This Market Is Unforgiving If You Overprice
The Boston Globe reports from Massachusetts. “After more than a year of plunging sales, lonely open houses, and proliferating for-sale signs, realtors said many sellers are finally willing to lower prices. As a result, houses sell. ‘The mantra for sellers is price, price, price,’ said Linda O’Koniewski , a broker in Melrose. ‘You have to be better priced than the competition. This market is unforgiving if you overprice.’”
“‘It’s pretty clear the market hasn’t found a bottom yet,’ said Terry Egan , editor at the Warren Group, which publishes real estate data. ‘The pace of sales has been pretty steady, but inventories are still only slightly lower than a year ago.’”
“‘This is how corrections work,’ said Alan Clayton-Matthews , a professor of public policy at the University of Massachusetts at Boston. ‘When there’s excess supply, prices will adjust to clear it. And they’re not going to adjust upward.’”
“Sellers who aren’t flexible learn buyers won’t stick around. Katrina and Ross Fujita had negotiated a $370,000 purchase price for a Hyde Park home that was listed at $389,000. When the owner balked at making repairs identified by the home inspection, the Fujitas rescinded the contract and walked away.”
“They found another home in better condition in nearby Dedham for the same price.”
“Kris and John Cain spent some $7,000 on new landscaping and kitchen renovations that included new counter tops, fixtures, and appliances. They priced the home at $425,000, about $50,000 less than similar homes were going for two years ago.”
“They received two offers, accepting one that was $11,000 over asking price. The home sold in five days. ‘When you’re seeing houses that are on the market for a long, long time, you worry about selling your house,’ Kris Cain said.”
“Roseland Property Co. and Lennar Corp. stopped work on Portside at Pier One because of cost increases and softness in local real estate, according to Massachusetts Port Authority, which owns the property.”
“Roseland spokeswoman Nancy Sterling said the project was delayed because the developers recently switched general contractors and, to cut costs, are requiring subcontractors to submit new bids for parts of the project. ‘That is taking longer than we thought,’ Sterling said.”
“Developers were about to enter the construction and sale phase at a time when building costs have increased sharply and the once-hot condo market has cooled. Downtown condominium sales decreased 8 percent in the second quarter, compared with a year earlier.”
“Last fall, Roseland took the unusual step of replacing its primary contractor on the project, Skanska USA Building Inc. with Suffolk Construction Co.”
“Kerim Evans, vice president of operations for Skanska USA, said…he was told by Roseland that Suffolk’s estimate for the project was ‘less than 1 percent different than where it was when Skanska priced it,’ he said. ‘It’s no mystery that the project is over budget.’”
The Eagle Tribune. “Foreclosure auctions in (Lawrence) nearly quadrupled over the first three months of this year compared with the same period last year.”
“In addition, the 87 auctions held during the first quarter of 2007 are more than half of the 145 auctions that resulted from failed mortgages during all of 2006. The 148 foreclosure petitions filed over the first three months of this year more than doubled last year’s first quarter totals.”
“‘When you’re seeing a dramatic jump of about 300 percent in the first quarter over the same time last year, it doesn’t bode well what’s going to happen this year,’ said Andrea Ryan, housing manager of the city’s Department of Community Development.”
“Rafael Delarosa of Lawrence testified yesterday that he could wind up losing his three-decker house on Stearns Avenue because of some false and misleading advice he got two years ago. ‘She told us the minimum we’d be paying (a month) would be $2,500, including taxes and insurance,’ Delarosa said of his mortgage broker.”
“But Delarosa wound up with mortgage payments of $3,700, with the insurance and taxes included. And the 30-year fixed-rate mortgage he expected turned out to be two loans, one for two years and the other for 15 years.”
“He and his wife earn a combined $2,400-a-month in Medford. They were counting on rent money from the triple-decker to help pay off the mortgage. But one of the apartments is vacant and new tenants are unlikely after he put a ‘for sale’ sign in his yard three months ago.”
“The mortgage brokers with the most Lawrence homeowners winding up in foreclosure last year don’t have strong ties to the city, according to A. Michael Ruderman, a graduate student at the University of Massachusetts Lowell.”
“‘Five of them are far away from Massachusetts,’ he said, noting they were from California.”
The Sentinel Standard. “Delinquent property taxes in Ionia County are producing record-level foreclosures and could lead the county into a financial crisis, according to county officials.”
