Las Vegas Prices Fall As Lenders ‘Clamp Down’
The Review Journal has the latest on the housing bubble in Las Vegas. “Home prices in Las Vegas continued their downward slide in February, dropping to a median of $309,000 based on 1,787 sales, according to figures from the Greater Las Vegas Association of Realtors.”
“Prices peaked at $312,500 in December and retreated to $310,000 in January. ‘We’re definitely softening, definitely slowing down,’ said Linda Rheinberger, president of the Realtors’ association. ‘We’re catching our breath and getting ready for the next boom.’”
“The number of new listings hitting the market in February declined 6.9 percent to 5,214, though the total number of listings rose 7.2 percent to 17,675.”
“Statistics from the Greater Las Vegas Association of Realtors are based on records from the MLS and do not necessarily account for newly constructed homes sold by local builders or transactions not involving a realtor.”
“‘One thing that I have noticed that is slowing the prices down on housing in the valley is appraisals,’ Las Vegas realtor Curt Liquin said. ‘Appraisers were liberal in the past and now they say the lenders are clamping down, which is making it harder for them to come in at the purchase price.’”
“Liquin said he talked to several appraisers in the past few weeks who told him they’re being pushed by underwriters to tighten their criteria. They’re not allowed to take into consideration builder upgrades that can add $10,000 to $50,000 to the original sales price of a home.”
“‘One (appraiser) told me last week that it didn’t matter what he or I thought the value was, it was the underwriters,’ he said. ‘There were a few that told me they are only being allowed to go back 60 days for comps (comparable sales prices) and cannot go farther than a mile away even if there are not good comps in the area or time frame. You can imagine how this may affect things when some areas are so new and there might not be comps in a mile radius of the property.’”
Thanks to the reader who sent this in.
how about a 10-12 year beather…
‘We’re catching our breath and getting ready for the next boom.’”
Just don’t bother holding it. Oh, and pack a lunch, you’ll be waiting for quite a while.
Better bring scuba gear with high-capacity oxygen tanks…
Being a ex loan officer, ex realtor , ex house insurance adjustor , ex tax consultant , from the good old days , I can tell you this is what starts happening in a credit tighting . The PMI Insurance companies
that insure these high risk loans are putting the clamp down on the underwriters . PMI Insurance companies insure these lower down loans by adding .25 to .75 on top of the regular interest on the loan .(you guys on this blog never talk about this ). Its a additional cost to the borrower .) THe PMI Companies will pay the lender if the note goes into forclosure and the lender has a loss. The Borrower plays the nut . The borrower/buyers can get rid of the insurance once his equity is 20% or more .Rhw PMI companies are going to be the big loosers , but they have been making big money for a long time in this housing boom because of a low amount of loss in a boom . They will look for fraud in a forclosure also to try to squeeze out of paying So all those people that lied on the low down loans who never owner-occupied the properties that go into forclosure might have the lenders coming after them .
PMI’s been bought up quite a bit here. I was under the impression that the PMI exposure is minimal because of the fact that many of the overleveraged (high risk) has 20% equity in their property in the form of a secondary note. nevertheless, I agree they’ll be taking a bath along with the holders of this crap.
How do you get 20% equity if you are a new buyer coming in w/100% I/O ARM financing? I don’t quite get what you are talking about? It is the new buyer who props up the market (until he doesn’t) — who cares whether last year’s I/O-financed 100% leveraged gambler is up or down on his winnings?
Meant 20% equity in the context of avoiding the PMI policy…20/80.
heck, even if someone put down 20% cash doesn’t mean they still have 20% equity but they escaped PMI…I not sure the secondary note holder requires PMI
Most traditional sources of capital try to keep their loan to value at 80% meaning that on a $500,000 mortgage the loan should be no more than $400,000. But if a potential buyer is not bringing $100,000 to closing there are two other ways to qualify for their rates (the more capital that wants your mortgage the lower your rate will be). The first is through insurance (PMI) the second is by borrowing $400,000 from a cheap lender and $100,000 (less any ownership) from a secondary lender. In the first case the insurer guarantees your payments in exchange for a monthly premium. In the second case, the second note is considered junior or subordinated. This means that if you default all the proceeds of the home upto the outstanding mortgage note belong to the first mortgage and any remaining proceeds belong to the second note. The secondary note would carry a higher rate, but because there has been a ton of capital chasing yield the difference between the two rates was quite low.
