A ‘Saturated’ Market And ‘Appraisers On Steroids’
A trio of reports from Colorado. “Like many other cities in the region and nation, Loveland is seeing residential construction come to a screeching slowdown. Through June of this year, the city issued 243 residential building permits for single-family homes. That’s a 40 percent drop from the first six months of 2005.”
“Loveland City Manager Don Williams said..residential has ‘dropped way down.’ ‘Interest rates are up; the market is saturated for residential,’ Williams said. ‘It’s slowed down, so we’ll be watching it. It’s just a cycle; we’ll outgrow it.’”
“Alan Jones, president of the Loveland/Berthoud Association of Realtors, said low interest rates during the past several years created a hot real estate market. A hot real estate market meant developers bought up land and builders put up houses. Now, Loveland has a ‘huge supply’ of new and older houses on the market, Jones said. ‘Builders are not seeing the profit margins they once did, and neither are sellers of resale houses,’ he said.”
“Local developer John Giuliano normally has two or three developments going at once. Now, he has only one (’Thank God,’ he said). ‘Things are slower; we’re not starting another one,’ he said.”
The Denver Post. “Frank Finn Jr. thought his family was getting a great deal. He borrowed $102,500, the cost of the land, home and installation. The appraisal showed his home in West Valley Estates would be worth $130,000. ‘I was like, ‘Right on,’ he said. I’m really making out on this. I’ve already got $28,000 in equity.’”
“Six years later, Finn is a foreclosed homeowner with ruined credit and monthly rent bills. So are his old neighbors. Of 65 homes in West Valley Estates, 28 were foreclosed from 2002 to 2006. The sale price of Finn’s home after his foreclosure: $57,700.”
“In Colorado, mortgage fraud is ‘a significant factor’ in the rising number of foreclosures, and ‘bogus appraisals are a big, big part of it,’ said Colorado Attorney General John Suthers.”
“Lenders estimate ‘as much as 15 percent of all appraisals are overvalued’ though not necessarily fraudulent, said David Berenbaum, of the national Center for Responsible Appraisals and Valuations. ‘We’re questioning a large volume of the loans today.’”
“Nationally, appraisers are feeling so much pressure to justify questionable home loans that nearly 10,000 have signed a petition calling on Congress to protect their independence. In a recent poll, they were asked how often they felt their peers succumbed to pressure. The leading response: 41 percent to 50 percent of the time.”
“Some appraisers say corrupt mortgage brokers and loan officers have compromised the appraisal industry, which has long been considered the primary check against fraud. ‘I am battling against appraisers who are on steroids; guys who are saying, ‘What number do you want?” said Matt George, a Littleton appraiser.”
“Colorado banks have concentrated more of their assets in real estate loans and securities during the past five years, leaving them vulnerable if rising interest rates kick the legs out from under the market. Since 2001, Colorado banks have seen their real estate holdings as a percentage of total assets increase from 48.8 percent to 59 percent, according to a Denver Post analysis.”
“‘It’s probably the highest that I’ve seen,’ said Richard Fulkerson, the commissioner of Colorado’s Division of Banking. ‘I can certainly appreciate the concerns in (too much) real estate concentration.’”
“Foreclosures in Colorado have tripled since 2000, and three out of 10 homeowners have home equity of 5 percent or less, the FDIC reports. Homebuilders in Colorado aren’t buying as much land as in the past because demand for new homes has softened. In addition, a record 31,900 existing homes were on the market in the Denver metro area in June.”
“‘That means homebuilders will need less raw land,’ said Wesley Brown of a Denver-based investment bank. ‘They (banks) are holding an asset that could string out over a long time.’”
“Nationally, appraisers are feeling so much pressure to justify questionable home loans that nearly 10,000 have signed a petition calling on Congress to protect their independence. In a recent poll, they were asked how often they felt their peers succumbed to pressure. The leading response: 41 percent to 50 percent of the time.”
Ho-hum…This petition has been gathering mold in Congress for like 3 years now. 10k worth of appraiser’s don’t mean squat in the PAC world of real estate. Politico’s don’t give a rat’s azz, ’cause the HELOC borrowing is the only thing that’s been keepin’ their constituents financially afloat for the last decade.
