On The Coast: The Housing Bust And Vacation Homes (Transcript) | WAMU 88.5 - American University Radio

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On the Coast: The Housing Bust and Vacation Homes

MS. REBECCA SHEIR

13:30:39
We move now from building homes to buying them. And in this economy, if you're lucky, selling them. But we're not just talking about any homes. We're talking about second homes and condos at the beach. And what's happening now that the housing bubble has burst. It's our weekly segment, "On the Coast" where coastal reporter Bryan Russo fills us in on the latest and greatest on the eastern shore of Maryland and coastal Delaware. And Bryan joins us now from 88.3 in Ocean City, Md. Bryan, welcome back to "Metro Connection."

MR. BRYAN RUSSO

13:31:09
Hey Rebecca, thanks for having me.

SHEIR

13:31:10
Okay. So from what I understand, if you drive up and down Ocean City's main drag, you'll see countless condos up for sale, right? Just sitting there vacant and they've been empty for some time now.

RUSSO

13:31:21
Yeah, that's very true, Rebecca. I mean, the condo market is perhaps taken the biggest hit. They were almost 1,300 condos listed in the month of March alone in Ocean City. And only 152 of those went to settlement. So that's like 12 percent. And many of the houses that are being sold are foreclosures. I spoke this week with Claire McLaughlin, the local sales manager at one of the nation's top realty companies, Prudential Carruthers.

RUSSO

13:31:45
She says foreclosures are really hurting the market as a whole because they're making property values plummet.

MS. CLAIRE MCLAUGHLIN

13:31:50
When you have a percentage of foreclosures and the value that the person bought the home at was a half a million dollars and the bank turns around and sells it at $300,000. It affects everyone.

SHEIR

13:32:05
But Bryan, if property values start going down, doesn't that mean local governments are going to be pulling in less revenue from property taxes? And if that's the case, could people where you are possibly see their taxes rise then to, you know, to make up the difference?

RUSSO

13:32:20
Yeah. And that's a really -- that's a very real possibility. Let me break it down to you like this, after the housing bubble burst property assessments in Ocean City went down $1.1 billion. And they are expected to drop again in the next scheduled assessment. So for the local government, since property taxes make up 58 percent of the budget, Ocean City has had to face very tough decisions about whether to hold the tax rate at a constant, which they actually have by making millions of dollars in budget cuts or to just raise taxes, which inevitably they may be forced to do anyway after assessments come in next year.

SHEIR

13:32:55
Well, is the market showing any signs of recovery now?

RUSSO

13:32:58
A little bit. But it certainly isn't in the condominium market. It's in single family homes and mostly in areas outside Ocean City. So we're talking Worchester County as a whole, you know, off the island or even into Wicomico County toward Salisbury. So basically, we're seeing sales of more humbly priced homes to retirees and young families rather than the sales of high priced second homes, you know, to weekend warriors, so to speak.

RUSSO

13:33:22
But as Jim Prete, a realtor for Prudential Carruthers told me, it's actually a great time to buy for both kinds of home owners.

MR. JIM PRETE

13:33:29
It very well could be the last great year to buy real estate because everything really is lined up right now for a buyer. They have a lot to choose from, the interest rates are, pretty much, near historic lows, there's not a lot of competition out there unless there is a foreclosure that's just incredibly priced. You know, you're not going to see multiple offers.

SHEIR

13:33:47
What are different kinds of homes going for?

RUSSO

13:33:50
Well, we checked out the website of Century 21's New Horizon, another local realtor down here and found three different beach front condos currently listed as, Sale Pending. They were all going for between $350,000 and $375,000. And in comparison, if you jump on the road and drive about 40 minutes west toward Delmar, Md., you can get a 4-bedroom single family house for less than $200,000. So that's a pretty big difference, obviously.

SHEIR

13:34:14
Yeah, that's a big difference. But even if you find a house that's a great deal, right, foreclosure or not, you still have to get pre-approved for a loan. Are banks giving out loans as willingly as they were during the housing boom?

RUSSO

13:34:27
No, not even close. It's very hard to get a loan now, unless you have pristine credit. But for many folks who've encountered the loss of a job and perhaps maxed out their credit cards just to survive, Claire McLaughlin, purchasing a new house is tough unless you really have a good mortgage agent.

MCLAUGHLIN

13:34:43
Banks are just very careful who they're lending to. They're asking for bigger down payments. They're very leery of buyers, period.

SHEIR

13:34:52
But you mentioned, the real estate business is starting to, you know, pick up. What are folks in the industry hoping next year will bring, therefore?

RUSSO

13:34:59
They are slowly but surely seeing a rise from the so called ashes of the housing boom. And most of the realtors that I've spoken with believe the real estate crash might actually end up being a good thing, since prices were so inflated to a point that they were just unmanageable and unrealistic. There are small increases almost every month when compared to last year, even if houses are selling below the listing price. And that's all really anyone's hoping for at this point.

RUSSO

13:35:24
They're just trying to get the market back. Not to where it was, but where maybe it should be.

SHEIR

13:35:29
Bryan Russo is the host of Coastal Connection on 88.3 in Ocean City, Md. Bryan, thanks for joining us on Metro Connection.

RUSSO

13:35:36
Thanks for having me, Rebecca.
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