Speculators Willing To Walk Away In Greater Numbers
The Monitor reports from Texas. “The nationwide housing slump is finally catching up to the Rio Grande Valley. Local building permits this year hit the lowest level since 2001. An overbuilt market during the past five years, combined with an increasingly more conservative mortgage market, has sent Valley builders scrambling for customers, builders and industry insiders say.”
“‘There is a real dearth of housing starts and I think that is really associated with the more stringent requirements on lenders,’ said Brownsville developer Bill Hudson.”
“The number of home permits in the Valley dropped 33 percent during the first five months of 2007 compared to the same period last year, according to statistics released recently by the U.S. Census Bureau.”
“The decrease is across the Valley and few areas are immune to tighter conditions, builders say. Some builders have had to make drastic changes to their local business model. National builder DR Horton has stopped raising new developments in the area.”
“During the last several years, the Valley has been on a home building spree, said Mike Blum, a real estate broker in McAllen. Suddenly, families who couldn’t previously afford homes on the area’s low wages could afford new homes under creative loan practices.”
“Wall Street and government regulators are now forcing lenders to tighten the loan process after several subprime firms failed during the first quarter of this year and the number of foreclosures nationwide skyrocketed. ‘The subprime shakeup has had an effect on the market,’ said Jack Pollock, president of the Rio Grande Valley division for Casa Linda Homes.”
“One report in May said the McAllen area leads the nation in the number of subprime loans at nearly 27 percent, according to First American LoanPerformance.”
“The decrease in home building has hit all segments of the construction market, from landowners to lot developers. There is currently about a 40-month supply of developed lots in the area, much higher than a normal supply of less than 24 months.”
“Even cities are seeing the decrease and that could cost thousands for each municipality in fees for building permits. ‘It’s slower during the last few months,’ said Luis Vasquez, chief building official for the city of McAllen. ‘We have had a little breather after things have been so fast.’”
“Vasquez said the department added staff during the housing boom of the last five years to keep up with demand.”
“The drop in building permits combined with strong real estate numbers could be good news for the market and may help the area avoid a prolonged slump, said Jim Gaines, a real estate analyst with the Real Estate Center at Texas A&M. ‘The builders are looking around and saying we can’t build,’ Gaines said.”
The El Paso Times. “El Paso’s residential real estate market has slowed from last year. Sales of existing homes were down 9.5 percent in the first six months of the year, compared with sales at the same time last year, Greater El Paso Association of Realtors’ data show.”
“Last week, just over 3,600 El Paso homes were listed for sale on the El Paso MLS, about 1,500 more listings than in July 2006, Realtors association data show. The numbers include most existing homes on the El Paso market, and some new homes. Many new homes are not listed on the MLS because they are sold by builders and not Realtors.”
“It’s a buyer’s market definitely. There’s so many houses out there and not enough buyers,” said Realtor Sylvia Olague-Lopez. ‘People are having a harder time qualifying for loans,’ he said, and fewer out-of-town investors are in the market this year.”
“Roxann Martinez and her husband have been trying to sell their three-bedroom home on Rex Baxter on the East Side for about four months so they can buy a new house. ‘We didn’t think we would have this much problem. Our first home sold (four years ago) in a week,’ Martinez said. They have a buyer’s contract on their home, which is selling for $130,000, but the buyer is having trouble qualifying for a loan.”
“Martinez said her home is priced below its appraised value, so she doesn’t want to lower the price.”
“Jan McNutt and several other Realtors said many sellers are cutting their original asking prices to help sell their homes. McNutt said out-of-town investors helped push prices up the past two years, and now that fewer investors are in the market, prices are going down.”
“Sonja Van Nortwick, president of the Greater El Paso Association of Realtors said, ‘I’m not sure if we’ll see another market like last year,’ which she called one of El Paso’s best ever.”
“‘People still want to price (their home) at a higher price and then realize they won’t get quite what they thought they could get’ because of the slower market, Van Nortwick said.”
The Denver Post from Colorado. “Despite predictions that foreclosures would level off this year, new filings rose 26 percent in the metro area through the first half of 2007 compared with the same period in 2006. For every two existing homes sold in the metro area during the first half of the year, another went into foreclosure.”