The morons at the federal Appraisal Standards Board think they’ve kept everything in check with their mandated Uniform Standards of Professional Appraisal Practice.
The course is mandated every 2 years, or your license gets tanked.
Nothin’ more than governmental sanctioned extortion for the good ‘ole boys doin’ the teachin’.
They hate to see me in their class, ’cause I tell’em for 8 hours just how corrupt and full of BS the system is.
The rubber stampers simply go to class, smirk at the instructor and laugh amoung themeselves about how much money their making-save for the idiot clowns doin’ appraisal management company work for chump change.
Lottsa FB’er’s goin’ to the gallows because of these schmucks.
Well said! We all know the sytem is corrupt but no one real seems to attack the issue. I guess it is business as usual.
Easy credit and monetary conditions always leads to this. Blame the stupid, incompetent and corrupt people at the FED. Easy Al and his dirty easy money. First, it is the monetary and financial system that is the source of the generalized corruption. These appraisers can continue their disgusting behavior because they know banks, financial institutions, the Fannie Maes of this world, the Central Banks of this world, couldn’t care less. Appraisers are doing what the financial analysts, these clowns, were doing when they were appraising the “fantantic potential” of the New Economy stocks.
I wish I could take credit for this. Too funny. From the other thread.
For any of you just entering into the rental market and can’t spend $2,000 a month please feel free to use my translation guide below:
Cozy = Small
Quaint = Busted
Conveniently Located = On a busy main road tucked in between a halfway house and a bus terminal
Charming = Small & has not been remodeled since the civil war
Has Character = Slightly overpriced and has a bathtub in the Kitchen
Great View = It’s on the third floor and you can’t move anything bigger than a folding chair up the stairs
High Ceilings = Old and the wallpaper looks like a fat girl after Liposuction
When the agent says “one small thing” = There is a old lady on the first floor with 15 small yappy dogs who bite, hump legs and have mange
Pool & Gym = crappy apartment complex and they will raise your rent after the first year
Convenient Non Permit Street Parking = HA! Good luck dipshit
Conveniently Located near a laundry mat = no washer/dryer or hookups
Convenient (Agents love this word) = Not Convenient
Affordable!!! = Wall to wall stained pink carpeted, wood paneled piece of shit!
Garden Level = Basement with tiny windows and you better be an Oompa-Loompa
Great Deal!!! = The landlord is a crack head, a pedophile or both
Anything with *** = ***Don’t Bother***
Has Character = Slightly overpriced and has a bathtub in the Kitchen.
Reminds me of a place I looked at in NY, the toilet was so close to the tub you would have had to put one foot in the tub to do your business. And only $1200 a month !
lol
Very good
Please everyone go to http://www.despair.com, click on “demotivators” at the top - it sums up the FB brilliantly!!!!!:)
There are so many good ones I don’t know where to begin, but one set that describes the order of FB’s demise:
Ambition, Cluelessness, Effort, Idiocy, Stupidity, Insanity, and Despair
Ideology over facts? The “Effort” poster shows Paris, France which, oddly enough, is one of the few places in Europe where measures of productivity are similar to those in the US. It is always good fun to smear the French, but don’t get too smug about who your competition really is.
““Foreclosures in Colorado have tripled since 2000, and three out of 10 homeowners have home equity of 5 percent or less, the FDIC reports.”
Wow. If 3 of 10 have equity of 5 percent or less at today’s inflated prices, imagine the equity story if prices fall 20-50 percent.
The 3 of 10 number seems amazing to me. That’s 3 of 10 who could not even afford to put 10 down, let alone an old-fashioned 20 percent. Or 3 of ten knuckleheads who HELOC’d themselves into the poorhouse. WTF are banks doing making those kinds of loans? Really? Part of me says the FBs will get what’s coming to them, but another part feels terrible that a lot of them are probably not that educated and had no idea what they were gettting themselves and their famlies into. Flippers are exempt from any sympathy whatsoever.
The really scary thing is what will happen to everyone else if that 30% is equivalent at a national level! There will be precious few people who escape this in a good position no matter how wise their choices were leading up to the bubble.
