May 2, 2007

Everybody Rode The Wave Of Real Estate

The Bradenton Herald reports from Florida. “Lenders have filed 573 foreclosure actions in Manatee County Circuit Court through the first four months of 2007, including a record 156 in April alone, according to the Manatee County Clerk of Court’s Office. At that pace, the county’s annual foreclosure-filing record, 901, set in 2002, could fall as early as mid-July.”

“‘We used to get, like, five (foreclosures) a day; Now it’s sometimes as many as 15 a day,’ court clerk Very Reyna said. ‘It’s set monthly records already this year, so a record year, I wouldn’t be surprised if that happens.’”

“The number of Lee County homes in foreclosure as of Monday is nearly 1,900 percent higher than at the same time last year, and the numbers in six other counties, including Sarasota, have more than quadrupled. Statewide, the number of homes in foreclosure rose to more than 49,000 as of Monday.”

“‘It’s bad, it really is, and I think it’s going to get worse,’ said Ryan Snyder, of Snyder Law Group, which specializes in real estate law and works with local banks and at-risk homeowners.”

“‘It was these specialty kinds of loans that did the most harm,’ Snyder said. ‘Even the experienced banks were taking loans that, in hindsight, they know they shouldn’t have. The bottom line is almost everyone is partially guilty. Everybody rode the wave of real estate.’”

“‘I don’t know how people are surviving,’ Snyder said. ‘Some homeowners are finding themselves in properties that are appraised at $100,000 to $200,000 less than what they owe on it.’”

Bloomberg reports from Florida. “The glut of U.S. properties for sale is about to hit the rental market. A record number of homeowners who can’t sell condominiums and houses are competing for tenants.”

“Anthony De Silva said he’s not happy to become a landlord. He bought a two-bedroom condominium on the ocean in Hollywood, Florida, 18 months ago expecting to sell at a $100,000 profit. Instead, he’s looking for tenants at $1,700 a month.”

“‘I don’t want to sell for less than I paid, so my only choice is to rent it,’ said De Silva.”

“‘The market is flooded with condominiums,’ said De Silva, who has yet to find a tenant for his 1,200-square-foot property in Florida. ‘I didn’t want to be a landlord, but I had to bite the bullet so I can afford to wait for a real estate recovery.’”

“‘I’m hoping the good times for real estate will be back in next year’s spring market,’ he said.”

The Record. “In an extensive interview last week with The Record, Hovanian CEO Ara Hovnanian talked about his company, the housing market and the home-building industry. Q. You talked about Fort Myers, Florida, and I know that really slammed your most recent earnings report. Is that market still the worst one for you?”

“A: ‘That’s a very tough marketplace. It just got very overheated with investors, who helped drive prices artificially high, and now they have taken their prior purchases and listed them to sell. They’ve cut back demand and increased supply. So prices have dropped dramatically in that marketplace.’”

The Fayetteville Observer from North Carolina. “Shirlyn Kimble wants out. It wasn’t long ago that her neighborhood in west Fayetteville thrived with homeowners.”

“Kimble did everything right: She paid her mortgage, she kept up her home. Yet she’s paying the price for Cumberland County’s thousands of foreclosures.”

“A Fayetteville Observer investigation found dozens of middle-class neighborhoods where high concentrations of foreclosures have diluted property values, driven off homeowners and, according to residents, invited crime.”

“In three dozen neighborhoods, at least one in 10 homes fell into foreclosure over the five years, the analysis found.”

“Trouble started when the original buyers moved away but hung onto their homes to rent them out, Kimble said. Subsequent tenants damaged the homes or skipped out on rent, she said. At least five houses on her street have sold at foreclosure auctions, the Observer analysis shows.”

“‘I know one house on this street, (the owner) just left,’ she said. ‘It wasn’t they couldn’t afford it. They just moved and let it go into foreclosure.’”

The Sun News from South Carolina. “Homes are staying on the market longer and real estate sales are falling more on the Grand Strand than in any other area of the state. The entire coast, however, is seeing falling sales - and Myrtle Beach is in the lead.”

“Home and condo sales tumbled 31 percent on the Strand, followed by a 20 percent drop in Beaufort, a 16 percent drop in Hilton Head and a 16 percent drop in Charleston, according to the S.C. Association of Realtors.”

“‘This is the year that we catch our breath,’ said Nick Kremydas, CEO for the state Realtors. ‘By the end of the year, we’ll be close to the 2006 level [of sales]. 2008 will be a better year.’”

“Local agent Martina Haire said she’d recently been dropped by Allstate for a single-family home policy she’s had for at least 12 years. So far, the only quote she’s received for new insurance was $400 higher from State Farm.”

“And she’s seeing the problems with her clients too. Some are considering selling and moving inland. Others are taking second jobs to cover the cost, she said.”

“While insurance is contributing to the coastal real estate market drop, the meltdown in the subprime lending industry is also a factor.”

“‘It’s starting to affect, particularly, first-time home buyers. In some ways the shake-out of the industry is a good thing, but in other ways it’s making it harder for families to have access to other lending products,’ Kremydas said.”




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146 Comments »

Comment by Ben Jones
2007-05-02 06:40:23

‘An abandoned condominium project is getting demolished, a relief for neighbors who complained about what they said was an eyesore and a safety hazard. Sitting next to Town Hall on Yacht Club Drive and Sleepy Oaks Road, the beginnings of the nine-unit condominium building are being cleared out.’

‘Work stalled with only a concrete parking garage and protruding rebar to show.’

‘Orlando-based Eola Capital said Tuesday it has agreed to buy a 17-building portfolio from Jacksonville’s St. Joe Co. for $383 million. Company spokesman Jerry Ray said the commercial-building sales don’t represent any change in strategy. ‘We just feel it’s a good time to sell,’ he said.’

Comment by Crapburner
2007-05-02 07:10:28

Love how the story ends by the neighbors glad to see maybe nice houses built there….are the neighbors a bit too optimistic?

In Florida with this market, they gotta be dreamin’….more like weeds, spiders, and ‘gators will grow there……

A couple more big hurricanes and direct hits and a lot of that coastal real estate is toast.