When a package of loans is sold to an investor, a mortgage insurance company (PMI) is often brought in as the independent, professional underwriter, that puts its stamp of approval on the package, even if all the loans are under 80% LTV. It can also offer blanket insurance on the pool. So, they are very concerned with the quality of individual loans.
Well it’s a pleasant thought “the PMI guys will lose their shirts! But I beleive that the PMI insurers, are only fronts for the Banks / member banks who write these loans. A company may actually exist, but is wholly owned by the bankers..It was a guise to bring in poor folk into housing (to make the Govt. happy) while they fleeced the poor public, for more interest..
I’ve followed this industry for a long time, and while I believe the PMI guys are vulnerable, I think the 80/20 structure has been a lot more popular with no-down buyers recently. So my suspicion is the holders/writers of all those seconds (lots of this from the subprimers) are starting to meet secondary market resistance and THEY are the ones tightening up. Just a hunch, but I’m guessing end investors are starting to realize a lot of the MBS they’re holding is crap and they’re getting nervous.
Excellent point Housing Wizard. During my tenure as an appraiser, there was a tremendous amount of coercion from mortgage broker’s prior to the RE value “boom” to inflate refi values in order for people to get out from PMI. I’m sure the numbers from those 125% of “appraised” value (add another 10/15% from the “liberal” appraisers) “Di-Tech” reports, et, el., went a long ways to obscuring true property values. Now the piper has come to be paid.
BTW-Did you also note the use of the word “liberal” relative to appraisers. Putting this term to print simply demonstrates how entrenched the “number hitters” and “rubber stamp” have become in the profession. The application of “conservative vs. liberal” bias as a denominator of the valuation process is pure BS. In a properly developed appraisal report a property valuation is supported by appropriate data and statistics. It’s the 24 hr. turnaround trainee hack-shop appraisal companies and the coercive, black-mailing mortgage industry crowd who have turned the scope of the work into a valuation free-for-all.
… soon (if not already) to morph into a valuation free-fall.
Right on
Appraiser in San Francisco
And this is how it ends. I’ve believed for a long time that the final collapse would be brought about by tightened lending standards, more so than rising interest rates. Who’s going to buy your $700K townhouse now that Joe $80K engineer can no longer get a loan for that amount? Now you have to sell your townhouse to someone who actually makes a quarter million a year, and those folks are hard to come by (and they don’t live in townhouses).
Couldn’t agree more.
Take away the ‘punch bowl’ and the party’s over.
It is supposed to be the Fed’s job to take away the punch bowl before the party turns into a drunken riot, but this time it seems they decided to let the housing market do the work for them…
Get Stucco,
I’ve likened it to “nickel beer night”. I understand O.K! After 9/11 everything was on the table and in the wake of a stock mkt. crash housing became “any port in a storm”. But letting it go on the way they did w/all the cash out re-fi’s drove the economy qtr. after qtr. as affordabilty slipped away was well, nickel beer night.
I’ve tried, but the PMI issue is not well understood. I see them charging borrowers for lender protection, but I think they are not going to much of a backstop when the music stops en masse.
The reason it doesn’t get the “air play” here is b/c SoCalMortGuy covers this topic to death. We’re not oblivious.
“The borrower/buyers can get rid of the insurance once his equity is 20% or more.”
This shows yet another explanation for the mystery of “where have all the buyers gone?”. Once home prices stop going vertically up and either flatten out or start to drop, PMI looks like a much more insurance product to anyone coming in with less than 20% down. The probability of making future claims payments looks a lot higher to an insurer when the degree to which buyers are underwater is steadily increasing, and conversely, the prospect of ever reaching the 80% LTV ratio goes from high to miniscule.
PMI insurers reflect the sudden increase in their perceived risk as a premium increase, and the marginal buyer who would have been crazy enough to buy at astronomically high prices is suddenly priced out. Luckily prices appear to be getting more affordable in Las Vegas and many other bubble markets, so perhaps the higher financing costs will not price too many out
clamped down ? you can still get an io/arm/neg am BS loan - It’s BUSH’s fault !
sure, I don’t see any signs of real credit tightening yet. A bit higher mortgage rates and more realistic appraisals will not kill this (worldwide) housing/credit boom, it will only slow it or cause a temporary stop.