“Nequity” or “Negquity”
I’m reading david lereah’s book, it’s just unbelievable. I’ll post some of my favorite quotes later.
I checked out his NAR webpage - one smug looking fellow. Is he the “Dow 36,000″ (Jim Glassman) guy for real estate?
YES. not only that, he doubled his bet with his new edition.
“‘That means homebuilders will need less raw land,’ said Wesley Brown of a Denver-based investment bank.”
When will the deflating value of land finally catch up with the homebuilder balance sheets?
Probably some time after the high interest on bridge loans for unsold inventory has bankrupted them.
Already has. The impact of land values is like falling off a cliff, amazed at how cool and breezy it is on the way down. The splat comes later.
It’ll hit land developers/speculators much harder. Lots of builders never bought the land that they were planning to build on, they simply paid option money to the land developers/speculators (which they will write off).
IMHO, with some exceptions, it will be high land basis on the more recent developments combined with high materials costs and falling home prices that will be bad news for developers, not deflating land values.
The last “developers” should be “builders”. Sorry to screw up the distinction. Builders have gotten very good at lining up inventory (land) without actually buying it until the last minute from developers.
When the appraisers and CPA’s can’t be bought off. But we have Enron and Ken Lay as role models for fleecing everybody. First, you rip off the public, get indicted, and then die before you can spend anytime in jail
Hey, I’ve got this coworker who is from CO and said the western side of the state where all the raw land is for building ranch properties is still hot…with bidding wars…Anyone from CO know about this?
spillover, from vegas to st. george, utah, to salt lake and now to grand junction. californicators with money buying on the cheap. job picture out there is sketchy at best.
Thanks. Wonder where it will end? Back in San Diego? Ha ha.
Funny you mention St. George. Some friends of my neighbor were selling their home in Vegas to build on some family land out there. Maybe they were flippers in disguise.
Also funny about St. George. My parents are selling their house to move closer to family. In three weeks the’ve had two appointment to look at it.
I sure hope some of these land “specuvestors” start taking it on the chin as well. There has been a grab going on all over the west for some time. Here in western Washington, I have seen land in certain areas more than triple in less than five years. And, in northern NV, I know of certain 1 acre lots which were purchased for $5k which were selling for $75k. Some of the returns are just unreal. I hope some of these people get burned too. I don’t like to see anything artificially inflated due to greed.
Just talked to some friends in rural Texas and they say that “hordes of people from California” are buying up all the land and causing their property taxes to jump.
Sound familiar?
How many of these CA locusts are there?
THEY ARE EVERYWHERE!!!
being in boulder, i’m of the mindset that the “flippers” are toast, but there are real households moving out of california to live a better life elsewhere out west. here in town, high end product is moving fast (against a backdrop of the smoldering denver market), mostly to out of staters, empty nesters, telecommuters, all with money from the coast, i couldn’t classify them as the classic “flipper” buying three houses in tuscon with 100% financing. they pay cash.
I don’t know who wrote this, probably a hopeful broker, but I have been looking at real estate in the past 10 months. Prices between 900k and 1,500,000. I am here to tell you if I wanted to buy the overpriced garbage there is a ton..for sale…and they are the SAME ton that was for sale 10 months ago….Keep dreaming!
I always love how people on the front range of Colorado think of themselves as being “in the West.” Truth be told, Denver is nothing more than a city on the high Plains. Might as well be a big Goodland, Kansas or Scottsbluff, Nebraska…just larger and closer to the mountains.
Argh! Goodland Kansas!
Sorry, bad flashback moment. Traveling cross-country in a Cessna 182 (friend with pilot’s license), got caught over Goodland between two big thunderstorms. Rough ride, left breakfast in a little baggie in Akron CO.
Probably the last of the move up buyers or equity locusts who were able to sell high. That well is sure to run dry soon. And after a 30-50 percent price correction in Boulder, they may be a little disappointed with their purchase in the not so distant future.