Comment by ozajh
2007-05-02 07:45:12

Everybody rode the wave of Real Estate

Some flipped, and some got flipped.

http://www.sfgate.com/cgi-bin/object/article?o=4&f=/c/a/2006/02/08/SPGMMH4RCJ1.DTL

Comment by ozajh
2007-05-02 07:53:22

Actually this is more topical, in today’s paper in fact.

http://www.news.com.au/dailytelegraph/gallery/0,22056,5022807-5010140,00.html

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Comment by aladinsane
2007-05-02 08:37:36

How about a little Ventures?

http://www.youtube.com/watch?v=6Wjzom-WNXE

 
Comment by aladinsane
2007-05-02 08:53:55
 
Comment by Chip
2007-05-02 12:25:00

That’s one big “10-foot” wave.

 
 
 
Comment by Jill
2007-05-02 09:58:26

The vacant land is in an area that’s otherwise 99% built out, and has a pretty decent location. If they can price the homes under $350K-$300K, which is midlevel for the area, they’ll sell in a timely manner even with current market conditions, since new single family construction in that area is pretty much non-existant.

 
 
 
Comment by SoBay
2007-05-02 06:51:07

“Anthony De Silva said he’s not happy to become a landlord. He bought a two-bedroom condominium on the ocean in Hollywood, Florida, 18 months ago expecting to sell at a $100,000 profit. Instead, he’s looking for tenants at $1,700 a month.”

“‘I don’t want to sell for less than I paid, so my only choice is to rent it,’ said De Silva.”

Anthony, let us know how successful you are at getting a renter to pay $1700.0 per month.

Comment by Roger H
2007-05-02 07:12:39

Most renters are use to renting a 2 bedroom apt for less than $1000 a month. The market simply does not exist for the sheer number of high priced rentals that are coming on-line. So, these investors will simply have to drop their prices to get tentants.

What will be interesting is to see all these young 20-yr old college students living in posh upscale condos. It sure beats the digs I lived in when I was in college.

Comment by Cobradriver
2007-05-02 07:27:24

Roger H,

What is even better is I just rented my last 2bd/1ba 2100 sq ft
apartment/townhouse for 650.00 a month in Cape Coral. My dad and mom bought these places 10-15 years ago and they are paid for. I have the ability to undercut every fb and still have positive cash flow for the parents. We are currently waiting for the per unit cost to fall to around 35-50k. At the high point of this disaster we sold 1 duplex for 300k !!!!! There is no way you can cash flow somehthin like that…but i guess thats why we sold and other were a buyin…

Chris

Waiting to double (or triple) our rentals !!!!

Comment by Bill in Carolina
2007-05-02 07:40:49

There ya go, Cobra. Sell when everyone else is buying, and buy when everyone else is selling. “Everyone” is not selling yet, but they soon will be.

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Comment by audet
2007-05-02 07:44:57

DeSilve says he’s a landlord - not yet buddy! You still have to rent the place. But you want $1700 and the market says $1000. Mr. DeSilva, you will be a foreclosed speculator before you are a landlord methinks.

Comment by Domi
2007-05-02 08:41:46

The next big advertisement will be in Rent Market.

!!Come and Rent out these big luxurious townhomes and houses. Its easy. Its Free.*!!

*Renter finance loans based on credit approval. Unlimited access to funds. Borrow as much as you could to cover your landlord expenses to prevent foreclousure proceedings and eviction.

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Comment by John Law(Duke of Arkansas)
2007-05-02 07:23:02

so $1,700/per month is his expenses, right?

Comment by bob
2007-05-02 07:51:05

you must have esp

 
Comment by Cocoa Beach
2007-05-02 09:18:19

Not even close. Probably more like $3000+ for 1200 sq.ft. on the ocean. Just another form of denial. A couple grand a month negative isn’t like selling for less than purchase price. He won’t have to tell his friends he sold for a loss…..yet.

 
 
Comment by Ken Best
2007-05-02 11:53:07

“‘I’m hoping the good times for real estate will be back in next year’s spring market,’ he said.”

Silva, it’s going to be 10 years down cycle, and your loan is resetting now.
Know anything about supply/demand, speculations, subprimes, and frauds?

 
 
Comment by chicagobubbleblog
2007-05-02 06:59:26

“‘The market is flooded with condominiums,’ said De Silva, who has yet to find a tenant for his 1,200-square-foot property in Florida.

I thought 1,000,000 people were moving to Florida every 30 seconds?!

Comment by Blackbox
2007-05-02 07:24:45

The problem is 1,000,001 are moving out every 30 seconds!
Geez

 
Comment by Darrell_in_PHX
2007-05-02 07:26:37

Reports are cicrulating here in PHX that 9,000 CA driver’s licenses a month are being swapped for AZ ones.

Oddly, vacancy rates are up and homesales way down.

On another note, two other stories. Average rent is now over $800 a month, however, individual apartment complexes are feeling preasure to drop rates. Have the local reporters bothered to add 1 + 1 and get 2? Nope. No stories about how all the expensive houses that came off the market last year are now fighting over each other for tenants. People are getting to move from a small apartment to a big house for very little extra money.

How long until those forced into becoming landlords that took thier place off the market to rent it at a loss, either go into foreclosure or wake up and realize the market ain’t NEVER coming back?

I guess it is what is called a “freeroll” in poker. Since they came in with $0 down, and loss will be purely a fictioal loss. He could have made $100K. Now he’s “fictionally” upside down. However, he can always walk away with nothing more than a foreclosure on his credit report.

So, renting it out is just another freeroll. Maybe the value will come back(maybe monkeys will fly out his arse). Maybe he’ll get to pocket a few months rent before the foreclosure. He only really takes a loss if he actually makes payments.

Comment by auger-inn
2007-05-02 07:40:22

My guess is that the idiots that claim residency in AZ when filing out the loan documents (owner-occupied) on their specuvesment have learned that they are guilty of fraud. I suspect a fair amount of these new “licensees” are trying to become legitimate residents in the event of foreclosure. I don’t think they will be successful in the event a lender actually attempts to uncover this type of fraud though.It is my expectation that all this owner-occupied fraud will be swept under the table.

Comment by hd74man
2007-05-02 08:36:50

Good point, AI.

Spoken like a true HBBlogger cynic.

LMAO

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Comment by CashOnlyPlease
2007-05-02 07:43:46

Not quite a freeroll. The banks can sue for the difference of what the house sells for versus the mortgage and fees.

Comment by Darrell_in_PHX
2007-05-02 07:50:01

And how do you get blood from a turnip?

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Comment by Housing Wizard
2007-05-02 08:13:35

You attach wages for years and years or you seek out the 100k cash -back that the borrower got .

