Sean Dreznin, Commercial Investment Real Estate Agent

Report finds 24.8 percent of Summit, Portage owners have negative equity

Published on Thursday, May 07, 2009

This article from http://Ohio.com is a bit of a micro-view segue from the previous blog article. Zillow has plenty of research and commentary to show how Akron Residential is slowly rotting from the inside, despite all the wonderful efforts of local business people. The local government needs to hopefully read this blog and many of the available resources out there screaming about the area needing help... anyhow... I digress... enjoy the articles' worth content.

Nearly a quarter of all homeowners in Summit and Portage counties owe more on their mortgage than their home is currently worth as values fell from a year ago, according to the latest research by the online real estate firm Zillow.

Home values in the Akron metropolitan statistical area — defined as Summit and Portage counties — fell 7 percent in the first three months this year compared to a year ago, according to the Zillow Home Value Index. The Zillow Real Estate Market Reports look at 161 metropolitan areas and cover the value changes in all homes, not just homes that have recently sold.

The average home price in the greater Akron area for the first quarter this year was $115,682, down 14.9 percent since the Akron market peaked in 2006, Zillow announced in a release Wednesday. The results for Summit and Portage counties showed:

• 24.8 percent of all Akron-area homeowners now have negative equity, meaning they owe more on their mortgage than their home is currently worth. The local area still fared better than the nation overall, according to Zillow.

• Homes in the Akron area lost $815.3 million in value during the first quarter of 2009, and have lost $3.2 billion in the past 12 months.

• 28.8 percent of transactions in the past 12 months were foreclosures.

• 8 percent of homes sold were ''short sales,'' meaning the proceeds fell short of the balance owed on the mortgage.

Nationally, home values fell in the first quarter, declining 14.2 percent from the first three months of 2008 to an average of $182,378. Declining home values left 28.9 percent of all American homeowners with negative equity by the end of the first quarter, Zillow said.

''Slowing declines in select markets are a bright spot or, at least, what passes for one given current market conditions,'' Stan Humphries, Zillow vice president of data and analytics, said in a prepared statement. ''Unfortunately, given the magnitude of the current rates of decline, we're still many months away from a bottom even as depreciation slows.''

Investment Real Estate Improvement Considerations

When considering a project for an Investment property, the first question you need to ask yourself, is simply, "Is this necessary, now?"

If the project is not considered dire and the consequences are minimal to nil, then logically in this market, it would seem to make fiscal sense to postpone the project (e.g. - Window replacements, asphalt replacement vs. repair)

Secondly, the next aspect to consider is how to recoup the cost of the improvements? Rent Increase? Reduction in amenities? Does the current market or your current rents allow for upside movement? Do you offer things like curbside trash removal whereas there is trash service offerred by the municipality, can you change light bulbs to be more cost effective, insulate water heaters, provide new air filters for tenants to improve efficiency and reduce costs...

Finally, Is there a clear advantage gained by making the improvements and abosrbing the immediate outlay of expense? Rental Increase with improvement... (New windows equals a $25 p/unit increase)

Scenario

$6,000 for new windows and insulation

$25 increase per unit (we'll say 4 units)

$1,200 per year gained in rent

5 years to recoup the cost of window replacement

Can you handle the approximate costs and term for reimbursement for this improvement?

This feels like a day we all sometimes need a boost or we let the little things get to us.... traffic jams, rude people, bad weather, annoying relatives, appliance breakdowns, etc...

I'm there now, and after I watched a video submitted by Tami Vroma, I started to fill the void left by the negative (I think the second Ghostbuster's sums up the feeling) encounters.

I felt I needed some more holiday inspriational fodder, and I remembered seeing this video a few years back and with a quick youtube search came across it and could not wait to share it again. It is a motivational, pick-you-up-by-your-bootstraps, get up, get going, feel alive video that can move mountains... I mean seriously, how awesome is this guy! Anyhow, clear 10 minutes from your schedule and be prepared to be inspired!

Lebron James is the chosen one...

This is documented both by his self-proclaimed nickname and most likely substantiated by most Ohioans as well.

Now the hard part. This is the year for a championship for the most championship starved states in the entire 50. We are honoring Ohio State, but we are talking professional here...

So in the big picture.

Browns - what, 1964

Indians - never? but real close a couple times (while the Marlins have won twice... salt in the wound)

Cavaliers - never but 2009 looks real good.

Kevin Garnett has in essence sold his soul (health) for a championship and will not be able to give anything to the Celtics this season---

So in reality, the LA Lakers appear to be the only contender for the Big Trophy...

Cavs in 6 for the Championship that Northeast Ohio deserves...

Let's do this Candyman

The rumor swirling these days is that Braylon Edwards is on the trade market and a few teams are sniffing around.

Specifically, the New York Giants, who released Plaxico Burress earlier this year after his well documented off-field weaponry skills. The talk is Braylon for a 1st round and 3rd round pick.

I believe the Browns should make this trade and wash their respective hands of Mr. Edwards. The relationship has reportedly soured a bit and his production shadowed the teams dropoff last season.

Braylon has been in the league for 4 years... He had one amazing season! Now while a .250 average in Baseball may get you a multi-million dollar contract and fame, 1 good season out of 4 in the NFL will get you cut or traded.

Mangini should make this trade and move on, like it appears a majority of northeast Ohio already has.

Sean