I’m still seeing many things that are similar to the slowdown in Europe around 2001 - the high end declined by about 30%, inventory increased strongly but except for maybe a few months the average sales prices kept slowly increasing. Some EU countries are already off to the races again by now, there has never been any serious drop in the averages (obviously because of historically low interest rates, but that could happen in the US again as well in 1-2 years).
I agree! Does anyone here think Dubya can keep the music playing until after the November elections?
All he has to do is keep it playing till the democrats get into power…then it will be THEIR fault.
Maybe they’re onto the scam, and will put forth more unelectable weenies, so the repubs trap springs on the repubs instead.
I must be getting paranoid….thinking politicans would use fiscal policy for political maneuvering.
“Prices peaked at $312,500 in December and retreated to $310,000 in January. ‘We’re definitely softening, definitely slowing down,’ said Linda Rheinberger, president of the Realtors’ association. ‘We’re catching our breath and getting ready for the next boom.’”
Right just like that “breather” just like that “breather” the Nasdaq took right after that boom.
You are correct flat. It is entirely my fault just like when I talked god into flooding New Orleans to satisfy my agenda.
No, that was Pat Robertson!??!??
God flooded Pat Robertson?
LMAO
Seems like a lot of the subprime lenders have clamped down too. They don’t seem as agressive as they once were, Maybe that Ameriquest settlement scared them good… Or there are more settlements and class action lawsuits in the pipeline…?
I would be surprised if these investors in the secondary market
bought these high risk loans without PMI INSURANCE . The PMI companies underwrite the loans on top of the lender underwriter . If the PMI company doesnt go on the loan sometimes the Lender carries the note until it becomes a “seasoned loan “, meaning the buyer was a good pay for 24 months etc. and has proven themselves therefore secondary market will now buy the block of seasoned loans . It will be different with a adjustable becoming seasoned . I just thought I would add this to the discussions
Its a game of musical chairs. When the music stops, who will be left without a chair?
sunny!
Answer: All of us.!
In a credit tighting people end up putting more money down and the appraisals are tighter . I dont understand why they didnt start making people put more money down in 2005 . When appraisals are going up that fast , thats usually what they use to do in the good old days . Let the borrowers take the risk of appraisals going up , not the lender or even the PMI companies .
I think it was because there are so many lenders out there who are in on the feeding frenzy… all scrambling to get as much of the pie as they feel their stomach can hold. To the lenders it’s all fine and dandy as the values are increasing. They know what the reason for those increases is…. the same stuff we all discuss on this blog.
Don’t forget: the fact that most of these lenders no longer hold a lot of the paper they originate means that their emphasis and main area of concern should be on origination, not servicing. That is what has led to this situation. The buyers on the secondary market are (finally) becoming wary, the originators feel increased pressure to not only generate more profitable loans (larger spread) but also higher quality loans (less risk, hence higher underwriting standards).
Why all this so late in the day? Don’t forget that mortgage bankers and those who trade on the secondary market pay actuaries a good heap of dosh to determine when it’s financially more beneficial to turn a blind eye and originate/buy all the loans you can get your hands on and when it’s best to cut back. We’ve reached the transition point from the former to latter.
Glad to hear that actuaries had a hand in creating the looming disaster. Their profession is already under a black cloud for destroying the UK and USA private pension systems. The feces looks poised to hit the rotating blades with respect to their role in the housing crash which seems to be underway. Good job, eggheads!
Wait Wait… You mean appraisers can only use comps that are less than 60 days old? They can only use comps with in 1 mile of the home in question? They are not allowed increase my homes value 20K for that 3K i just spent on stainless steel appliances? What about that $200 worth of paint I just threw up? Thats not going to get me an extra $8,000 ? and those granite counter tops and new cabinets i put in? surely those should net me another $20-30K on the value of my investment?
I think thats the mentality of some of these investors here in Florida and I am sure its the same story in Las Vegas (they have some really bad areas downtown), they bought crappy houses in bad neighborhoods, yeah you dumped thousands of dollars in upgrades and renovations but unfortunately no one wants to live next door to a strip club and/or crack house no matter how nice the granite counter tops look. Better invest some more in security before someone comes in and steals those pretty new appliances & rips the granite counter tops right out of the kitchen….
hehehe…Hey Mr. Homeowner, those $20k of stainless steel appliances are known as fixtures…not real property. Sorry-no contributory value here…
But what the f*ck do I know…I’m only an appraiser.