 
Comment by Chip
2007-05-02 12:46:44

“You attach wages for years and years or you seek out the 100k cash -back that the borrower got.”

Yup. Ya did the crime, ya do the time.

 
 
Comment by implosion
2007-05-02 18:17:32

What are the foreclosure laws in AZ? Like CA?

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Comment by Neil
2007-05-02 07:05:47

“‘This is the year that we catch our breath,’ said Nick Kremydas, CEO for the state Realtors. ‘By the end of the year, we’ll be close to the 2006 level [of sales]. 2008 will be a better year.’”

I actually like the fact they keep calling false bottoms… by the time we really do approach the real bottom, no one will listen. ;)

2006 sales in 2007? Nyet. The best you can hope for at the end of the year is a sales rate (units) of 50% of 2004. People freeze up when they realize there are only falling knives to catch.

Got popcorn?
Neil

Comment by GH
2007-05-02 07:34:10

I have to wonder about these people. There is no logical reason or even glimmer of an indication that prices have bottomed out and are about to rise, yet …..

I would say looking over the multitude of data, things have only just tipped over the peak which was 2005 for most areas and are accelerating downhill fast.

Look at any metric:
1. Inventory soaring across the country
2. Foreclosures increasing at a geometric rate
3. Credit standards tightening by the day
4. Record price to income ratios in many bubble areas
5. Rents often less than half Mortgage/Taxes etc
6. Real Estate driven unemployment climbing

So in what world are prices now poised to increase?

Comment by Darrell_in_PHX
2007-05-02 07:42:24

Been a while since my econ class.

What happens when supply is rising fast, demand is falling fast, and prices are well above fundamental support levels????

Dang, if only I could remember. Does it rhyme with POP but start with “Dr”?? Hmmmm… I seem to remember something similar to “like a rock”.

Comment by rellimgerg
2007-05-02 08:01:05

Nice…

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Comment by jckirlan
2007-05-02 10:30:58

lol

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Comment by James
2007-05-02 08:38:49

They only realize they are falling knives when they see the pile of fingers on the floor. Lots of blood left to be spilled.

 
 
Comment by Arwen U.
2007-05-02 07:05:57

‘I didn’t want to be a landlord, but I had to bite the bullet so I can afford to wait for a real estate recovery.’” . . . “‘I’m hoping the good times for real estate will be back in next year’s spring market,’ he said.”
This is particularly the kind of landlord you should warn every renter you know to stay away from. I have a story about something that happened to me this weekend with my friend’s neighbor. The situation turns my stomach. The gist of what I posted on my blog:

Yesterday I was doing research for this blog, [looking up upcoming foreclosure auctions] and discovered that a house on a friend’s street was going up for auction on May 4th. . . . . Sadly, the renter there (nice lady) was not even informed this was going to occur. . . . Thankfully, we were able to make the tenant aware of the situation and offer assistance. In Fairfax County, the buyer has a mere 15 days to close. If no one buys the property, the bank will reposess it and list it through a real estate agency.

Comment by auger-inn
2007-05-02 07:23:25

Perhaps someone could start a pay site that emails subscribers when the property they are renting goes Les Pendens, NOD or any other public recording? Seems like a business opportunity awaits some enterprising person. I know if I was a renter I’d pay for an automatic update on the place I was renting.

Comment by MGNYC
2007-05-02 08:37:09

i just rented a place and i checked the house and guess what it is owned by a late 50’s widow who bought it in 1983 and it is completely paid off with no heloc’s or any other $$ extractions and she even owns another residence a few miles away that is paid off. smart lady who i will be glad to rent from.
eurpean woman with a brain and not a greedy one either very fair rental price on a very well kept home

 
 
Comment by aNYCdj
2007-05-02 07:36:26

I hope the renter didn’t pay this months rent…..considering the deposit was spent already……..

Comment by ric
2007-05-02 07:43:46

I was talking to a guy in a bar in Fairfax VA yesterday. He lives in San Clemente CA with his wife and two kids, paying 2,650/mo rent to live in a 940K house. He told he had to fly back the next day because his wife called to tell him a foreclosure notice was delivered that day.

I told him whatever you do, don’t send in that May rent check.

This is all going to end sooo badly.

Comment by aNYCdj
2007-05-02 07:54:39

AS a Paralegal……..A foreclosure Notice IS a defense against paying the Rent.

Remember this is still AMERICA and you have a right for a neutral 3rd party to make a decision on who gets the money.

The landlord wont sue, and here is the kicker;

IF THE LANDLORD TRIES TO LOCK YOU OUR OR CUT OFF ANY UTILITIES THAT IS ILLEGAL …

CALL THE POLICE AND HAVE THE LANDLORD ARRESTED…

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Comment by bob
2007-05-02 07:56:11

Why? Your max loss as a renter is 1 month. Compared to the homeowners/landlord that have PITI and then have to do all the landlord work themselves.

I think that the market will solve this out.

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Comment by aNYCdj
2007-05-02 08:01:32

But a LEASE IS A LEASE……If you move out the landlord could sue you for the months remaining on it…

So the BEST advice is just to stop paying RENT…..a Judge might make you pay it back, but then you would have time to find a new place.

Also…..Where is my security deposit, i was going to use for moving expenses?……The Judge will DEDUCT that from any rent you owe…

This is still AMERICA!

STOP paying RENT until you get real answers from the broke landlord.

 
Comment by Neil
2007-05-02 09:28:01

I would go one step further. Set up a dedicated acount for the rent. Send a letter telling the landlord and mortgage company that the fees are in escrow. Demand to know immediately if the lease will be honored. If not, deduct from the escrow account immediately the deposit and one months rent. Don’t get greedy… That can get the renter in trouble.

But also keep a hold of the money. :) When the judge tells you whom to hand it over too… do so politely. Until then, don’t forget to turn off the utilities when you move out…

This is going to be so common… I’m paying extra in rent for a commercially managed complex.

Pretty soon the mortgage market will be back to normal… I expect by August. That will really pull the rug out from under home prices.

Got popcorn?
Neil

 
Comment by aNYCdj
2007-05-02 09:38:31

I agree Neil……..The Court Is a tenants friend in a foreclosure

Just be nice keep accurate records, and make sure you pay before you leave court. NO payment plans, or the judge might void the order and make you pay EVERYTHING you owe to the landlord , and Make you sue him for your deposit back…if he hasn’t filed for BK yet

This is what a renter needs to know IN WRITING:
Demand to know immediately if the lease will be honored.