I live closer to the eastern side of Colorado, but am baffled as to why anyone with one brain synapse talking to another would be in bidding wars “all the raw land for building ranch properties.” Is your co-worker talking about those vast, arid, dust-blown expanses where the only economic activity of note is building supermax prisons? Ranches take a lot of upkeep and don’t generate much profit. A lot of movie stars and Californicators built ersatz “ranch properties,” but they have to pay hired men (not exactly pillars of the community, for the most part) to actually run the place, and most figure out after a few years that paying for the privilege of “ranching” really isn’t a good long-term option. I also know that a lot of (mostly Californians) who built those gaudy monstrosities in the Front Range mountains are discovering that they’ll be lucky to sell for half of what they paid — living on an isolated mountainous property that shouts out “I’m wealthy — rob me!” isn’t such a hot idea, given the rampant meth problem in Colorado (Colorado Springs has one of the highest burlary rates in the nation, and home invasions are happening with greater frequency). So, I’m mystified as to why anyone would get caught up in a bidding war over “all the raw land.”
‘A lot of movie stars and Californicators built ersatz “ranch properties..and most figure out after a few years that paying for the privilege of ‘ranching’ really isn’t a good long-term option.’
I did a post with an article from the NY Times, I believe, on that subject last year. There were very prominent properties that sold at huge loses.
COL real estate is still going down despite being one of the “best” places to live.
1. Fort Collins, Colorado
Population: 128,000
Typical single family home: $215,000
Est. property taxes: $1,700
Pros: Outdoors lovers’ paradise; good schools; very little stress
Con: Tech-dependent economy
Dan Olsen’s heart had been set on raising a family in Montana. But when he visited his future wife Kari’s family here while the couple were in college, Dan knew he had found the place he wanted to call home.
“There’s a whole different sense of priority here,” says Dan, now 39. “It’s kind of an outdoorsy, ‘take time to smell the roses’ attitude. I absolutely fell in love.”
“Three out of 10 homeowners have home equity of 5 percent or less, the FDIC reports.”
That is an astonishing statistic. Especially at these interest rates and house prices. What that basically means is that if things get rough in the housing market, 30% of the houses will be coming back on the market. That is a ton of houses. Simply a TON !
I’m wondering what the effect of all these “piggyback” loans will have on bank behavior when they foreclose. Traditionally the buyer was required to buy PMI when the loan was for more than 80% of the assessed price. In case of default the PMI would protect the bank by allowing it to sell the property and, in case the sale proceeds didn’t cover the loan, pay the difference.
Many home loans today use a “piggyback loan” and I assume this second “downpayment” loan constitutes a second lien on the property. I believe that means that, when the property auctions, the second lien holder gets whatever is left after the primary lien holders loan is paid off.
Is that the equivalent of PMI insofar as the primary paperholder is concerned? Would Fannie Mae have any interest in protecting the assets of the second lien holder? Probably not.
A case could be made that the “piggyback” arrangement actually encourages the primary lien holder to sell for less since there is no insurance claim involved to cover any losses of the second lienholder.
Given that the second loan is often for 20%, this says to me that the primary lenders could become very aggressive in discounting foreclosed properties if they think the market is tanking. They don’t want to be sitting on a property that could lose 30% of its value since that would put them in the red.
Yep, but that’s really only a factor for conforming loans (under 410k in 2006 and tracks the HPI). That’s why Fannie and Freddie are in better shape than most going into a downturn.
Why do you say that? What happens in the case of a non-conforming loan that has a piggyback attached?
They aren’t as necessary one of the things that makes a loan conforming is 20% down. If you weren’t planning to sell it to Fannie/Freddie you don’t need to worry about the 20% down requirement either and can pick up extra yield on the whole thing rather than just the piggyback.
I think he is saying that because Fannie and Freddie only do conforming loans.
The second trust deed holder has to come in a cure the first TD to be protected in foreclosure . Don’t know if alot of 2nd TD holders will do this if they have nothing to gain if the market goes down to much .
Sorry ……and cure the first TD not a cure the first TD
……cure means bring the loan current .
Also don’t know why a first Trust Deed leinholder would care about a second Trust Deed lenders note .Its always the best to be in first position . 2nd TD notes are more risky to say the least .