“Commission Chairman Jim Banks thinks he knows part of the reason. ‘When you can borrow 110 percent of the value of the house if you can’t keep it you let it go back,’ he said. ‘We need to take this seriously on how we are to proceed. There is a financial crisis.’”
“The 2007 forfeitures, which are based on 2005 unpaid taxes jumped to 506, a 34 percent increase from the previous year’s 375. ‘Thirty-four percent tells me something is wrong,’ said Ionia County Treasurer Nancy Hickey.”
“She added, ‘When I started around 20 years ago if we had a dozen in a year that would be a lot.’”
The Cape Cod Times. “The starter home is back. An increase in the number of homes selling for less than $300,000 is among the real estate trends reported yesterday by Barnstable County Register of Deeds John Meade.”
“‘Today, there are starter homes to be had in the $200,000 range that weren’t there three or four years ago,’ Meade said.”
“The median sales price for individual commercial and residential properties last month was $325,000, down nearly 11 percent from May 2006. Total sales volume, however, was up 13.8 percent, from the same month this year. The sales growth marks the second consecutive month of increases, following more than a year of almost constant drops in volume.”
“In a less positive trend, foreclosure numbers continued to surge in May, when 22 foreclosure deeds were filed with the registry, the highest single-month total in 10 years. The filings bring the year’s total to 73 foreclosures.”
“The annual foreclosure total for each of the years from 2000 to 2005 never exceeded 46 foreclosures. In 2006, Barnstable County had 87 foreclosures.”
“Meade attributed the rapid increase in foreclosures to the decline in sales value. When prices drop, homeowners can owe more on their mortgage than they are able to get for their house on the market.”
“‘In a declining market, it is going to be more difficult for anyone who runs into financial difficulty,’ Meade said. ‘You’re going to have foreclosures resulting because they are not able to move their property on the open market.’”
for 08
counties will be raising tax rates
07 was the re-election etc year
next year pow-right in the kisser
Here’s a price reduction for you–what half a million will buy you in Southern California–and it’s “Just Reduced!”
http://re.ocrealestatefinder.com/realestate/Sales/Listing.asp?FPId=478-S467264&flag=L
“They received two offers, accepting one that was $11,000 over asking price.”
Anybody that pays more than asking price deserves to go bankrupt. It is as simple as that.
It was this practice that drove prices up so fast between 2002 and 2005. Made possible by looney loans of course.
I still see it. It appears that my fellow mass residence believe anything listed below assessment is a deal. In the last 6 months, I’ve watched two places come on the market below assessment. Both were smallish 3 bedroom/1 1/2 bath homes in a nice neighborhood, both sold within two weeks of listing, and both sold above listing price. One sold a bit below assessment and one was about 5K over assessment. Both sold somewhere around 420K and were assessed for around 425, I have the actual numbers at home.
On the other side, which is the vast majority of new listings, people come out way over assessment and gradually come down. I’ve been watching one place that was listed 150K over assessment about a year ago and have dropped their price 125K. It will be interesting to see what happens when they get to assessment. Assessments are still 30% over valued in my opinion. So I rent.
wow, I thought BAHSTIN would be the big tanker
I guess it’s
FL
AZ
NV
BEN: we need a who’s the biggest loser ranking
Is the assessment based on 70% of market value? Here in Connecticut a property’s assessment is based on 70% of market value? It is very, very rare for a property to sell at or below its assessed value here in CT.
Massachusetts homes are assessed at “full and fair cash value(s)”
Given this: “In 2005 the average salary for the American worker was stuck around $40,000 a year.”
(http://www3.ccps.virginia.edu/career_prospects/Trends/salary-sixfigure.html)
I still think “…starter homes…in the $200,000 range” are priced too high.
No kidding, when I read that I thought, I must be stuck in a time warp or something. To me a “starter” is priced WELL below 100,000.
starters in nyc are considered anything under 500k
what a freaking joke. not everyone works for a hedge fund
Yes, here in Suffolk County starter homes can be had for between 400 and 550k! The same homes that 5 years ago could be had under 200k! SWEET!!!!! “Great Opportunity”… yeah, for those selling…. No one is making more money and all OTHER expenses including r.e. taxes have doubled.