 
Comment by Paul
2007-05-02 16:42:37

Here in San Diego, this happened to me. I kept up with things, thanks to this blog, so I knew the owner was toast.

Deposit Gone.

The bank says leins like deposits, etc. are wiped clean in foreclosure. Doesn’t sound right, but they kicked me right out. I told ‘em they’d have to fight to get me out, and i’t cost more to evict me than it would to give me my deposit and get the unit in good condition. They saw the light and offered me $1000.00

Oh yeah, I didn’t pay the last month’s rent to the former owner. She can bite me.

Paul

 
 
Comment by captain jack sparrow
2007-05-02 12:07:48

ric,

If he doesnt send in that May rent check, can the “landlord” hit him with bad credit? I realize that the “landlord” is getting foreclosed on and the guy you were talking to will have to move. I just wonder if the “landlord” has any legal right to slam the guys credit.

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Comment by Paul
2007-05-02 16:47:55

I believe the landlord will have to win a court case (such as eviction). My landlord told me she was “going to f*** my credit.” But after the foreclosure, she will have no standing, not being the landlord anymore. She’ll need to sue, and what judge will deal with her after she has made no payments?

I put a fraud alert on my credit, and will sue her big time if she manages anything. I kept the last month’s rent, she kept the (already spent) security deposit.

Paul

 
 
 
Comment by Cinch
2007-05-02 10:15:58

Good point! Many renters who rent from upside down mortgage landlord may not be abled to receive their deposit back. The deposit goes to paying the mortgage. If you kept the place well, they will probably come up with some ludicruous excuse like the carpet needs major shampoo work (forgetting that house is only a year old!).

 
 
Comment by Heath
2007-05-02 07:54:56

I’m moving to DC in a month, and I’d rather live in a private apartment (english basement, FB’s condo). But this very fear lingers in the back of my head and makes me think I should go with a complex.

Comment by flatffplan
2007-05-02 08:04:22

check out da hood carefully in DC
I like the basement of a house idea
my brother did that and lived like a king

 
Comment by aNYCdj
2007-05-02 08:08:52

Then READ what i wrote……Deadbeat tenants AND NOW DEADBEAT LANDLORDS, are entitled to their day in court

This is what you get for Livin’ In America!

Comment by Chip
2007-05-02 13:00:30

“DEADBEAT LANDLORDS”

Good one. What an evolution of terms here on the blog.

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Comment by wmbz
2007-05-02 07:14:21

“‘This is the year that we catch our breath,’ said Nick Kremydas, CEO for the state Realtors. ‘By the end of the year, we’ll be close to the 2006 level [of sales]. 2008 will be a better year.’”

Based on what?? Why in the hell won’t a reporter ask.” You say the market will improve in 2008, based on what data”?

Comment by auger-inn
2007-05-02 07:31:40

How about asking what they were forecasting two years ago for some background on their accuracy?

The problem is that people upside down are actually listening to these idiots and thereby worsening an already bad situation for themselves.

 
Comment by In Colorado
2007-05-02 07:32:10

Cuz it has to. We all know that all real estate, regardless of location, local economy, supply and demand, always appreciates, and downturns like we are experiencing now are self correcting anomalies.

I’m sure it makes sense to them!

 
Comment by SKB
2007-05-02 07:39:17

My thoughts exactly!!!!

Such a load of BS, sure they need to catch their breath all right, hooked up to an oxygen machine.

 
Comment by Sad but True
2007-05-02 07:54:56

The reporter didn’t dare ask because he knew the guy would have punched him in the face.

Comment by Cinch
2007-05-02 10:20:07

The reporter could ask, can you point me to someone or data the support your point of view. I think you can ask hard questions and still come off as nice and friendly.

Comment by Sad but True
2007-05-02 12:18:03

Maybe, but I suspect that this guy is wound up real tight given that his world is falling apart big time.

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Comment by Paul in Jax
2007-05-02 08:00:27

This seems to be the new mantra, all of a sudden, that 2007 ain’t gonna happen but 2008 will be fine. So it must be that, OK, RE can go soft, but only for a short period of time. If anything, we are in a bit of a reprieve now, with strong equity markets, still-low unemployment, and low real interest rates. So what’s the catalyst for things getting better in ‘08 - more clarity on the fact that we’re going to have nationalized health care and a national sales tax in the next presidential cycle, perhaps?

Comment by In Colorado
2007-05-02 08:40:54

That has been the mantra in my neck of the woods since 2000. Just wait till next year.

 
Comment by Patriotic Bear
2007-05-02 12:19:18

The alt a, subprime and other junk loans are due to pull back from an average of 37 billion dollars a month of resets to around 15 billion in aruond 18 months. This should provide some relief. The problem is that the resets then rise back to the 30 billion area in 2009-2010. Have a nice day owned by homes uh home owners.

Comment by Chip
2007-05-02 13:11:04

“…then rise back to the 30 billion area in 2009-2010.”

Bear — that’s the surge of bailouts I’ve been eyeballin’. Hopefully, the smarter of the FBs will see the train coming and get off the tracks a bit early, but I suppose even that may not happen in most areas until the the first dead blossoms of Silent Spring in 2009.

Got lease.

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Comment by _FLmtgbroker
2007-05-02 16:02:31

Bear,

Keep in mind that in reviewing the widely quoted and viewed credit suisse report that alot of the resets in the 2009-2010 are option (suicide) ARMS. With the various “recast” portions of those notes and the current indices that they are tied too I think that that segment will not make it that long with APRS ranging from 8%+++

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Comment by BanteringBear
2007-05-02 11:49:27

“Based on what?? Why in the hell won’t a reporter ask.” You say the market will improve in 2008, based on what data”?”

Based on stuff man, hey, don’t sweat it, here man have a hit off this, you’ll get it bro.

Comment by Chip
2007-05-02 13:13:26

LOL.

 
 
 
Comment by implosion
2007-05-02 07:14:40

“While insurance is contributing to the coastal real estate market drop, the meltdown in the subprime lending industry is also a factor.”

“‘It’s starting to affect, particularly, first-time home buyers. In some ways the shake-out of the industry is a good thing, but in other ways it’s making it harder for families to have access to other lending products,’ Kremydas said.”

Am I inferring correctly that she is talking about first-time buyers being unable to buy in a (presumably more expensive) coastal area?