“The 12,085 filings represent nearly half the 25,513 existing homes sold during that period. With the peak home buying season only six weeks from wrapping up, another dismal record in foreclosures seems unavoidable.”
“‘There is nothing to keep this year’s total foreclosure numbers from well surpassing last year’s,’ said Ryan McMaken, a spokesman for the Colorado Division of Housing.”
“Even in Douglas County, once viewed as immune, new foreclosures filings raced ahead 38 percent in the first six months of this year. ‘There are a lot of houses that were bought as investment properties. Those are going under,’ said Dianne Bailey, the county’s public trustee.”
“Bailey said she is seeing larger homes and wealthier borrowers going into default, in contrast to other areas where novice homebuyers in lower-priced homes have been the ones getting into trouble. Investors, faced with rising payments…and flat or declining home values, appear willing to walk away in greater numbers, she said.”
“‘These are upper-middle-class people. The houses that are being lost are averaging $250,000 and $300,000. We are seeing many $500,000 and $1 million homes going under,’ she said.”
“Denver Post research last year into loans in foreclosure found that while many were adjustable rate products, most had gone into default even before payments reset higher. ARM borrowers may have expected their paychecks and home values would rise enough to offset higher payments, McMaken said.”
“In another troubling trend, public trustees report that a larger percentage of homes going into foreclosure this year are sliding all the way through.”
“Adams County public trustee Carol Snyder said her office sold 1,180 homes at auction in the second quarter of the year. In only 23 cases were mortgages reported as cured, meaning the borrower had caught up. In only 21 cases did borrowers ‘redeem’ or buy back mortgages after the public trustee sold them. In 416 cases, the foreclosure was withdrawn, usually because a lender reworked a loan or agreed to accept a sale by the borrower for less than what was owed on the note.”
“In Douglas County, Bailey estimates only that about 35 percent of borrowers are able to escape foreclosure once they enter in, compared to half last year.”
“More than 11,500 Coloradans, a third of them in the Denver metropolitan area, who did business with national lender Ameriquest Mortgage Co. are eligible for $8.4 million in restitution the firm has agreed to pay in a national, year-old predatory-lending investigation, state Attorney General John Suthers said Thursday.”
“Consumers claimed the company misrepresented the amount of interest they had to pay, inflated home appraisals that left borrowers with unaffordable loans and failed to clearly disclose fees and penalties associated with paying off loans early.”
“Thousands said in multiple lawsuits that they were financially ruined because they lost their homes, were forced into bankruptcy or had their credit destroyed.”
“More than 4,840 borrowers in the Denver metro area are eligible to divide $3.66 million, the highest average statewide. Restitution checks range from $123 to $3,462, Suthers said.”
“The settlement was penned in January 2006, but the amount residents in each state would collect was just determined, Suthers said.”
“‘Doing the right thing for the people we serve has always been one of our core values. We regret those occasions when our associates have not met this ideal to our customers’ expectations,’ Aseem Mital, CEO of ACC Capital Holdings Corp., parent of Ameriquest, said at the time of the settlement.”
“Thousands said in multiple lawsuits that they were financially ruined because they lost their homes, were forced into bankruptcy or had their credit destroyed.”
“More than 4,840 borrowers in the Denver metro area are eligible to divide $3.66 million, the highest average statewide. Restitution checks range from $123 to $3,462, Suthers said.”
That’s restitution?? or is it just contempt??
“On the same day that the White House announced that President Bush is nominating California billionaire Roland E. Arnall to be ambassador to the Netherlands, the company he controls said it would set aside $325 million for a possible settlement of allegations of predatory lending tactics…
Arnall is the firm’s principal shareholder. He, his wife and their companies have been the biggest political contributors to Bush since 2002.”
http://www.washingtonpost.com/wp-dyn/content/article/2005/07/28/AR2005072801842.html
But where are the investor’s restitution settlements… ?
Oh, wait.