If the F’d borrower defaults on the 1st mtg, the 1st forecloses. The 2nd has the option prior to the sale to bring payments current on the 1st and file their own foreclosure notice. If the 1st goes to sale the party holding the 2nd is F’d and ends up with air. That’s a quick view. There are nuances to it. When I was a hard money lender, I didn’t lend money on any property that I didn’t want to own. Very seldom went to judicial foreclosure.
pismobear …That’s what I’m saying . Why would the 2nd trust deed holder want to bring current payments of first and file foreclosure if the market has tanked 25 to 30% .If you were a hard money lender you must of went really low on the loan to value ratios ,but look at all those second TD’s out there now .There isn’t any equity .
Are you saying the second trust deed holder (STDH) can make payments current for the FTDH and then initiate foreclosure? If they are first to foreclose does this mean they can claim their money first? Doesn’t seem like they could since the very idea of being SFDH implies being second to the trough.
Nope , any senior loans have to be paid off.
Yep ,STDH makes payments current on first T.D.,than STDH files foreclosure .
Don’t know if this is the case folks. The 2nd trust deed holder has to be in arrears for them to initiate a notice of default. Depends upon what their note and deed of trust says.
“Would Fannie Mae have any interest in protecting the assets of the second lien holder?”
Not if they have any sense left at all. If they did, imagine that getting out into the public domain. It would be like the ending of a Snidely Whiplash movie, “Curses, we’re finished!”
A lot of the stuff, I have seen has one lender double dipping. What I mean by that is they provide the first and the second. But all of the stuff I do is over fannie/freddie limits have no idea what non-jumbo lenders are doing.
I had just the opposite experience with my appraiser. When I sold my condos last January (too early) in FL, the appriaser wouldn’t come up to the sales price. He wouldn’t get near it.
I sold two rental units for $142,000. The appraisal came in at $124,000
I didn’t think I would get any higher so I sold them. I wish I knew these appraisers were out there. I wanted to unload them anyway after being a landlord for 10 years. It’s tough work; definitely not passive income. I worked my tail off for that return.
I did hold out for two other units. Event though the units still appraised at $124k, I ended up selling them to a cash buyer for $165k.
The market was going crazy then so my realtor just told buyers only to come with cash after appraisal after appraisal kept coming up short of the sales price.
They probably were accurate appraisals though. They places were a dive. I was happy to get that much for them.
I believe there is a correlation in markets with stubborn high “listed” prices vs quantity of properties owned by realtors/related.
Some unscrupulous realtors may convince clients to offer high, while they sell their own properties. I’ve mentioned this concern months before the crash.
This is priceless, from Today’s Boston Globe’s Business Section:
Boston Globe:
“Coldwell Banker Residential Brokerage, Massachusetts’ largest real estate firm with more than 3,500 agents, is coaching agents on how to persuade clients to list their homes at an asking price that undercuts those of comparable ones on the market.
The hope is low prices will attract more prospective buyers, leading to faster sales. Other real estate agents in the Boston area report success with similar strategies in a housing market with an unprecedented glut of properties for sale.
Called “drama pricing” or “energy pricing,” it is a drastic measure for difficult times. And it seems to run counter to the conventional strategy of selling your home for the highest price possible.”
(I’d post the link, but don’t know how, maybe someone could help me out)
This was posted earlier in the day.
must have missed it, thanks (I’m braindead waiting on the dataquick LA numbers)
“Nationally, appraisers are feeling so much pressure to justify questionable home loans that nearly 10,000 have signed a petition calling on Congress to protect their independence. In a recent poll, they were asked how often they felt their peers succumbed to pressure. The leading response: 41 percent to 50 percent of the time.”
Most everyone knows about Enron fewer know about Fannie Mae but no one … i mean no one talks about the 1 out 2 homes nation wide appraisal ‘froth’. This is unreal how these guys are getting away with this.
For every bubble there is scandal and corruption.
http://www.socalbubble.blogspot.com/ has a nice article.