Comment by Darrell_in_PHX
2007-05-02 07:38:06

Probably unhappy that first time buyers can’t buy the houses of the current owners for a price that would allow those current owners to move to the coast.

Take out the bottom and the pyramid can’t stand.

 
 
Comment by John Law(Duke of Arkansas)
2007-05-02 07:16:03

2008 will be a better year.

It’s starting to affect, particularly, first-time home buyers.

don’t worry, the oxygen to the housing bubble is being choked off but things will be alright if we wish hard enough. besides, wasn’t 2007 supposed to be the bounce after a terrible 2006?

Comment by aladinsane
2007-05-02 07:17:20

When you wish upon a loan…

Comment by In Colorado
2007-05-02 07:35:04

..makes no difference who you are (or how much money you actually make)….

 
Comment by az_lender
2007-05-02 09:12:25

… Makes no difference what you [pretend to] “own”

 
 
Comment by In Colorado
2007-05-02 15:45:21

The NAR should license Charlie Brown to be “spokes-toon” with his ever futile post game loss battle cry: Just wait till next year!

 
 
Comment by Blackbox
2007-05-02 07:17:42

“‘I don’t know how people are surviving,’ Snyder said. ‘Some homeowners are finding themselves in properties that are appraised at $100,000 to $200,000 less than what they owe on it.’”

Wow, Inverted appreaciation really sucks!
Geez

Comment by Blue Skye
2007-05-02 08:52:12

Snyder makes it wound like the appraisal changes the expenses. Maybe it means it’s hard to survive without fresh home equity loans?

Comment by az_lender
2007-05-02 09:18:57

And hard to survive the ARM resets. Here we are in May, the first month of three months of $38 billion/mo of ARM resets. To be followed by another six months in which ARM resets will average about $45 billion/mo. Hard to refi to fixed if you are deep underwater.

 
 
Comment by BanteringBear
2007-05-02 10:13:22

Why isn’t anybody calling out the appraisers who rubber stamped the original purchase? Those hacks are partially responsible for this mess.

Comment by In Colorado
2007-05-02 15:48:44

It must have been great to have a job where you did no real work (other than fudging estimated values). Of course this also applies to Realtors, Mortgage Brokers and those fine folks in the title company offices.

 
 
 
Comment by Eastofwest
2007-05-02 07:18:36

“The bottom line is almost everyone is partially guilty. Everybody rode the wave of real estate.’”
NO, No, NO they didn’t…alot of people were responsible. They bought what they could afford at a fixed rate, or didn’t buy because of wacked fundamentals…I am reading between his lines that we all are responsible,and thus ALL must pay for the cleanup…Alas I know deep in my heart the machine will make me clean-up and will be included..uggg

Comment by Chip
2007-05-02 13:18:29

From a lawyer’s comment in one of Ben’s references above, “The bottom line is almost everyone is partially guilty. Everybody rode the wave of real estate.”

The classic set-up for a government bailout request. We’re all guilty! Save us from ourselves, O Leviathan!

Wonder if it’ll get so bad that we have to sacrifice a virgin squirrel from San Francisco.

 
 
Comment by John Law(Duke of Arkansas)
2007-05-02 07:20:12

isn’t it funny how this ended being almost being the sign of the very top of the market in florida?

World’s Tallest Condo Towers Planned
Thursday, 05-May-2005 10:50AM
United Press International

MIAMI, May 5 (UPI) — A real estate developer has proposed the world’s tallest condominium tower — 110 stories high — for downtown Miami.

http://news.usti.net/home/news/cn/?/biz.industry.others/2/wed/cq/Uus-towers.RtsC_Fy5.html

Comment by GetStucco
2007-05-02 08:34:37

How does that story square with this one? It seems that against the backdrop of a real estate bust, the race to build the world’s tallest condo tower is underway…
———————————————————
Condo spire to soar in Chicago
April 20, 2007

CHICAGO — The Chicago Spire, planned as the world’s tallest residential building, won approval Thursday by the city Plan Commission.

http://www.freep.com/apps/pbcs.dll/article?AID=/20070420/NEWS07/704200448/1001/NEWS

Comment by Crapburner
2007-05-02 08:48:48

They go up slowly GetStucco but come down quite quickly as we have seen in the past few years….

Madness…simple madness…..

In a power blackout or long tern natural gas failure, you ain’t going to be able to heat the building in winter (i.e broken water pipes)….it will be uninhabitable above a few floors…..

Unless it has its own long tern backup of support systems, long term life living a 100 stories up is not long for this planet.

Comment by holly
2007-05-03 17:01:17

I am wondering how long the elevator ride to the top would take…

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Comment by Civil
2007-05-02 09:30:48

It seems like I had heard that the Empire State Building and other NY skyscrapers were all completed just in time for the Great Depression. Will history repeat?

Comment by GetStucco
2007-05-02 10:09:18

Actually, I posted this link about the Empire State Building a couple of days ago…

“The Empire State Building is a 102-story Art Deco skyscraper in New York, NY. Its name is derived from the nickname for the state of New York. It stood as the world’s tallest building for more than forty years, from its completion in 1931 until the construction of the World Trade Center North Tower in 1972, and is now once again the tallest building in New York after the destruction of the World Trade Center in the September 11, 2001 attacks.”

http://en.wikipedia.org/wiki/Empire_State_Building

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Comment by FutureVulture
2007-05-02 11:23:44

Notice the World Trade Center being built in 1972 also just preceded a secular bear market.

 
Comment by John Law(Duke of Arkansas)
2007-05-02 11:54:50

The world’s tallest building syndrome

http://www.ameinfo.com/56699.html

 
Comment by Duane lapinski
2007-05-02 21:09:56

It’s know as the ” The Curse of the Skyscraper”. There is paper on the subject, “Skyscrapers and Business Cycles” by Mark Thorton at http://www.mises.org/journals/qjae/pdf/qjae8_1_4.pdf

 
 
Comment by holly
2007-05-03 17:05:35

talk about foreshadowing…

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Comment by Renterfornow
2007-05-02 07:22:50

why the frig are these so called “experts” surprised?
Most here saw this coming 3-4 years ago.
The stench is getting stronger.

 
Comment by WT Economist
2007-05-02 07:24:29

“‘I don’t know how people are surviving,’ Snyder said. ‘Some homeowners are finding themselves in properties that are appraised at $100,000 to $200,000 less than what they owe on it.’”