Stupid “FB’ers”
Even rental units in Germany normally come without any fixtures - you have to bring in your own kitchen appliances and even the cabinets themselves. Built-in kitchens are unusual enough to merit mention in the ads.
Which means you truly are just buying the house or apartment. You are then free to spend 1000 Euro on Ikea’ cheapest kitchenette or 10k+ Euro on your granite dream. But your mortgage lender will not finance it.
German house prices have pretty much been flat the past 10 years, according to The Economist, even though it’s been crazy over in the Netherlands and Britain.
“no one wants to live next door to a strip club ”
Speak for yourself!
http://realestate.msn.com/buying/Articlenewhome.aspx?cp-documentid=338165
Check out this article.
I’ve been keeping tabs on foreclosures on RealtyTrac. Great website. I intend on tracking the foreclosure trends in my city over the next year or two in preparation for snagging a prime piece of real estate in a fire sale.
Some people may already be aware of this site but I found it interesting to view some of the properties. (www.prudentialproperties.com//start.aspx?VIP=Yahoo!+IDX). They show a total listings for Arizona at 56,332.
one mile limit is pretty restrictive and can only work in high density urban areas.
Off topic check out this RE seller situation, may be more common in future months
http://tinyurl.com/zlkxd
$6000? Put it on yer credit cards, Bucky! Oh, wait, they’re probably maxed out…
I thought this might lighten things up but does remind me of the housing bubble.
A plane was taking off from New York. After it reached a comfortable cruising altitude, the captain made an announcement over the intercom, “Ladies and gentlemen, this is your captain speaking. Welcome to Flight Number 293, nonstop from New York to Seattle. The weather ahead is good and, therefore, we should have a smooth and uneventful flight. Now sit back and relax… OH, MY GOD!”
Silence followed, and after a few minutes, the captain came back on the intercom and said, “Ladies and Gentlemen, I am so sorry if I scared you earlier. While I was talking to you, the flight attendant accidentally spilled a cup of hot coffee in my lap. You should see the front of my pants!”
A passenger in Coach yelled, “That’s nothing. You should see the back of mine.”
The pilot reminds me of the head of the NBR. the coffee reminds me of him just realizing the bubble has popped and the passenger your local realtor who though shook up now has his rose colored glasses back on.
In a tighting money market I have seen underwriters just slash appraisals 10% across the board regardless of what the appraiser comes in at . This forces the buyer to come in with more money down to get the loan . Sometimes the sellers lowers the price if the sale is subject to the appraisal , sometimes the borrower comes in with the additional money . You will be seeing alot of this sort of thing starting to happen now .
When I was in the lending business Appraisers use to laugh at cheap trick improvements like paint and new counter-tops . It was how many bedrooms and bathrooms do you have and whats the square footage . If you added a pool you got 25 cent back on the dollar in the appraisal . In a going up market we would let the first borrowers put down more money until the new values were established in the upward movement . This was the good old day sort of appraisals that were designed to protect the lender . How this got out of wack in recent years I will never know .
Just plain old greed along with lax lending standards.
in my country a pool (or the cost of a nice garden) is fully tax-deductible (meaning you pay just 50% of the real cost) and appraisers often add 75-100% of the cost to the value of the home. easy money
The media doesn’t do anything to keep reality in check either. I was bemused watching HGTV’a “Flip this House” last week. They would constantly show the $$$ return on each improvement, i.e. “New $1000 Garage door installed, value added to home $5000!”, “New Counter-top’s $3000, value added to home $10,000!”…etc. It didn’t make any sense to me. This particular episode had the flippers setting a ridiculous price on the home after their improvements (looking for an “ego” buyer, willing to over pay for the house). Needless to say, the show ended without the home being sold.
These shows do serve a purpose: If anyone is paying attention, they reveal how much the flipper is trying to rip you off.
What I mean by the underwriter slashing the appraisal is that the underwriter just requires more money down which is saying the appraised value isnt established enough yet .