I will not be surprised to see homes sales increase YOY for the Northeast in both May and June. Here’s why:
“Boston logged 22.57 inches of rain in May and June 2006, the most in a two-month period since record-keeping began in 1872″
Housing pumpers I am sure will make note of this, they blamed the cold for the dismal winter/spring sales period…it would only be fair
‘She told us the minimum we’d be paying (a month) would be $2,500, including taxes and insurance,’ Delarosa said of his mortgage broker.”
“But Delarosa wound up with mortgage payments of $3,700, with the insurance and taxes included.
“He and his wife earn a combined $2,400-a-month in Medford. They were counting on rent money from the triple-decker to help pay off the mortgage.
- So Rafael Delarosa and his wife are knocking out a combined monthly income of $2400 … and somehow qualified for a supposed loan with a payment of $2500 per month. This sounds like our California math … only we let tomato pickers who earn 11k buy 700k houses.
thanks, didn’t catch that at first.
‘She told us the minimum we’d be paying (a month) would be $2,500, including taxes and insurance,’ Delarosa said of his mortgage broker.”
“But Delarosa wound up with mortgage payments of $3,700, with the insurance and taxes included.”
So, what’s the big deal here? The mortgage broker told them $2500 was the MINIMUM, not the maximum. Is there a language problem?
Yes. They thought anything above the minimum was optional. And perhaps it was, early in the life of the mtg.
Palmetto said: So, what’s the big deal here? The mortgage broker told them $2500 was the MINIMUM, not the maximum. Is there a language problem?
Not really. He expected a 30 yr fixed with minimum PITI of $2500… when instead he got ARMs. If you put it together, it sounds like they were duped. even with a 30 yr fixed, the broker might word it as “the minimum payment is $2500/month, but one wouldn’t expect it to rise much further than that, as it would only be Taxes and insurance that rose.
“But Delarosa wound up with mortgage payments of $3,700, with the insurance and taxes included. **And the 30-year fixed-rate mortgage he expected turned out to be two loans, one for two years and the other for 15 years.**”
regardless, however, one must ask why lenders are giving loans that have monthly payments that are 50% MORE than people make per month.
“one must ask why lenders are giving loans that have monthly payments that are 50% MORE than people make per month.”
Greed. It’s all about the commission. Take equal parts of greed and stupidity and you’ve got a recipe for disaster.
They were most likely counting the putative rental income in this three family.
I remember when I was in my early 20’s and a car loan came back with something different than what we agreed to I got up and walked out of the room.
These people are whining bone heads. Yes the IO thing can be hidden but 2 loans and false income can not. They got way over their heads based on their combined income figures and had no business becoming landlords.
“So, what’s the big deal here? The mortgage broker told them $2500 was the MINIMUM, not the maximum. Is there a language problem?”
There are many halfwits who don’t know the difference between minimum and maximum. For example - in response to a ‘two-drink-minimum’ sign for a table seat - “I’m only allowed two drinks?”
He and his wife earn a combined $2,400-a-month in Medford. They were counting on rent money from the triple-decker to help pay off the mortgage.
Looks like that business plan needs revision. I’m nearly envious of the excellent learning opportunity that they have been presented with!
Right, these people did not even qualify on the teaser payment. I wonder what income they stated on their loan app. I assume like everyone else 10K a month.
“He and his wife earn a combined $2,400-a-month in Medford. They were counting on rent money from the triple-decker to help pay off the mortgage.
Many yearsago (late 80’s) I took an extended business trip to Toronto. I was shocked at how expensive houses were in that area, especially when compared to wages. I asked the Canadians how could they afford the mortgages. I was told that most first time buyers had to take on boarders (”roommtes” or whatever you want to call them) to make ends meet. I guess this is the new reality in the American bubble markets.
Danvers MAZZ just altered their single-family zoning by-laws to allow “in-law” apartments. Units can’t exceed like 750SF nor be occupied by more than 2 people.
And you can bet your azz, this places won’t just be occupied by “relatives”.
Just more evidence relative to the decline in the standard of living this country.
Si Senor…
I used to live in Topsfield. I’m actually surprised that Danvers did not already allow inlaw units in it’s SFR zoning. I remember some houses set up that way over by Hoods Pond … maybe they were not legal who knows. Anyhow it does show the changing living standards.
Of course folks out here in So-Cal just throw granny in the garage and put a window on the garage door!