If they paid a price they could afford, with the expectation of staying there perhaps for the rest of their life, they are surviving just fine. Who cares what the house is worth relative to the mortgage if you just live there?

Can we start rolling out the “house is a place to live” articles. No need to do new work. Just copy from the early 1990s.

Comment by Arizona Slim
2007-05-02 08:08:33

Sure, they can copy those old articles. But do they know how to paste?

 
 
Comment by Renterfornow
2007-05-02 07:24:38

Isn’t it funny how know one talks about the affordability issue and that house prices are so distorted vs incomes due to these dbet zombies/toxic loans?
When will these phoney “experts” finally admit that prices need to drop alot like 50% in bubble markets to make up for this pricing distortion?

 
Comment by aladinsane
2007-05-02 07:30:26

Who will be the very first Floridian to sell an organ of theirs, to make the monthly housing nut?

 
Comment by Jim
2007-05-02 07:30:59

OT. Another casualty of the slow real estate market…
http://www.foxnews.com/story/0,2933,269573,00.html

Comment by Darrell_in_PHX
2007-05-02 07:48:43

The house hadn’t been shown for a couple weeks….

 
Comment by pnc
2007-05-02 08:27:27

See what happens when you lowball. Please don’t stop because of this.

 
Comment by Jimmy Jazz
2007-05-02 09:04:31

LOL, they got in a stinger at the end of the article: “I can’t believe my sinuses were that bad!” Hahahahaha.

 
Comment by Patriotic Bear
2007-05-02 12:27:33

I wonder if they bought the house as is.

 
 
Comment by Darrell_in_PHX
2007-05-02 07:31:57

WOW!!! Guy on CNBC named “Gary Shilling” just said that subprime is going to take down the housing market, and that is going to take down the whole economy. Makes a pretty good case for it giving stats on how home equity loans have kept the economy afloat.

The counter guy talks about product innovation and inproved product distrobution… umm.. Hello!!! What good does that do when poeple can’t buy.

I guess the guy could be blunt because they were specifically talking about the “super rich” getting hurt. Maybe you can speak the truth if you’re doing so in terms of its effect on the super rich having to give up their SUPER fancy stuff. You’re not allowed to speak truth if it hurts the people that buy the stuff that gets advertised on our tv station.

Comment by Crapburner
2007-05-02 07:54:13

N.Assoc. of Realtors, subprimes, Alt-A’s and any bank that has invested in this stuff would love to keep it quiet!! When talking heads in CNBC start noticing it, you know the end is not far off.

They can’t get the toothpaste back in the tube anymore with internet, blogs and new media.

 
Comment by GetStucco
2007-05-02 08:37:37

‘Guy on CNBC named “Gary Shilling” just said that subprime is going to take down the housing market, and that is going to take down the whole economy.’

Did he factor in potential respiking operations from the top level of the U.S. govt? (E.g., FB bailouts and running the printing money press at full bore to make sure that home prices don’t keep deflating for long…)

Comment by crisrose
2007-05-02 10:14:48

Running the printing press at full bore won’t do any good.

Without wage inflation (and that isn’t happening with Chinese/Indian slave labor) house prices have one way to go - DOWN.

Bailouts won’t work - it’s too big to bail. Talk of a bailout is only to forestall the panic.

It’s over.

Comment by In Colorado
2007-05-02 15:52:05

I wonder if the globalists wanted this on purpose. What better way to get the standard of living in the US down to 3rd world levels? Create rampant inflation, but nobody gets a raise!

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Comment by hd74man
2007-05-02 08:39:56

Bankers and Wall Street sharpies have looted the till.

Where is Madame DeFarge and the big blade when you need them.

Comment by Crapburner
2007-05-02 08:43:59

A few French haircuts on Wall Street…..sounds just absolutely yummy…..

/sarcasm off

 
 
Comment by BillF
2007-05-02 08:45:11

Mr Shilling is a regular columnist for Forbes, by the way. He’s been talking deflation for as long as I can remember, and has also loved the long bond for as long as I can remember (and to his credit, owning long-dated Treasury bonds since the early 1980s has been very profitible… I doubt as profitible as stocks, but probably close).

Bill

Comment by Neil
2007-05-02 09:42:02

Gary Shilling is very bearish and has been a long time.

His favorite quote at the dinner table is that when he went long on bonds, he set himself and his kids up for life. He is too bearish (long term). But… he has made a fortune betting on bear markets over the years. Don’t bet against my Uncle on this (yes, Gary is a relative. My sister gets along with him well… I don’t. Hence no invite for him to my wedding.)

He always talks deflation. The difference between him and other perma-bears is wait for when he moves his money to where his mouth is… (He is in the process of doing that.) He is always looking out for certain “investment events.” We’re in one (per his reasoning). He’s in the process of moving his money. Yes, he’s been doing it for three years, but the flow rate of funds to bearish bets is getting pretty frantic for him.

If he is this bearish (vs. his normal low intensity perma bear)… He’ll be right. He just has an instinct for these things. Every time we truly get into a bear market he makes so much money its sick… He’ll do it again. Its just his genius.

Got popcorn?
Neil

Comment by pt_barnum_bank
2007-05-02 10:24:22

Where’s he putting his money?

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Comment by Neil
2007-05-02 12:09:19

I’m not sure…

As I noted, my sister gets along with him well. I’m not invited over. ;) So I usally get my news 2nd hand.

As to stocks… He made his previous fortune betting on long bonds… I’m not sure where he is now.

Again, I’m related, but I really don’t know the guy well. But its well known in the family when he switches gears… that’s when its time to wrangle the dinner invite… ;)

One reason he and I don’t get along is that I’m usually optimistic… constant bearishness is… annoying. I have no problem being long term bullish and short term bearish. :) I know this housing bust will one day pass.

Sorry I cannot help with you guys investing… I just don’t know where his money is going; he charges for that service ya know… ;)

Got popcorn?
Neil

 
 
Comment by GetStucco
2007-05-02 10:47:47

Neil — I wish I had a rich, bearish uncle.

How does he know the reflation of the stock market bubble will not succeed? So far, so good…

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Comment by jckirlan
2007-05-02 10:50:05

yes i think we all want to know.

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Comment by az_lender
2007-05-02 09:23:17

Shilling, a Forbes columnist among other things, has been talking down RE for about three years. He was a little early, but has always said the whole economy would come down due to the housing bubble. He prescribes US Treasuries, which I think kind of guarantees you get less-than-your-money back, but there’s no doubt he thinks the stock mkt will come down when the big banks have to admit their losses.