When the history of this period is written, the focus will be on the huge financial losses that the investors in the MBSs suffered, with a footnote mentioning that hundreds of thousands lost their homes. Unfortunately the guilty (mortgage brokerages, bundlers, and debt resellers) will probably not be identified until the statute of limitations has expired. The market will have long since dealt with the equity locusts, who will hopefully be sleeping under bridges somewhere in Texas.
Has anyone else noticed an increase in panhandlers, or is it just the season for that?
I wonder if you can do a class action lawsuit with two different classes: one as the defendants and the other one as the plaintiffs. The you could start the process rolling with just one good representative from each class and not have to worry about id’ing all the bad actors at the start.
By the way, I am a lawyer and the answer is, “No, you can’t.”
We are just going to have to rely on greed to have put a lot of the jerks in a similar situation that they put their clients. And they have no excuse. They knew exactly what was going on.
Enron was previously Bush’s biggest contributors. I’m seeing a pattern.
Enron was previously a lot of peoples’ largest contributors, on both sides.
Nation’s head Realtor says market ‘isn’t down’
Don’t try to tell Dick Gaylord it’s a down housing market, or that there’s a housing slump - and don’t dare mention the word “bubble.”
The congenial Long Beach man, who will assume the role as the nation’s head Realtor next year, will argue vehemently that the market “isn’t down but just returning to normal.”
http://www.presstelegram.com/business/ci_6380552
See, there’s no problem.
Bagdad Gaylord
Returning to normal, give me a break here.Normal will be when all the specualtors are flushed from the sytem and prices are back to affordable.We are far from normal mr realtor.
All these people in the business are sh@tting bricks right now.They are saying anything to keep buyers around.
tell that to all the FB’s throwing their keys at the bank officer and the deputy sheriff who just told numbnuts to GTFO!!
I know it’s been said before but the name is classic.
Actually that’s not so much lie as it is just a paradoxical statement. “Returning to normal” IS down - because up where it was - wasn’t normal. Thus to get back to normal - it has to go down.
It’s all double-speak - see? As long as you make a statement that can be construed two different ways - it can’t be a wrong prediction or a lie.
Please don’t bug Dick … he is dividing his time between Realtor duties and orgianizing the Long Beach Gay Parade.
His name is ‘Dick Gaylord’.
uhhuh uhuh
Ah. I was wondering where the local realtor overlord got his talking points. “There is no bubble”.
And we’ll try again WITH the url this time.
Lee’s Realtors board president says markets are strong
what planet did this idiot just beam in from? either that or he just chugged a whole pitcher of Kool-aid
The leadership team also plans to do more to drive people to its Web site, http://www.realtor.com, even though it’s already the most visited real estate site, in an effort to discourage people from buying and selling homes on their own with the help of certain Web sites.
OMG… The only thing this guy has learned is that people violently dislike real estate salespeoples… so, he’ll try to combat the low commish web sites. No shame at all.
“Even in Douglas County, once viewed as immune, new foreclosures filings raced ahead 38 percent in the first six months of this year. ‘There are a lot of houses that were bought as investment properties. Those are going under,’ said Dianne Bailey, the county’s public trustee.”
Investment properties in Denver? I suppose that to a Californian Denver housing might appear to be “underpriced” and therefore a “good investment”, but didn’t they stop to consider why appreciation out here has been anemic for the past 5-6 years?
Stopping to consider why appreciation has been anemic? Why that would take a bit of research. And analysis.
And we all know that researching and analyzing aren’t half as much fun as snapping up a bunch of “underpriced” properties!
Plenty of Clownifornians have been “snapping up” bargains in the Denver area for the past three or four years. And you can bet they used “smart” money to purchase these gems. 80/20 stated investor loans were the loan of choice of course. The average length of time that a loan was in place before it went into foreclosure in Colorado was only 11 months. Didn’t have to wait for a reset before these clowns hit the wall.
I’m happy to see that my competition for a new home here in California have volunteered to be out of the market until 2010.
Man has mall parking been *crazy* the last few years around Christmas… I’m prediction Christmas 2007 will suck.
Got popcorn?
Neil
Despite predictions that foreclosures would level off this year…
Maybe they’ll learn a thing or two about the biases of those making such predictions.