Borrowers better start saving money because in a tight money market the bottom line is more money down requirements from the lenders
My war chest is steadily growing…
I am hoping this gets bad enough where I dont have to worry about having a loan.
I fly into vegas a few times a year (mostly for trade shows–I’ll be out at NAB in a couple of months.)
I’m always amazed at the sprawl. There’s so much land there that they can keep building houses farther and farther out forever…or until they meet the LA sprawl.
Combine that with the water problem, etc, and I can’t imagine how and why house prices there would ever rise. There’s a potentially infinite supply of houses and a finite amount of water. I think LV will crash harder than most areas.
It may be the lack of water that saves LV’s rear end (in the long run) by restricting future building…..
Restricting development is absolutely out of the question. Las Vegas is run by the casinos and developers, period. The city council has rejected every attempt at ’smart growth’ restrictions. Mayor Oscar Goodman is aggressively and loudly proclaiming to anyone who will listen that LV is wide open for growth.
Does anyone know what fraction of the land around Las Vegas is Bureau of Land Management (BLM) land, and not available for building?
I would not bet the ranch on it but I believe most of it is BLM….I do recall that several large developers may have traded some land that the BLM wanted for land around the Vegas area…
BLM holds regular land auctions. The last few have been staggeringly profitable. The land is sold at phenomonally high prices, even though much of it is marginal for building and requires major improvement (steeply sloping, etc.) Even large blocks sell for hundreds of thousands of dollars per acre. Only the big players can buy in to this game. The price is so high that they are now building in Kingman, AZ, an hour out of Vegas, across the dam.
Didn’t I have a bet with somebody (Vegas Viewer??) about prices going down 10% by April? Here it is March, and prices are down about 1%.
Someone is going to owe me dinner.
It wasnt me.
I did read it though.
This blog has gotten too big, I think they missed your post, a couple commented on you absence. I’d say give it four weeks and they should get you a preimuim meal, not a Big Mac. But in four weeks, I think they will be right on.
Dead Yen carry trade HO!
It’s funny, I used to be obsessed with bubble blogs. Now that I’m no longer racking up equity, I’m totally bored with the whole thing. I have to force myself to visit once per day, and then I just skim the headlines.
All this was way more fun last year. I wonder what’s going to be the “next big thing”.
No reason. Nothing to offer but rhetoric. Classic Realtorism.
The comments are getting so absurd that It’s becoming difficlut to respond. But I will anyway!
This is Linda Rheinberger a month ago in the LVRJ…this is when she said David Lereah told her to look for an investment propery in Las Vegas.
Feb. 08, 2006
Home prices down in LV
Report shows median, sales dip in January
http://tinyurl.com/j96sa
Linda Rheinberger, president of the Greater Las Vegas Realtors Association, said December was an unusually active month for sales and people may have “flopped months.”
“Look at days on the market. Sixty percent (of homes) sold in less than 60 days. That’s what I look at as telling,” she said. “Maybe we need more listings because they’re still going.”
Rheinberger said she attended a regional conference for Realtors in Santa Fe, N.M., and Las Vegas was hailed as the “poster child” for the Rocky Mountain region.
“They’re just all over Nevada and Las Vegas about how strong our market is,” she said. “The true experts are bullish for ‘06. So we’re not going to play into somebody’s hands that they want to make a trend of one month when we’re so strong.”
She said David Lereah, chief economist for the National Association of Realtors, told her to look for an investment property for him in Las Vegas.
Remember Lereah’s book about the RE boom till the end of the decade?
Maybe Lereah was returning the favor because she actually reviewed it on May 09, 2005 on Amazon. 5 stars no less! But unfortunatly 0 of 14 people found her review helpfull…how sad.
Reviews Written by
Linda Rheinberger
(REAL NAME)
Reviewer Rank: 2113198 Page: 1
Are You Missing the Real Estate Boom? : The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade - And How to Profit From Them
by David Lereah
Edition: Hardcover
Price: $12.97
Availability: Usually ships in 24 hours
0 of 14 people found the following review helpful:
(5 stars out of 5)
“Insightful, May 9, 2005
This book makes perfect sense It does not allow thinking individuals to become complacent in how they view real estate investments for the future.”
Review Written by
Linda Rheinberger
http://tinyurl.com/fbrro
That’s like your Mom singularly beeming about your screeching trumpet skills while every living creature within a 3 mile radius is running madly for the hills.