Then vs. Now
A word to the wise: The great Los Angeles housing boom is over. The real estate price explosion in southern California, which sparked a national boom still continuing elsewhere, has stopped. The bubble that everyone said could never burst has burst. All over Los Angeles and Orange County, home buyers can buy a property for less than it would have cost a year ago, although there are exceptions. Buyers who can pay cash can almost steal houses and real estate. The days when ordinary citizens got rich from buying houses are gone, at least for the time being and at least in southern California.
But what a bubble it was. In the 10 years from 1970 to 1980, the price of the average house in Beverly Hills went up by a factor of almost seven. The average house in West Los Angeles, a region of by no means opulent homes, rose by almost six times. Houses in Malibu routinely doubled in value every year in the late 70’s. By the end of the decade, newspapers advertisted ‘’starter houses,” for families who had never owned before, in remote desert suburbs starting at $200,000.
Any lucky person who got in on the boom in the early 70’s saw his paper profit reach about 30 times his down payment by 1980. People who had never earned more than $40,000 suddenly found that they were millionaires just from that little house with a pool in Pacific Palisades. Ronald Reagan is said to have paid $29,000 in the early 50’s for a house in Pacific Palisades that is now for sale for $1.7 million and cannot be sold, which is the whole story.
The boom went on for such a long time because the economics were right. All through the 70’s the cost of owning a house in the better neighborhoods of Los Angeles was negative. That is, the cost of servicing the mortgage plus taxes was less, usually far less, than the increase in the price of the house. Figure it out: mortgages were less than 10 percent for almost all of that decade, under 7 percent if you count the tax features, and houses were increasing in value all over the West Side of Los Angeles by a good 20 percent a year on a compounded basis. The banks, savings and loan institutions and and the economy generally were paying families to live in the better neighborhoods of Los Angeles. The economics of housing inflation were such that for a long period, lenders made mortgage loans at rates substantially below the appreciation of the houses they were loaned upon and in some years, noticeably below even the trend line for inflation. This cheap credit fueled the takeoff of the boom. As prices rose to stratospheric levels, the price history itself fed the boom. Real estate agents assured buyers that however high prices were, they would go even higher.
Wives went to work. Second mortgages were drawn up. People would do anything to get in on the boom, which looked as if it would never end. Even when prices got so high that ordinary citizens could no longer afford to get in, rich people came from all over the country and the world to get in on the one true never-ending bubble.
And Now July 17, 2006
The market also began to fade first in San Diego. The craziness seemed to peak about two years ago, when bidders routinely submitted letters saying that they and their children would be forever honored if the seller would consent to choose them.
Whatever happens here, optimists and pessimists agree, will happen later in the rest of the state.
That’s about the only thing everyone agrees on. The size of the coming hangover is a particularly contentious matter.
Most analysts and people in the real estate industry insist it will be mild. The housing bears say the bulls are either misguided, uninformed or shills.
At a Century 21 sales office in the Ocean Beach neighborhood, broker David Davis said the market had already bottomed out. The spring was weak, he acknowledged, averaging only one or two sales a month — half the office’s usual rate.
But things are already back on track, Davis said. He expects four sales this month, about normal.
The last San Diego real estate collapse, which hit in the early 1990s, was triggered by convulsions in the aerospace industry. The post-Cold War downturn caused widespread unemployment and a generalized exodus from much of Southern California. High interest rates contributed to the misery.
“Our No. 1 industry is now tourism,” Davis said. “Unless they take away the sun, we’ll be fine.”
He’s putting his money where his optimism is, spending $187,000 over the winter for a downtown condo he’ll live in. He knows other agents who are buying too. “I think they see a good thing,” he said. “Buy low, sell high.”
If Davis radiates cheer, the fliers taped to the window outside the office door tell a different story. “Huge Price Reduction,” one says. Another says both “Reduced” and “$15,000 Credit.”
In some cases, the prices are dropping faster than the fliers can be reprinted.
A two-bedroom town home has its price of $324,900 crossed out with a marking pen, replaced by $309,900. Another house, a four-bedroom in suburban La Mesa, has a printed price of $575,000.
Below that is handwritten $549,000.
Scribbled below that is a new minimum: $499,000.
What helped supercharge the San Diego boom was the spread of unconventional financing methods.