Comment by az_lender
2007-05-02 09:24:15

sorry Bill I didn’t see your post when I put up mine

 
Comment by Chip
2007-05-02 13:29:37

Does anyone know what CNBC segment this was on? I’d like to watch it if there is a re-run.

 
Comment by Paul in Jax
2007-05-02 14:03:43

I’ve seen Shilling a couple of times recently saying the long bond will go to 3%. Interesting that he and Schiff are both huge bears on the housing market and the economy in general, but have opposite views on L/T interest rates.

I’m with Shilling on this one, at least as far as trying to speculate on the next big move. Just as it took inflationary expectations a long time to come down, and hence long rates were sticky and stayed “too” high throughout the 80s and even into the early 90s, it will take a long time for inflationary expectations to adjust upward from any Fed monetary expansion to counter a recession, and so bond rates are likely to go lower and then be sticky at low levels.

 
 
 
Comment by diogenes (Tampa)
2007-05-02 08:03:10

I just loved this comment:

“‘I know one house on this street, (the owner) just left,’ she said. ‘It wasn’t they couldn’t afford it. They just moved and let it go into foreclosure.’”

What do you think will happen when prices fall on houses that people buy with NO MONEY DOWN??

There’s your answer.!!!………….and we’re just getting a good start.

Comment by aNYCdj
2007-05-02 08:19:47

If they were SMART they would have gotten a 2 year rental lease BEFORE the foreclosure shows up on their credit report…

 
Comment by Ken
2007-05-02 13:23:08

“‘I know one house on this street, (the owner) just left,’ she said. ‘It wasn’t they couldn’t afford it. They just moved and let it go into foreclosure.’”

Diogenes — give us an update as to what happens when that walkaway finds out the IRS is coming after them for the amount they owed on it as “Forgiveness of Debt = Taxable Income”.

 
 
Comment by mikey
2007-05-02 08:21:13

Bu..Bu…But It’s supposed to BE DIFFERENT HERE in North Carolina…

The Fayetteville Observer from North Carolina. “Shirlyn Kimble wants out. It wasn’t long ago that her neighborhood in west Fayetteville thrived with homeowners.”

“Kimble did everything right: She paid her mortgage, she kept up her home. Yet she’s paying the price for Cumberland County’s thousands of foreclosures.”

Y’all Gambled and Dropped the Ball y’all…Gambled and Dropped the Ball…NEXT GF UP for Housing Roulette.

SPIN that Wheel !

Comment by jckirlan
2007-05-02 10:53:18

We have a ton of FSBO and regular for sales here in Wilmington. Still asking wishing prices and the fundamentals are way way way out of whack.

 
 
Comment by GetStucco
2007-05-02 08:31:04

“‘The market is flooded with condominiums,’ said De Silva, who has yet to find a tenant for his 1,200-square-foot property in Florida. ‘I didn’t want to be a landlord, but I had to bite the bullet so I can afford to wait for a real estate recovery.’”

There is a dearth of evidence these days that the property market is running out of land, but a lot more signs of an increasing shortage of tenants relative to the number of rental units, especially when you look at the record number of vacancies.

“‘I’m hoping the good times for real estate will be back in next year’s spring market,’ he said.”

He had better hope and pray to his statue of St. Joseph that the housing bubble punch bowl is successfully respiked by next spring. I don’t personally foresee that happening, though I am sure the social engineers at high levels of the U.S. govt are hard at work on a plan to make this happen.

Comment by Home_a_Loan
2007-05-02 09:06:34

De Silva apparently isn’t too good at math. That area has years’ (plural) of inventory, and now he’s expecting a spring recovery next year. Not a problem, as long as:

- sales rates triple, and
- foreclosures stop, and
- no new listings appear, including REOs

Yeah, that’s going to happen. Methinks Mr. De Silva is going to be disappointed. :(

 
Comment by WT Economist
2007-05-02 09:15:15

This is what I can’t believe. If I wanted a second job managing properties (which I don’t), I’d at least have them nearby so I could keep an eye on things. WTF is someone from New York doing owning investment properties in Florida?

 
 
Comment by hd74man
2007-05-02 08:33:12

“‘I don’t know how people are surviving,’ Snyder said. ‘Some homeowners are finding themselves in properties that are appraised at $100,000 to $200,000 less than what they owe on it.’”

As I’ve noted before-in the ‘90/’91 bust people could get out from under their properties bringin’ $10k to $20k to closing in a forced to sell situation.

A painful experience, but most could scrape together the bucks to pull it off.

$100/200k?

Not a fookin’ chance.

It took a taxpayer financed $500 billion to settle the FIRREA tab in ‘90/’91.

And not a whimper from the masses.

This debacle is easily 10x worse.

So….10X $500 billion….

I do believe that amounts to about $5 trillion….

We’re broke…

Comment by dennisd
2007-05-02 09:12:03

We’ve been broke for quite some time. Using debt to finance “prosperity” will eventually implode.

Although, I’m a software engineer by trade and not gifted in the smoke-and-mirrors of high finance and economics. So, I could be wrong.

Comment by technovelist
2007-05-02 14:56:40

You could be wrong, but you’re not.

 
 
 
Comment by RE_MESS in MD
2007-05-02 09:08:41

My landlord wants to short sale his house to me. I’m in Hagerstown, MD.
He bought it in 2005 for close to 425K. He offered it to me last year for
410K and I countered it with my offer of 325K. Now he is saying that I could get it for close to 300K as the bank would take the loss. And the builder is offering the same house now for close to 260K and upgrades etc. I think the upgrades are not more than 40K in my current house.

I don’t know much about short sale. I was thinking to counter it with 250K. Please advise if someone knows about shart sale and is it same as foreclosure. Any other things I should be careful about. I’m still very tempted to wait and see how the market is after this summer.

Comment by az_lender
2007-05-02 09:31:02

30% off the 2005 price is probably still a bit expensive, but you may not be able to get his bank to come down to $250K, because there are still a bunch of specuvestors out there who might pay $300K or more for the REO (assuming a foreclosure auction brings no higher bidders). I don’t know anything, just guessing. And have been to Hagerstown sometimes. How much rent have you been paying?