Linda Rheinberger should be warned about hoping for something;
“Maybe we need more listings because they’re still going.”
because you might get it;
the total number of listings rose 7.2 percent to 17,675
These mortgage companies generally sell to the secondary market . They make their money on the points . Some lenders make their money on servicing the notes that they sell to the secondary market but they dont own the notes anymore . The biggest problem will be the notes written in the last year and 1/2 if the market takes a correction . Did the credit market get so loose that lenders were giving low down loans to non-owner occupied investors? If you had lendings doing this , they are to blame for losses . I guess I have been out of the lending business to long because investors always had to put more down at a higher rate and points . I cant believe that those principles would of been violated and investors in the secondary market would of bought those loans . Something fishie is going on here .
Total RE for sale in ORange County, CA just passed the 17,000 mark - 17,058 as shown on OCREFinder.com - an increase from 11,720 on January 3rd.
What’s interesting to watch is that the majority of new home listings are in the $ 1 million level. A local realtor told me yesterday that “everyone wants a million for their house”.
With lenders “clamping down” I’m wondering who is going to be buying these homes? Could get ugly here in the OC!
Maybe the Chinese bought all those high risk loans . Investors usually arent this dumb in the secondary market . What your telling me on these housing blogs is that everybody lost their marbles for the last three years and bought swamp land loans ?
It’s called “reaching for yield.” One of the major things the Fed’s ridiculously easy monetary policy caused was a hunt for higher yielding investments. With short rates at 1% and 30-year bonds yielding 3.5%-4% many months ago, investors the world over started paying up for higher yielding investments. All the “inflation” the Feds kept looking for wasn’t in widget prices. It was in asset prices. Investors (pension funds, mutual funds, even foreign central banks in more recent months) came in and bid up the price of REITS, junk bonds, corporate bonds, mortgage-backed securities, subprime mortgage pools … you name it … in search of investmnts that yielded more than US Treasuries. They didn’t care about credit risk. They needed to generate higher yields.
Now, you’ve got risk-free rates rising on both the short and long end of the yield curve. And you’ve got investors FINALLY looking at thier portfolios and saying “Hmm. Maybe a few of these 100% LTV, no-doc, interest-only, 60% DTI, borrowers might default.” So they’re starting to unload their crap mortgage bonds. And they’re starting to buy fewer new bonds. That’s slowly drying up the pool of sucker money/investors these subprimers are counting on to unload their crap loans. Faced with the possibility they may have to portfolio more crap, and or carry this paper for longer than they expected, they’re starting to tighten up standards. But as far as I’m concerned, it’s WAAAAAYYYY too late for that.
At least, that’s my two cents.
Maybe the Chinese bought all those high risk loans
That’s what I’m thinking. China is building their economy. We are helping them. Even if they lose some money, it’s like an investment in their future. They are building an economic powerhouse and we (America) will be left with a huge debt. If they lose a few real dollars, so what?
Gosh, I remember when appraisals meant something. When a home went into escrow, all parties waited anxiously to see if the appraisal would come in. Often, it didn’t, and that meant the deal usually fell apart. House goes back on the market. Only to fetch even less next time.
The lucky sellers whose home appraised in the first couple weeks of escrow, were then usually hit with “review appraisals” right at the end of escrow. Often, the price of the home had dropped by then, blowing the deal sky high, just as we were ready to close.
All participants have been suffering from some serious amnesia to not think any of this could come around again.
Thank goodness they aren’t holding their breath till the next boom. We would have a bunch of dead realtors lying around.
Call me one of those dumb investors I guess. My 401k is exposed to MBS securites. I have nearly all of my funds in the “fixed value” money market fund with Fidelity. It purchases MBS securities. The problem is, it is really the “safest” option right now, and i dont really want to pay penalties to pull out the funds. Quite frankly, Im sure there are many like me that are exposed to these loans and do not even know it. Pensions, 401k’s etc are full of them.
It’s true. The whole 401k program just serves to funnel savings into investment vehicles that are not chosen by the invester. It’s like a communist election. They pick the candidates and then let you vote.
My plan’s MM fund is FMPXX, which has at least has unloaded all its Fannie Mae paper. I’ve been bugging my employer to add the Fidelity Treasury-only fund, since it’s right there in the same family. I’d suggest sending them e-mails expressing your concerns, and printing them out and putting them somewhere safe. Probably won’t do much good if TSHTF, but it’s better than nothing.