Some adjustable-rate loans allowed buyers to postpone payments on the principal. Sometimes the loans allow the buyer to pay only part of the interest, tacking the remainder onto the loan itself.
The advantage of these loans is that buyers can afford much more house. The disadvantage is that they reset quickly, which is why critics call them suicide loans. After the grace period expires, the payments can skyrocket — particularly if it is a time of rising interest rates like the present.
Holders of these loans can’t afford to see prices decline. Yet for everyone who has been shut out of the market, the only hope is a drastic slide.
“Houses really need to fall by 50% to become affordable again,” said Tom Scott, executive director of the San Diego Housing Federation, a coalition of nonprofit and advocacy groups. “It would be better for everyone if the price of housing fell.”
Buck, the homemaker, said she and her electrician husband, Andre, might start looking at foreclosures. Notices of default, the precursor to foreclosure, reached 1,533 in San Diego County in the first quarter of 2006, up 60% from the year-earlier period, according to DataQuick Information Systems. The number is still low by historical standards, however.
“Our No. 1 industry is now tourism,” Davis said. “Unless they take away the sun, we’ll be fine.”
Just think for a moment about this total idiots’s statement.
Tourism is the No. 1 industry.
I don’t know what the situation is like on the west coast, but up here in New England, a tourist based economy translates into seasonal minimum wages and tip based based jobs like bartending and bed-making.
It’s all a total disconnect from the pricing levels of residential real estate.
The coming collapse will be a mind-f*ck.
Here’s the mystery of Colorado to me:
Why did Colorado go to complete implosion, while other markets still boomed? I understand the tech bust hit hard, but harder than the Bay Area? Toxic loans seem to be rampant in CO, but that seems to have been very selective in maintaining prices (key developments stayed expensive). What is different about Colorado?
Colorado has always been the place of choice for Californians. In the early 1990s, the state’s growth was comprised mostly of California transplants. Unfortunately for most of them, they didn’t do their homework and learned the hard way that Denver can have snow (and lots of it) any time from September to June.
Look at this sleazeball/FB in training:
Mortgage Collectors make BIG money!!!! 07/17 19:23:31
Hey all of you mortgage collectors!!! I am a real estate investor who buys homeowners out of distressed situations. We could set up a very profitable relationship together. I need leads to homeowners who are 60 days or more past due. No one will ever know where I got the information and I will be very discreet by not even letting them know that I know they are past due.
What is in it for you? For every house I purchase, I will pay you $2,000 cash. Each and every house. The average cllector I work with makes around $6,000 a month. My problem is that I need more houses than I have and need more houses to buy. Your privacy will be completely protected. Email me at cashequity @gmail.com. This is not a joke. I currently work with 3 other collectors all of whom work for Citimortgage but it isn’t enough. I need more. Please email for more info. This is not a joke or a sales pitch. All I need from you are names, addresses, loan amounts and how far behind they are. AGAIN, you will be protected. No one will ever know how I get the information. Make the stress you deal with worth it. Make the money!!!!
http://forums.albuquerque.craigslist.org/?ID=46220011
ockurt, your friend’s friend is right–there are still bidding wars going on in West CO. I’ve been traching Grand Junction prices for 18 months now and they are very bubbly, approaching Pheonix prices, in a place that hasn’t shown any real growth in years. GJ used to be a lot cheaper than front range Fort Collins and Loveland. Now they’re about the same, if not slightly higher in GJ.
I am an appraiser in Orlando and I rarely get pressure to “hit a number” but then I have a very old certification number. People know I have been around awhile. (30 yrs)I thought I would share a standard phrase in all of our reports with you all.
IT IS COMMON IN THE CENTRAL FLORIDA MARKET TO USE SALES OLDER THAN 6 MONTHS AS THE MARKET HAS GONE FLAT WITH RESPECT TO SALES. INVENTORIES ARE RISING AT A VERY VERY FAST PACE AND THERE ARE 3 TIMES AS MANY PROPERTIES COMING ON THE MARKET AS ARE SELLING. WE CANNOT SAY WITH ASSURANCE THAT THE MARKET IS FALLING AS THERE AREN’T ENOUGH SALES TO DETERMINE THAT FACT. WE DO ANTICIPATE A DECLINE IN VALUES BASED UPON RISING RATES AND BUILDING INVENTORY.