Toronto was in a bubble in the late 1980’s and saw a huge crash (40%) in the early 1990’s. It’s now relatively affordable, and I daresay memories of that crash may have curbed speculation. Canada’s current bubble city is Vancouver which dwarfs anything Toronto has seen.
I dont get it, homes are still overpriced, and these buyers think they are getting a ‘deal’ because it is reduced by $50k. What is really going on?
Same sort of asses who piled into dot-com stocks when they initially started to dip in Spring 2000. That ended poorly for most.
Not just dot com either. I burned myself on Nokia & EMC then.
Same here except it was Worldcom and Qualcomm. My problem wasn’t “buying the dip” but rather failing to sell early enough after the peak had been passed. Oh well, at least I didn’t magnify my losses via margin trading unlike the FB’s of this bubble.
Aye, Worldcom - I knew ye well.
Nothing like losing several thousand dollars to educate a person about buying stocks “on the dip”. That was the last time I tried to “be smart” about investing in a collapsing company.
you guys forget about lucent?
“I dont get it, homes are still overpriced, and these buyers think they are getting a ‘deal’ because it is reduced by $50k. What is really going on?”
It’s the availability of money and the mentality that I deserve/want/need to own. I know three couples that have purchased places in the western Boston suburbs since February. None can comfortably afford the new mortgages and none care. I don’t think any of them thought one iota about affordability or how their lives were going to be after the purchase. They wanted the houses and they bought them. I can’t believe that they got the loans nor can I believe they paid what they did. But they did, c’est la vie.
None can comfortably afford the new mortgages and none care.
As far as I can figure, this is the new American mentality. I guess it has to do with having everything they’ve ever wanted and never having to do without. You want it? Buy it and figure out how to pay for it later. (Mommy and Daddy will is always there to bail you out). The people I know who have overextended themselves all have some sort of family safety net, be it a trust fund, inheritance to come, rich parents, childless wealthy siblings, etc….
Its stories like this that make me fear that the bubble will rear its ugly head once again. I suppose that as long as our Asian “trading partners” are swimming in cash they will have to find someone to lend it to.
I wonder at what point will people start to realize that Kansas City isn’t such a bad place after all, especially once a bubble market house costs 20x as much a comparable house in KC (or Cheyenne or Little Rock).
I wonder at what point will people start to realize that Kansas City isn’t such a bad place after all, especially once a bubble market house costs 20x as much a comparable house in KC (or Cheyenne or Little Rock).
As soon as they stop performing Oklahoma! in all of the high schools (”Everything’s up-to-date in Kansas City…they went an’ built a skyscraper seven stories high, about as high as buildin’ oughta go…”).
But I thought that Oklahoma was OK!
“Kris and John Cain spent some $7,000 on new landscaping and kitchen renovations that included new counter tops, fixtures, and appliances. They priced the home at $425,000, about $50,000 less than similar homes were going for two years ago.”
“They received two offers, accepting one that was $11,000 over asking price. The home sold in five days. ‘When you’re seeing houses that are on the market for a long, long time, you worry about selling your house,’ Kris Cain said.”
Smart sellers stupid dopey buyers.
how many people are that stupid to be fooled by a new countertop and refaced cabinets that cost chump change compared to the over valued prices?
The reic preys on ignorance, stupidity, emotion and lack of transparency which is changing due to the internet.
“The reic preys on ignorance, stupidity, emotion and lack of transparency”
That limits their market to about 90% of the populace.
I really don’t understand this obsession with countertops. If I were looking to buy a house, the type of countertops would be very low on my list of priorities. Maybe that’s why I’m still renting.
Not me, I have tile countertops now and I hate them. They chip and the grout is hard to keep clean. Next place I want Corian or some other solid surface material and no friggen Granite either.
We have corian. Just remember you can’t put a hot pot on it like you can on tile - it cracks with high heat. But at least you can repair it.
I agree totally about the tile. I had a house with white tile that was awful to keep looking clean, Soft scrub with bleach and a toothbrush, what a pain in the neck. The house I’m in now has black tile & grout and it’s so shinny that every smudge and water drop shows and makes it look unclean. And I’m the type of person that doesn’t want to be part of the herd. Since everyone is getting granite I want something else. Once “luxury” or upgrades become mass market and common, it loses its cache/specialness. For my next kitchen I’m looking into stained concrete.
