From a distance, the Boston housing market looks more like a wave, or one of many troughs in a receding tide. Some parts of the city are further down than others, just as some tidemarks around the country stretch farther out to sea. Up close, the steps backward or forward are small, like the fitful trudge of horseshoe crabs.At a meeting of Mayor Menino’s Foreclosure Intervention Team Wednesday morning, there were some steps forward to report from an especially beleaguered area around Hendry Street in Dorchester. A tenant facing eviction from a house recently in mortgage trouble was about to sign a one-year lease. The city was offering to buy five three-decker condos that were taken by foreclosure. There was an offer to buy a three-decker beset with mortgage trouble and a legal dispute. And the city was in discussions with the US Dept. of Housing & Urban Development over a vacant property around the corner on Coleman Street. Buyers had agreements to buy two other houses on Hendry Street and Clarkson Street. And one more three-decker on Hendry Street would soon be up for auction.
The Hendry Street area was also getting attention from the police, as well as outreach to property owners and tenants. And, to help break the deadlock on foreclosed housing throughout Boston, the Mayor’s administration had also filed a home rule petition to impose a surtax of 10%.
The rest was putting the numbers in perspective.
“We’re not as bad as ’93 and ’94, but we never want to get there,” said the mayor. “And all the predictions we get are the worst is yet to come.”
Officials say one sign that more trouble is on the way is that only 30% of the adjustable-rate mortgages they’re concerned about have jumped to a higher interest rate.
“Nine hundred eighty-two loans have already reset,” said mayoral advisor Pat Canavan. “We’re anticipating in the next few months, through April of ’08, 750. So, we’re not at the peak of this issue yet.”
Also growing is the percentage of properties for which banks fail to find a new buyer. That means the party holding the mortgage takes title, dotting the city’s map (above) with one more “Real Estate Owned Property” or “REO.” According to the Dept. of Neighborhood Development (DND), in 2005, 48% of the foreclosures in Boston ended up as REOs. In 2006, it was 81%. Last year, the figure was 93%. Currently, the city has 565 REO properties.
DND figures put the number of foreclosure petitions on Residential property in Boston at 2432, which is up from the 2006 total by 75%. There were 703 foreclosure deeds, which is up from the 2006 figure by 169%. According to DND’s Deputy Director, William Cotter, the totals are evenly split between property owned by occupants and investors.
Cotter says 76% of the foreclosed properties are in four parts of Boston: Dorchester, Roxbury, Mattapan and Hyde Park. In parts of those areas with concentrations of subprime lending and foreclosures, he explained, property values fell last year by 10-15%.
“There are other neighborhoods in our city that are not affected in any way,” he added, “but this value is directly related to the problem.”
City officials say their prevention programs reduced the number of potential foreclosures by 30%.
“This effort today,” said Cotter, “and the effort of the mayor is to stay ahead of those things—stay ahead of the REO properties and the abandoned and vacant property, so that we can minimize the overall impact. If we can do that, the decline may not be as low, and we can help the market recover more quickly.”
As in years of decline during the early 1990’s, early 1980’s and much of the 1970’s, a small amount of time could make the difference between a house fit to market and a house damaged by vandals or plundered for materials such as copper pipes.
Even if worse things have yet to strike the Boston housing market, it’s still possible to go from foreclosure sale to profitable investment in a single day, even when a property’s losing value. Records show that’s what happened January 31 with a three-decker on Armandine Street in Dorchester. One buyer purchased the three units from three different lenders for a total of $299,000. Then, in what might be called a condo deconversion, the whole house was sold the same day to a pair of buyers for $450,000, with a 10% down payment. The same three units sold in 2006 for a total of $810,000.