Comment by RE_MESS in MD
2007-05-02 09:34:21

$1200 per month. It is a 3800 sq. feet house built by Ryan Homes in
2005. Owners say that houses in the area rent for $1600-$1800 per month and I got a good deal but I’ve been seeing for Rent signs for the last 1 year on some houses. Owners talk BS most times as they are stuck with huge loans and talk like David Lereah.

Comment by Cinch
2007-05-02 10:46:50

100% joking here. Hagerstown is a redneck infested town, and he wants $300K for it? The town is 1 hour commute to D.C. on a good day and driving like you stole a car, but realistically 2 hours.

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Comment by George C
2007-05-02 19:11:25

Just remember - whatever price you buy it at, you will be stuck with it for a VERY long time.

 
 
 
 
Comment by Paul in Jax
2007-05-02 09:37:51

I don’t think “short sale” is a term with any legal significance - it’s just a way of describing somebody accepting less for something than they owe on it. When a bank takes the property back this way they incur a loss or a charge to reserves (and the seller may incur tax consequences).

In your case, you simply need to make certain that at closing all liens are satisfied. This shouldn’t be a major complication if the deal is on the up-and-up, but you should get an RE lawyer and talk to the seller’s lender if possible.

What’s a house worth in Hagtown? I know there was a run-up as it is almost far exurbia of DC, but I recall it as a kind of a rundown old place. I would think 250K might be your final figure judging from what you say about builder offerings, so I would start lower - BUT - better to do the due diligence on the legal aspect before you start serious negotiating.

 
Comment by Paul in Jax
2007-05-02 09:37:53

I don’t think “short sale” is a term with any legal significance - it’s just a way of describing somebody accepting less for something than they owe on it. When a bank takes the property back this way they incur a loss or a charge to reserves (and the seller may incur tax consequences).

In your case, you simply need to make certain that at closing all liens are satisfied. This shouldn’t be a major complication if the deal is on the up-and-up, but you should get an RE lawyer and talk to the seller’s lender if possible.

What’s a house worth in Hagtown? I know there was a run-up as it is almost far exurbia of DC, but I recall it as a kind of a rundown old place. I would think 250K might be your final figure judging from what you say about builder offerings, so I would start lower - BUT - better to do the due diligence on the legal aspect before you start serious negotiating.

 
Comment by pick
2007-05-02 10:22:01

Mess,
Short sale is not like just buying a house at a discount. Your landlord would need to provide full financials to the lender showing (and proving) he doesn’t have the assets and the cash flow to continue ownership. In addition, I have to assume he owns his residence, so that can be an asset unless he’s upside down there also. Unless there’s a lot of foreclosure properties in the area, they will force him to market the property in a normal manner. And even though he would have to sign the sales agreement, he still must obtain lender (and possibly investor as in PMI or 2nd holder) approval. I say go for $250

 
Comment by zeropointzero
2007-05-02 10:51:47

So …. it was built in 2005? Or fairly recently?

Sounds like you might get a good deal — but, keep in mind, you may also be surrounded by a lot of other FB’s who also bought at around 400k ….. and, if so, your nice neighborhood may be changing and becoming a little less upscale over the next few years.

Even if I got a nice deal - I’d be a little wary of purchasing in a community where a lot of my neighbors may be in for a financial shock. You may end up with a deal that makes economic sense, but you might not like the neighborhood/development in the long run.

Just a little food for thought. Let us know how it goes.

Comment by hd74man
2007-05-02 10:59:18

so, your nice neighborhood may be changing and becoming a little less upscale over the next few years.

Good point 0.0.

Lots and lots of bad projects in shit locales have been financed during this free for all.

What you just think is a marginal idea today, could be a major disaster tomorrow. aka…government steps in to buy complete subdivision and then sells to low-income types to relief “homelessness”.

Fookin’ people can’t even muster the initiative to take their garbage to the curb for collection.

I wouldn’t be a buyer for ANYTHING! until the dust settles and that’s easily still a couple years away.

 
 
Comment by Chip
2007-05-02 13:51:51

On a different track, and notwithstanding that buying in that ‘hood right now might be a bad idea, if the lender will take a short sale of $250K, you might be able to get the same or better deal from the builder and get a warranty and maybe a lot location or some upgrades or modifications that suit you better. At any rate, if it were me, I wouldn’t take any deal without at least talking to the builder for a comp.

If you do jump off the cliff, maybe the bank that is taking the short sale will give you a decent fixed rate and no closing costs.

 
 
Comment by RJ
2007-05-02 09:11:02

Ara Hovnanian:
“They’ve cut back demand and increased supply.”

Damn. I hate it when they do that.
http://www.secform4.com/insider-trading/938549.htm

 
Comment by mikey
2007-05-02 09:50:42

“Anthony De Silva said he’s not happy to become a landlord. He bought a two-bedroom condominium on the ocean in Hollywood, Florida, 18 months ago expecting to sell at a $100,000 profit. Instead, he’s looking for tenants at $1,700 a month.”

It’s NOT Flipping or Speculating. It’s a RE ADVENTURE Tony. DON’T forget to HANG ON TIGHTLY as Management IS NOT Responsible for Acts of Stupidity.
Thank you !

 
Comment by Renterfornow
2007-05-02 11:00:11

Hey Dope you are underwater now. who ya going to blame now?

It’s seems that every RE genius that looks like a dope now is not to blame.

Dump these turds.

 
Comment by Renterfornow
2007-05-02 11:00:19

Hey Dope you are underwater now. who ya going to blame now?

It’s seems that every RE genius that looks like a dope now is not to blame.

Dump these turds.

 
Comment by Renterfornow
2007-05-02 11:00:20

Hey Dope you are underwater now. who ya going to blame now?

It’s seems that every RE genius that looks like a dope now is not to blame.

Dump these turds.

 
Comment by HarryD
2007-05-02 19:52:45

“I don’t want to sell for less than I paid, so my only choice is to rent it,’ said De Silva.”
“‘The market is flooded with condominiums,’ said De Silva, who has yet to find a tenant for his 1,200-square-foot property in Florida. ‘I didn’t want to be a landlord, but I had to bite the bullet so I can afford to wait for a real estate recovery.’” “‘I’m hoping the good times for real estate will be back in next year’s spring market,’ he said.”

Maybe a brain would be more valuable than a tenant for this investor

 
Comment by drew
2007-05-04 13:08:24

“The problem with the current market is that the supply is up, …”

Wrong! The problem is that sellers are unrealistic with prices. The increase in supply is the result.

 
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