A tight money market will be a good thing in some respects . It will stop the flipper/investors and the real supply and demand numbers will take over . Flippers trying to make money on condo conversions in 2005 was just plain foolhardy . Alot of lenders wont lend in a project unless the owner occupied ratio is 75% to 25% renter or even better than that .
Comment to stockmonkey2000
Maybe you have a balanced 401 k in which a small % of those loans got in the package . After the PMI companies pay off might not be a potential for loss
I think we can all see that in one way or another we are all tied into the housing market . A soft landing would be better for all . I cant believe that they are still showing those FLIPPER programs on TV . How outdated could you be . They aired a re-run the other day that was over a year old . They need to put a disclaimer at the beginning of the program stating that “this channel does not endorse that these result are obtainable in current market trends .
Back in the old days ,( about 20 years ago ) a flipper was a guy who bought a fixer upper usually about 20 to 25% under market , fixed it up and made a small profit margin by bringing it up to the value of the current neighborhood value . These new age flippers dont buy way under market to warrent the fix up costs . They rely on appreciation .
You’re so right about that, Wizard. I bought my 1st house in ‘79…it was a fixer ($39K in Berkeley, CA), but that’s what we were looking for. We were dirt poor with a 1 year old. As it turned out, we lived in an area where there was a redevelopment program going on so we qualified for a 3% loan to rehab the place. A lucky break for us. Those were the days.
BayQT~
Flippers from several years ago actually would make a neighborhood better by fixing an eyesore property. It took some skill and business sense to do that. Flippers of the last few years are nothing but scum that have contributed to this insane market. I wish them nothing but to be thrown to the wolves. Same for the realtors, mortgage co, etc that also helped.
Maybe the patrons or workers of a strip club would want to live next to it. They build houses next to a strip clubs? Aren’t they all in the seedy downtown areas?
Vegas just a few yrs ago had a lot of signs saying housing for $100K or so. It must be insane there now. Same for Reno. Oh, I forgot, the broke baby boomers are going to save them with their empty wallets.
Exactly! When we began work on the house, so many of our neighbors passed by and commented on the great job we were doing. It *was* an eyesore when we bought it, but it was the pride of the block when we finished.
BayQT~
Call me one of those dumb investors I guess. My 401k is exposed to MBS securites. I have nearly all of my funds in the “fixed value” money market fund with Fidelity. It purchases MBS securities. The problem is, it is really the “safest” option right now, and i dont really want to pay penalties to pull out the funds. Quite frankly, Im sure there are many like me that are exposed to these loans and do not even know it. Pensions, 401k’s etc are full of them.
Echo that for me, just replace “Fidelity” with “Vanguard”. We have to hope that our exposure is minimal, and/or that the MBS’ being bought by our “Money Market Funds” are not the exotic paper (I actually think this is the case). I’d like to think that the exotic paper is mostly being bought by foreign investors who have run out of places to park their money and have to gobble up any investment they can, and hedge funds.
Had to stop my friend from buying a time-share in Vega on a CONDO 6 months ago . They wanted 30 to 50 thousand to buy two weeks a year in this condo that didnt even have a kitchen , The sales pitch was ” cost to get a room in Vegas will go up “. Since when cant someone get a room in Vegas if they book enough in time . I think this clever Condo builder felt this was his only way out . According to my friend people were buying into this time-share . Made the price of the condo go to over a million for 300 square feet . Now 30 owners of one condo will be feeling the pain . I usually get a room for 50 bucks or under . In addition they were offering financing on the time-share . Remember the time shares back in the 7o”s and 80’s in Hawaii anyone . 20 years ago I had someone offer me a time-share for free , but in small print I had to pay 700 a month in homeowners costs . I passed . Buyer beware of desperate sellers that resort to time-shares to get out of their loss . Maybe I will get a bunch of free dinners going to the time-share marketing programs that will spring up 6 months from now all over the place .
I can get a room at Mandalay Bay anytime except for New Year’s week for $75/night. Can’t beat that.
Why put $30-50K down and monthly payment for just two weeks/year?
That was the joke of the whole thing , but, my friend said people were buying them .