SAN DIEGO — Credit union representatives from two cities that have taken heavy hits from the run-up and subsequent collapse in real estate prices are reporting slight improvement in the last three months.
Cindy Campano, VP of retail lending for $1.3-billion Arizona State CU, and Mathy Hogan, EVP of lending for $1.5-billion Fairwinds CU, said the housing markets in Phoenix and Orlando, respectively, appear to have stabilized.
Campano said the median home price in Phoenix plunged to $125,000 in July 2009 from $252,000 in July 2005.
"Distressed and foreclosed properties still dominate the market, but May, June, July did see 9,000 residential sales each month, which is a slight improvement," Campano reported. "Our members are struggling and have made requests for us to help. So far we have made 87 loan modifications; and only one has stopped paying."
Hogan painted a similar picture of the Central Florida real estate market. She said the August 2005 median price was $249,000. In August this year, the median was $165,000 for "normal" sales, $128,000 for "distressed" properties, and just $85,000 for bank sales.
"Short sales have decreased," Hogan told an educational session audience at the CUNA Lending Council's 15th Annual Conference here. "Distressed properties make up 50% to 78% of available properties in Central Florida, but the numbers are getting better. We used to see people try everything before they came to see us, then they tried to make their payments. Now, we are seeing more savvy individuals doing research, making a 'business decision' and then walking away."
Both Campano and Hogan said their CUs ramped up their mortgage lending efforts during the housing boom. In 2005, Arizona State funded $19-million in mortgage loans during the entire year. From 2006 through 2008, the CU funded $359.9 million. During nearly the same timeframe, Fairwinds CU funded $439 million in first mortgages from 2005 through 2007.
Fairwinds currently holds $69-million in commercial mortgages, $421 million in first mortgages, and $174 million in equity loans. Hogan said the delinquency rates are 0.43% on commercial, 4.11% on firsts and 2.1% on HELOCs.
"Home prices under $250,000 have stabilized," Hogan said. "I don't think things will start to be positive until the end of the third quarter 2010."
Campano said Arizona State CU brought her aboard in 2006 to set up its mortgage department. She said the credit union avoided trouble by never accepting stated-income applications and by having strong underwriting standards.
"The Phoenix market has stabilized because people are finding a niche level," Campano said. "People are finding nice homes for a reasonable price in some neighborhoods, but we won't see appreciation for a while. There might be one more spike in foreclosures as adjustable mortgages reset."