I really don’t understand this obsession with countertops
I understand - it’s like everything else in this country: people want things because everybody else has them and the marketing folks have convinced them that they need them. No one thinks for themselves anymore; it’s all mass thinking. The funny thing is, in a few years something else will come out that will render granite as “so 2000.” I’m guessing stainless steel countertops - isn’t that what the commercial kitchens have?
Fancy concrete countertops are next….my realtor told me
Concrete is already becoming passé in the really top end — can be rather nice with the shell inserts etc. Once it becomes desired by the hoi polloi don’t expect either the quality or style longevity. Still is a high maintenance end product as is granite. Done well it is more than double the price of granite and has about the same high cost to keep looking good. Stainless steel is so 60s truly high end…. though very low maintenance. I expect some retro to return but the stainless appliances have taken steel counters out at the kneecaps IMHO.
I’ve had my granite kitchen countertops, floors, backsplashes for ten years now and have never done a thing to maintain them. It looks great, handles hot heavy-duty cookware directly, and gets industrial-strength daily useage from both myself and my college-aged son and his foodie friends. I wipe it clean with a damp towel, the floor stays cool in the summer, hides spills and crumbs. Bought it direct from the quarry for less than any other surface I could find, including stainless steel (which I also have along one 20 foot span of kitchen.) What’s not to love other than the fact that it got co-opted? Stone rocks.
(sorry.)
lol!
Technical reprieve for FBs:
http://biz.yahoo.com/fo/070601/549844fec1f41a3861ca5c3c697b9106.html?.v=1&.pf=loans
“Technical reprieve for FBs:”
Great article on what is to come. It’s time for a beer and buffalo wings.
This could actually be huge. Mortgage holders don’t have the proper paperwork? Ha, fricking idiots were so anxious to collect their fees for flipping, slicing and dicing these pooled mortgages, and they forgot the paperwork? Ha, ha ha…
What this means, of course, is that the losers are the holders of the MBS securities - they can’t foreclose, and they can’t collect interest, so poof goes the principle. How’d you like to be holding the worthless bonds? I admire the FB’s that thought of this!
I’m not so thrilled about it. Less foreclosures = less price declines, right?
Higher interest rates, because of risk of loss of interest and principle, will drive house prices down. Foreclosures will too, of course. But add 0.5% on the current mortage rates, and I suspect the pool of possible borrowers will shrink considerably.
Until the mortgage holders get their act together, the FB can probably live mortgage free because they can’t foreclose, at least immediately. Eventually though, the recorded mortgage lien against the house will ultimately screw the FB in the end.
Not necessarily. Until the industry gets its act together, no potential bond buyer is going to buy. Dry up the money = huge credit crunch. It might actually halt the market for a very short time. And any time that sort of market stops due to fear, it takes a little while to rev back up and the ramp up will have more controls on it. While they are rewriting the agreements to make sure there is always a known holder of the debt, why not revise the parts that set the terms for what sort of loans can be pooled?
Over all, it could speed up the sub-prime and Alt-A credit crunch. That should bring prices down very nicely.
It might actually halt the market for a very short time.
Why should that be?
The market has thrived on lying to the igorant and gullible for the last 4 years.
Why would this change with Congress bought and sold by the Axis of Weasels ?
HD74man,
The market is driven not by buyers, but by lenders.
There are always buyers willing to borrow more than they can pay. People aren’t dumber now than they were 20 years ago… they can just borrow more money.
You induce fear into a credit market, and indeed you do get a “credit crunch”.
Any credit crunch translates into even more severe price declines 9 months to 12 months later.
Not necessarily. Until the industry gets its act together, no potential bond buyer is going to buy. Dry up the money = huge credit crunch. It might actually halt the market for a very short time. And any time that sort of market stops due to fear, it takes a little while to rev back up and the ramp up will have more controls on it. While they are rewriting the agreements to make sure there is always a known holder of the debt, why not revise the parts that set the terms for what sort of loans can be pooled?
Over all, it could speed up the sub-prime and Alt-A credit crunch. That should bring prices down very nicely.
Drying up the money is equivalent to hiking the interest rate. There are always buyers for bonds, if the bonds are cheap, ie high interest rates.
Idiots, not doing the paperwork right. It would be a joy to watch these Wall Street vultures twist in the wind for ages while they argue in court - the last place they want to be.
