|
several years here - on fairly low teaser rates, favorable terms and modest payments via an adjustable mortgage scenario.
And now is the time when lenders could raise those rates, and they did."
Buying in when interest rates were low and homes were plentiful in Southwestern Illinois - during the boom of 2004-2005,
Spreng said - may have meant for some buyers that they bought in a few years ahead of when they'd saved enough of an
adequate down payment. "And now their monthly payment is on 100 percent of the value of the home and they don't have any
equity built up in it. So what do they do? It's a real dilemma," he said. "If we could find the data for Southwestern
Illinois from a few years back, I think we'd see that most of the distressed properties on the market here today were indeed
subprime loans in the first place, where the home was not appropriate in terms of the buyer's income range."
The good news, Spreng added, is that if you're not a subprime borrower, there are likely some excellent homes to be had
in this area. "If you're a buyer with a real down payment and conventional financing, I bet you'll find sellers in
Southwestern Illinois ready to deal," he said.
Relatively new subdivisions, such as The Oaks off of Illinois Rte. 143 in Edwardsville, show substantial homes that are
already up for resale for the second and third time. Jerry Rombach, executive officer of the Home Builders Association of
Greater Southwest Illinois, says although it's not possible to know the exact circumstances, these $200,000-plus homes and
their sellers may be victims of adjustable rate mortgages gone upward.
"I think it would be a mistake, though, to link what's happening around us with the predatory lending crisis that has
spurred so many foreclosures," Rombach said. "For people in our area, they're looking at an increase in their mortgage
payment, an increase in their utility bills and how that affects their household spending…and they're just having to pull
back until it all settles. It's not an indication that our region is in any kind of real estate crisis mode. When folks
point to places like Albuquerque or San Francisco, really hot housing markets, you're not only seeing new starts plummet but
values plummet, too, because they were so hot to begin with. But we're not seeing that here," he added.
Spreng said the same homeowners who may be reeling from ARM payments gone upward may have gotten what they wanted in the
long run - but not in the short run, when it comes to their monthly expenses - in terms of their annual property tax
assessment.
|
"Even if the asset, the home, is worth more - which is obviously a good thing in the long term as far as the investment
itself is concerned - it still puts pressure on their monthly payment right now," he said. "But at least this impact is
softened for those who pay their taxes through an escrow system."
But no matter who you are, the other enormous factor impacting Southwestern Illinois homeowners' disposable income at
this time, according to Spreng and others, is definitely the huge increase in energy costs - namely due to the
yet-to-be-solved deregulatory utility crisis between Illinois legislators and Ameren. Spreng and other business leaders here
say that users' inability even to put a close estimated amount on this summer's electric bills is adding to what may already
be a precarious financial condition for many households.
"It's important, however, to keep in mind that energy costs are rising everywhere in a world of rising petroleum prices,"
Spreng said. "That being said, it is very, very true: For people in our area who are living day to day with an increased
mortgage payment, an increase in their property tax and a couple hundred dollars each month - or even more - in increased
utility costs, that's bound to be seriously impacting their bottom line. All of a sudden, they may well be feeling an
immense burden, especially if they were living on a fairly tight margin before."
Ameren spokeswoman Erica Abbett said the power company, as of press time, had not yet shut off any past-due bill payers
in Southwestern Illinois.
"We've not disconnected anyone yet," she said. "At this point, it's still truly a last resort. There would be an expense
for us to reconnect at a later point, plus we just don't want to do it. We're looking at our past-dues in 30-day, 60-day and
90-day buckets and what we're seeing right now is that a lot of customers in the region are calling to set up payment plans,
which is really good."
Ameren's Dollar More program - the voluntary program that asks bill payers to donate an additional $1 toward the bill of
someone in their service area who can't pay their bill -receives its contributions from three sources, Abbett said: Ameren's
charitable trust, its employees and its customers.
Abbett said according to Dollar More contributions received so far in 2007 from both Ameren employees and customers in
CIPS and IP, the company's two subsidiaries' service territories serving most of Southwestern Illinois, giving is "very
close" to what it was during the same period of 2006, despite the fact that people's bills have increased significantly.
Ameren does not separate the total Dollar More contributions by employees from those given by customers.
The Salvation Army in Alton, a United Way of Greater St. Louis-funded agency in the Southwest Illinois Division, receives
money from Ameren's Dollar More program and is actively channeling it to residents this summer who are struggling to pay
their utility bills.
|