This is in the absence of current sales activity in any particular area but is in every report.
Surprisingly we are very very busy and we have had numerous calls asking us to alert lenders when we can clearly define a decline.
I am sure there is pressure to hit numbers but it is up to the appraiser to make it clear that we call it like we see it. In the short term it will cost you a little money but over a career it will yield many more dollars.
We lose a full 60% of our potential business due to an inability to appraise a property in the range needed to make a loan. Also, I should point out that lenders are requiring reviews on many many reports now and for the most part they pass muster. I personally write up about 25% for aggressive practices. In many cases these so called experts who are certified have been in the business for less than 5 years and have no clue what a free and open market is about.(with underwriting guidelines)
To these youngsters it is normal to see 100% financing with a piggyback loan, IO, deferred payments, and no docs as well as no income verification. In their world everything works.
Those of us who have been around awhile know that things do not always work and when the food runs out the dogs turn on each other. Enter the attys.
Many, many of the young brethren will fall on their swords over the next few years.
I hope you plan to continue working for many more years. I’m sure many others like myself who’ve been waiting patiently on the sidelines will need an honest appraiser looking out for them in a couple of years when things become affordable again.
. Also, I should point out that lenders are requiring reviews on many many reports now and for the most part they pass muster.
The appraisal review process is another rackeetering crock of shit.
Most clients will pay nowhere near enough for the expertise necessary to do a proficient and professional review job.
The legit appraisers tell them to go crap in their hat, and so some newbie trainee dimwit who doesn’t know jacksquat gets the assignment.
And if by chance their number doesn’t reconcile with the original appraisal, which means the originator can’t sell the mortgage, you can bet they’ll collapse like a Florida sinkhole once their boss thunders into their cublicle screaming, “YOU WANT US TO LOSE THIS F*CKIN” CLIENT?…YOU GET THAT NUMBER RIGHT OR PACK UP YOUR SHIT AND GET THE HELL OUT…”
Ken Lay and Larry Skillings got nothin’ on the rubber stamp appraisal crowd.
“WE CANNOT SAY WITH ASSURANCE THAT THE MARKET IS FALLING AS THERE AREN’T ENOUGH SALES TO DETERMINE THAT FACT.”
How many sales do you need?
You have to have paired sales. Problem is no resales other than flips.
Nothing in my neighborhood has sold in this calendar year, and one of the houses currently for sale was also listed last year, another is foreclosed and has dropped from $217k to $179k asking price. I’d say until something actually sells it’s really hard to tell what the market is like. Houses in my neighborhood had been selling for ridiculous prices up until last year, then the city started talking about annexation proceedings and the market fell apart.
Who to blame for pressuring appraisers to hit a “needed” value? Follow the money up the line; mortgage brokers to lenders to agencies/securities packagers to wall street to investors. So, mortgage brokers are going to pressure appraisers if they are allowed to. The simple answer is to not allow them to.
At the bank where I work, the employee loan officers cannot choose or contact the appraisers. These independent appraisers are assigned by a central bank department that also monitors the quality of their work. They are paid a generous market rate. Appraisers who do quality work are given regular work by the bank and I have heard that they like the arrangement. I cannot comment on the performance of the loan portfolio except to say that this bank’s delinquencies are a fraction of the state average.
Lenders can control the appraisal process but leave it up to brokers. The advantage to both is more loans approved. A RE market with rapidly increasing prices hides these sins. The disadvantages to the current arrangement will be felt when prices drop.
Sensible- you hit it on the head…so long as the market continues upward one is covered, but once it turns there is a not so clear path to real market value. This is the most difficult time to appraise anything. We are all experts in an ascending market. Not quite so easy once the worm turns. Call the bottom!
I cannot comment on the performance of the loan portfolio except to say that this bank’s delinquencies are a fraction of the state average.
Of course the delinquencies are a fraction, you play by the rules…
for which you have my sincere compliments.
However-how you survive in compettion with the low-lifes is beyond me.