To be perfectly honest, I doubt that the paperwork was really “done” wrong. I just think an inexperienced newbie lawyer didn’t trace down the right party to put on the documents. As someone already pointed out, if they are directing payments to the right people, someone knows who the real owner is. Love to see a legal aid attorney catch it. Makes the firms rethink how little supervision they give to the new associates.
Or it could have been a stupid and/or lazy exeperienced lawyer.
“To be perfectly honest, I doubt that the paperwork was really “done” wrong. I just think an inexperienced newbie lawyer didn’t trace down the right party to put on the documents.”
I agree. The agreements that transfer mortgages from lenders to banks/securitizers are really picky about the form the mortgage documents have to be in. Also, information about all included mortgages comes with the MBS. I think that transferred mortgages are even less likely to have errors of any kind than past mortgages.
Also, if there are errors, servicing agreements will require that the bank make good, so it won’t end up a loss on the MBS side.
I’ll bet the lawyer was so dumb he thought there were two lenders because the loan servicing was transferred…
Reminds me of our work as “draft counselors” in 1968-70. The Selective Service local boards were made up of volunteers who didn’t know what they were doing, and a secretary who knew only a tiny bit more. So they made technical errors all the time, enabling people with good advisors to avoid Nam.
That is very interesting. What sort of technical errors?
“This could actually be huge. Mortgage holders don’t have the proper paperwork? Ha, fricking idiots were so anxious to collect their fees for flipping, slicing and dicing these pooled mortgages, and they forgot the paperwork? Ha, ha ha…”
Not too surprising to me actually. I did some temp work during the big Internet run up and I was amazed at how many companies were flying by the seat of their pants. Everything seemed to catch them off guard, good record keeping was usually the first thing to go out the window.
I don’t completely understand the situation. Obviously some entity has a lien on the title to the house and mails little payment envelopes to the borrower every month. Isn’t that entity also ultimately the one that must be repaid?
The FB’s may be able to avoid paying temporarily by arguing that some legal “i” has not been dotted, but it’s not as though their obligation has disappeared. If they are not making payments, then the late fees and interest will be piling on every month, and their credit rating will be destroyed.
Good question/point. Normally when your loan is sold - the buyer of the loan picks up receipt of subsequent payments by notifying the resident and setting up a new escrow account etc. What happens though if the loan is *split* into several securities like this?
Presumably there’s still some escrow company responsible for collecting payments and then splitting the payments to the separate mortgage holders. If payment stops then probably the holders get to fight over who gets what. It seems a lot like a business bankruptcy actually - where the “preferred” shareholders get first dibs, and would probably get the foreclosed house. Assuming all the paperwork is good, that is.
Mazzholeland is a bizzare place.
With Greatest Gen Grampie and Grammie’s passing on, it’s very, very easy to have a resident husband/wife team inherit a million dollars worth of probate derived housing equity.
To a large extent this is “found” money-and believe me, it gets spent.
This is Bimmer 720 and Caddie-Escalade land!
But this inheritance crowd will always have the wherewithal to keep the price of homes in decent locations outta sight.
So…it’s a situation of life bein’ nothing more than a lotto ticket.
Some win-a lot lose.
The losers in this game are the one’s who have arrived to the purchasing game from a realm outside the Commonwealth with little equity purchase money in their pocket. The winners are the post WW II crowd & their children who prospered while the rest of the world laid in economic ruin.
The employers already see the writing on the wall though.
John Hancock says they are moving jobs to NH because their middle managers cannot afford the home prices in Mazzholeland.
Then there is the trend of the oldsters bailin’ out of the South to come home to die.
Heaven forbid what that does to the universal health care system set up by the legislature.
Read between the lines and the place is economically toast.
Ya gotta be brain-dead to go long housing-wise in this place.
Oh, don’t worry, Deval Patrick will fix it all.
Oldsters coming home to die in MA are covered under Medicare which is a federal program and are not going to be part of the pool covered by the new program. However, scewing a population towards Medicare and away from private insurance may put financial pressure on the hospitals since public insurance tends to reimburse at a lower rate.
Heaven forbid the specialist doctors take a small pay cut!
scewing = skewing.
Sigh. Mondays.
