
• Conversely, home prices in markets that were spared the worst of the housing downturn are projected to grow at a slower pace. Texas, for example, accounts for 11 of the 39 markets where prices are projected to increase at an annualized 1.5 percent or less over the next five years.
• Of the 30 best-performing housing markets in the 2011 fourth quarter, 13 had unemployment rates of seven percent or less and 14 had a median family income above the national average.
• Seven of the 10 worst-performing markets in 2011 had unemployment rates higher than the national average and median family incomes below the national average.
• Twenty-two of the 25 markets that have seen the largest decline in home prices from peak to the end of 2011 are in California and Florida.

A huge inventory of nonperforming mortgages in the U.S., but the regional variations in the speed at which servicers can clear the loans are primarily due to differences in foreclosure procedures. As of first-quarter 2012, S&P’s months-to-clear estimate in judicial states is almost 2.5 times as long as nonjudicial states.

The volume of these distressed U.S. nonagency residential mortgages (which excludes loans from government sponsored entities, such as Fannie Mae and Freddie Mac) remained extremely high at $354 billion in the first quarter, but it has declined in each quarter since mid-2010. This latest number, which is based on the original balances of the loans in the shadow inventory, represents slightly less than one-third of the outstanding nonagency residential mortgage-backed securities (RMBS) market in the U.S.

New York City’s distressed inventory ranks largest in the nation with the highest months-to-clear, at 202 months. Boston ranks next at 86 months, then Chicago with 72 and Atlanta with 71 months.

Although liquidation rates seem to have leveled off, it’s still taking servicers longer to foreclose, S&P found that recently liquidated loans missed payments for an average of almost two-and-a-half years before being closed.

• S&P estimates it will take 46 months to clear the national shadow inventory. This is down one month from fourth-quarter 2011.
• Differences in liquidation rates between states are creating a large and growing difference in regional estimates of the months-to-clear.
• The U.S. monthly first default rate fell to 0.67 percent in March 2012, the lowest level since May 2007.

The uptick in seller confidence recorded by two recent surveys comes as concern is growing that seller withdrawal from the market is creating record low inventories that are limiting buyer choice and curtailing sales in the middle of the spring buying season (see Buyers Walk the Walk.). Last week the National Association of Realtors reported total housing inventory at the end of March declined 1.3 percent to 2.37 million existing homes available for sale, which represents a 6.3-month supply at the current sales pace. Listed inventory is 21.8 percent below a year ago.

In Fannie Mae’s Monthly National Housing Survey released this morning the percentage of respondents who say it is a good time to sell increased from 10 percent for the fourth straight month to 15 percent; not exactly a band wagon but a trend in the right direction.

“This month’s survey shows a continued gradual improvement in consumer sentiment and outlook for home prices,” said Doug Duncan, vice president and chief economist of Fannie Mae. “After flatlining at depressed levels for over a year, a growing share of consumers indicate that it is a good time to sell, suggesting rising optimism for the housing market.”

A second report, conducted April 15-16 by Rasmussen Reports, found that nearly one-in-five (18 percent) of American adults say now is a good time for someone in their area to sell their house, up six points from a month ago. Some 63 percent disagreed.

Changing attitudes among sellers are clearly linked to price expectations. On average, Americans expect home prices to increase 1.3 percent over the next twelve months in the Fannie Mae survey (the highest value yet recorded). Thirty-two percent of respondents expect home prices to increase over the next 12 months, a slight decline from the sharp spike last month. In turn, confidence in the economy’s direction rose to a survey all-time high in April (hitting 37 percent, an increase of 2 percentage points from last month). In the Fannie Mae survey, the percentage of Americans who say it is a good time to buy decreased by 2 percentage points to 71 percent.

Likewise, sellers who take their homes off the market create an invisible supply of properties that might play a big role In boosting inventories when better prices encourage sellers to put them back on the market.

The dramatic drawdown in inventories in most markets over the past year has led some to wonder whether a sizeable volume of properties will be listed for sale at the first sign of price recovery, possibly killing or dampening price appreciation (See Are Sellers Withdrawing?).

Tallahassee broker Joe Manausa made a convincing case for the “Forgotten Inventory,” as he calls it, in a post last week on Active Rain, a site popular with real estate professionals.

“Would you be surprised/shocked to discover that the homes listed for sale in the MLS only represents about 20 percent of the real inventory of homes that need to be sold?” he wrote.

“You might never have thought about it, but there have been a lot of homes that failed to sell during the housing correction, and those that remain unlisted and unsold are a group that I call the Forgotten Real Estate Inventory. It is the growing group of homeowners who have given up hope of selling their home, but they still want to move.”

In fact, the numbers potential listings owned by frustrated home sellers may not be as forgotten as some believe, nor quite as large. A survey by Move, Inc. last November found that the number of homeowners who have delayed selling their home because of the real estate market had not grown in the previous 18 months-a period that included increases in sales and prices stimulated by the federal tax credit- but actually declined slightly. The Move stidy found that some 17.5 percent of owners today say they have delayed selling their homes because of the real estate market where they live compared to 19.3 percent in March 2010. However., that inventory is still sizable and close to Manausa’s estimate.

On the other hand, Milton Ezrat, senior economist and market strategist for Lord Abbett financial advisors, had a more aggressive estimate of the invisible inventory. He estimates the shadow inventory, in which he includes homes held off the market by their owners waiting for better prices, to be double the “official” visible inventory reported by the National Association of Realtors. Visible and invisible inventories together constitute about an18 to 24 months’ supply, even at today’s diminished “official” inventories, he estimates.