“‘Today, there are starter homes to be had in the $200,000 range that weren’t there three or four years ago,’ Meade said.”
Starter homes on the cape are 50 year old, 700 sq ft summer cottages without heat. What a bargain.
Maybe the starter home is “back” because people can’t afford insurance. It’s too bad that the Cape Cod Times article doesn’t mention the area’s extremely high homeowner’s insurance rates, especially flood and wind premiums.
Yes, and they recently started requiring hurricane windows be installed if you change the windows in your house. Very expensive…
“‘Today, there are starter homes to be had in the $200,000 range that weren’t there three or four years ago,’ Meade said.”
We have had these in San Diego for a couple of years now. They are known as condo conversions.
Obviously, the Globe did not attend a recent foreclosure in Everett, MA in April 2007. 2 family home in good condition. Assessed at 501k. A broker had it listed for 434k. Never sold so it went into foreclosure. Bank bought it back at 289k. There was only 1 bidder at the auction other than the bank. So much for the Globe’s article today. No wonder readership is disappearing with journalism like this.
Do you have a link to a story about the auction? I’m collecting links to such stories for the Boston area.
A friend was at the auction and couldn’t believe the lack of interest. He called me from the auction and gave me the details. I actually listened to the brief auction via my cellphone. Maybe the Globe reporter should attend some of these auctions prior to writing articles fed to them by realtors. Oh that’s right, that would require some work.
If your friend is motivated, maybe he could post some details of the auction here: http://www.bostonbubble.com/forums/ , or if he has his own blog and wants to write it up there, I’d be interested in linking to it.
No wonder readership is disappearing with journalism like this.
The Boston Globe caters to the intellectually obscure.
I scan the Sunday edition in a about 20 minutes, and always come with the same conclusion.
Who cares?
The editorial page is beyond description.
The Banks and mortgage companies certainly have a huge problem with their paperwork for loans that have been sold into securitized pools and ultimately onto buyers of MBS paper. However, the effect of this problem is likely to be that it simply takes so much longer to foreclose.
The Trustee of the MBS pool (someone like Deutsche, Citigroup, US Bank, Bank of New York) will enact foreclosure proceedings on behalf of the MBS investors. They will be able to do this because the MBS holders will have effectively a “perfected security interest” in the loans. This is very well established law.
The nightmare for the MBS investors and the Trustees is that enforcement of obscure local regulations will delay foreclosure, and therefore the recovery of Principal, by many months, or even years.
What will the net effect of this be? Well, obviously the delays may exacerbate the problem because it will take much longer for these properties to come back onto the market and be resold. However, it will make MBS holders very reluctant to buy new paper which may go some way to contributing to drying up money available for loans.
Either way, it’s hard to overstate what a pain in the butt this is for Trustees, and especially the “Master Servicers” who are responsible for managing the foreclosure process and recovering the principal. Another point, during this process, the Master Servicer is responsible for making “advances of principal and interest” to the MBS holders during the period in which the borrower is delinquent. This should lead to very interesting times for the major Master Servicers out there….names such as Countrywide, Washington Mutual, Wells Fargo, Citigroup.
This is very interesting — thanks. Might explain why a Deutsche-bank foreclosure, on a street in a neighborhood I follow, was followed by an unusually high number of other properties going up for sale on that street. Wonder if they fear this place becoming a weed-infested eyesore that will ding their own values.
is likely to be that it simply takes so much longer to foreclose.
I did a foreclosure appraisal on a VA takeback which took so long, the house had to be torn down because of the mold which formed when the HWBB system broke due to improper winterization.
Left hand ain’t got a clue what the right hand is doing.
Talk about a complete clusterfook.
Yeah, and add in the fact that in some ways no-one really cares. The original lender long ago sold the loan off, the Master Servicer collects great fees for the REO work and huge interest payments on it’s “advances”, the Trustee is doing all they are supposed to do and the risk has been so atomized the individual MBS holders will know very little until the Ratings Agencies downgrade their bonds - then all s**t will hit the fan!!
Ratings Agencies downgrade their bonds
Yes this is truely the trigger on the MBS bag holders. Wonder how many lemings will dump their shares of hedge funds heavily invested in MBS when the rating agencies finally come clean on these ‘partners’ of theres. Its gonna be huge, fast and ugly.
Yeah, and add in the fact that in some ways no-one really cares
Got than one right, English…