Manausa believes his Forgotten Inventory is mostly on the high end of this price spectrum, but the Move study found the largest demographic to be moistly owned by middle-aged, middle income families. More homeowners ages 35 to 49 (22 percent) and those making $40,000-$49,000 a year (21 percent) said they’ve delayed selling their home in the past year as compared to other age groups. which may indicate growing families in need of more space are having a difficult time moving up as a result of today’s market conditions.

Just how much of a price increase will it take to encourage sellers to re-list their homes? Far more than most markets will see this year, if projections prove true. In fact, Move found that today’s frustrated homeowners are less tempted to sell in response to incremental price increases than they were in 2009. Price increases in June 2009 of 20 percent or less would have motivated 61.6 percent of homeowners to sell. Now, however, price increases of 20 percent of less would motivate 55.4 percent. Based on the survey, a 5 percent increase in prices today would motivate only 11.7 percent of owners to sell their homes. The decline in pending price-motivated inventory suggests many owners may have sold their homes when the tax credit temporarily raised prices in 2010.

Neighbors. Can’t Live Without ‘Em.

By Homer Guthrie, Expert Homeowner

Neighbors are like apple cider. When you first move in, they’re nice and sweet. That’s because they will want to borrow something someday, or ask you to take in the mail when they go on vacation, or baby sit in a pinch. They act friendly but they are really just checking you out.

After a while neighbors get fizzy and sour like cider that’s turned. I mean, was it my fault the dog preferred their lawn to ours? And how was I to know that their kids were allergic to the poison ivy? We just grew a little bit to keep trespassers away and it worked pretty well.

I speak of my neighbors in the past tense because we don’t have them anymore. Most every house in walking distance is empty and has been for months. They’ve all been foreclosed. The families piled their belongings in U-Hauls and tearfully said good bye. Looks like they’ll stay empty for some time since it takes an average of 18 months to process a foreclosure in our state. For Pete’s sake, they built the Empire State Building in 18 months in the middle of the Depression.

Some wiseacre news person decided our neighborhood, Mirage Manor, was the worst in the region for foreclosures and then some big deal web site made us the reddest of all the red areas on its national heat map of foreclosure disaster areas. Wasn’t long before news reporters came around to cover what one of them called the “Chernobyl of American real estate.” The worst was a young radio reporter who breathlessly described everything she saw into her microphone. She made our neighborhood sound like Berlin after World War II, complete with graffiti, boarded up doorways, broken windows and waist-high weeds. She called our home “ground zero in the foreclosure plague” and “an island of homeownership in a landscape of tears.” I mean, really.

So when she knocked at the door, my wife Felicity invited her in for coffee, and she proceeded to stick a microphone in Felicity’s face.

“Mrs. Guthrie, tell me what your neighbors were like?”

“It’s very sad,” she said. “I miss so many of them. I used to baby sit for the Johnsons next door and we all looked out for each other the way neighbors do, you know.”

“And it’s such a pity that now that they are renters they won’t get their mortgage interest deductions next year.” I chimed in.

The radio reporter looked a little annoyed and turned her mike at me. “Mr. Guthrie, what’s it like having no neighbors?”

“Well, like everything else in life, it has its plusses and minuses,” I began. “It’s sure a lot quieter and now I can always park in front of the house, so I took down my “Anthrax Quarantine!! Park at Your Own Risk” sign. People don’t bother with our neighborhood any more. They don’t come to the door to pray for us and ask us to join their church. We save money on Halloween candy. And I haven’t run over a tricycle in months. Minuses? Well, I guess the biggest thing I miss is not having anyone to borrow tools from, which is actually not such a big deal. All our ex-neighbors left in such a hurry that I guess I forgot to return a bunch of stuff. I’m pretty well stocked for the duration.”

She decided to give me another chance to say something she could use. “Mr. Guthrie, perhaps you can tell us why you think you and your wife are the only homeowners to survive in this neighborhood?”

“Sure, that’s easy. You see, we’re both expert homeowners.”

The reporter looked amused. “Expert homeowners? What makes you an expert?”

“Well, for one thing, at this point our mortgage guy-his name is Earnest S. Crowe-knows he’d lose big time if he even thought about foreclosing on us. And we know that he knows what we know. See, we’re deeper underwater than the Titanic because we refinanced every chance we could in the good old days. When values sank, our lender ended up with all the risk. Homes in Mirage Manor are pretty much worthless. I mean, who wants to live in a place they call the Chernobyl of American real estate? If they were to foreclose on us, they would just add to their losses. Nor would it make any sense to make an example of us. There’s no one left around here who would notice. That’s how an expert homeowner would analyze the situation,” I said.

“What Homer forgot to mention is that the real reason we still own our home is that we pay the mortgage on time,” said Felicity. I frowned.

“I see,” said the reporter, who decided she’d had enough of us.

She only used a little bit of the interview, what Felicity said about our neighbors. Which is probably just as well. I’m hoping that I won’t have to give back the tools I borrowed.

About House Poor

Homer Guthrie is an expert homeowner who lives in Mirage Manor, a suburb known worldwide as the “Chernobyl of American Real Estate.” With his wife Felicity, who is also an expert homeowner, his real estate agent Bea Meriwether, and his mortgage broker Earnest S. Crowe, Homer tackles the tough issues in residential real estate in a weekly column called House Poor. Read House Poor every Monday on Real Estate Economy Watch.

To contact Homer or to inquire about posting House Poor columns on your site every week, write him at admin@realestateeconomywatch.com or post a comment.

Copyright 2012 by Reecon Advisors LLC. All Rights Reserved.