Newspaper ads here in SF Bay Area still peddle Denver/Aurora metro “investment opportunities”.
Simply amazing, especially Aurora.
these are “investment opportunities”, just really bad ones.
60 to 65% flow-thru. That’s a massive number of REO’s gathering on the books of America’s credit unions and banks. And all quite nicely situated for their wholesale (or is that firesale) release this winter - leading to a massive spring inventory.
I remember a slew of articles last fall about the low ‘normal’ rates of flow-thru of around 8%. Trouble in paradise.
Colorado Association of Realtors must have cut their advertising $$$ to the Denver Post. That is the closest thing to honesty on the subject out of them in as long as I can remember.
Subprime is contained. Or was it ARM is contained? I can’t remember…………..
Subprime isn’t contained in the cookie jar if the ARM can open it up…
touche
News from Bozeman Montana, I just got word from a person in the city planning office, a large subdivision on South 19th is in deep trouble. Since the they started sales of lots early this year, only seven have sold. So far the developer has not payed his enginering firm or other contrctors. More details as I learn about them.
Thanks Duane,
Now if the development goes under, will the Bozeman Chronicle bother to report it?
That subdivision will likely be one of many ghost towns around the valley–its errily quiet out there. Inventory of homes and lots is skyrocketing, and price reductions of even 10% on resales fail to draw any interest from buyers. Bozeman is a great place to live, but things have gotten way out of hand over the last couple of years.
News from Bozeman Montana, I just got word from a person in the city planning office, a large subdivision on South 19th is in deep trouble. Since the they started sales of lots early this year, only seven have sold. So far the developer has not payed his enginering firm or other contractors. More details as I learn about them.
What is really sad is how common it is during a downturn not to pay the engineers, architects, surveyors etc… There are so many small businesses that go broke during these times. It’s amazing to see how many well respected, upper level members of the development community are actually living on hot air and credit. Some of these people have two months worth of payroll in the bank and yet walk around like they were the King of Siam.
“‘These are upper-middle-class people. The houses that are being lost are averaging $250,000 and $300,000. We are seeing many $500,000 and $1 million homes going under,’ she said.”
Hahahahahaha, you gotta be kidd’in. Here in Salinas that $500K house would have been purchased by a strawberry picker or a WalMart greeter. Middle class my a$$.
Yeah, those Midwesterners are pretenders and wannabes. Here in Bay Area we are so rich, that you can overhear people in a coin-op laundromat talking about $700K+ properties.
Well..in my streetof 300-400k houses we don’t have any strawberry pickers or WalMart greeters. There is one foreclosed house that the bank has finally put on the market (its been empty about 18 months). There are few houses for sale in my neighborhood. I think most people know that they won’t sell so they are staying put.
Anyway, out here WalMart greeters live in 100K houses or apts.
What is pretty common out here are people who work in retail who buy 150-200K houses with toxic loans.
And by retail, I mean someplace like Best Buy, not WalMart.
Don’t they pay very well at Flatirons and Colorado Mills?
Sarcasm off.
Well, the speculators have left this market.
See here for a dose of reality for the Kool-Aid drinkers in the Alt-A Bay Area:
“One of his more shocking assertions is that the real inventory of homes on the market in San Francisco is far above what is listed on the traditional clearinghouse for that information, the Multiple Listing Service. In addition to the roughly 1,100 official listings, Koval insists that there are more than 4,000 additional finished units marketed through sales offices, being presold in midconstruction, and coming online by this time next year.
‘The idea is to counter some of the industry rhetoric — like, “it’s always a good time to buy,” “the real estate market always goes up” and “they’re not making more land,” ‘ said Koval, a renter.
‘I love San Francisco, and that’s why I live here,’ he said. ‘But that’s not to say that every house in San Francisco is a good investment.’”
GETTING DOWN AND DIRTY ON HOUSING
SocketSite is a blog that feeds on San Francisco’s real estate obsession. Topics include gossip on listings and prices, financial analyses and architectural observations.
Kelly Zito, San Francisco Chronicle Staff Writer
San Francisco Chronicle - Monday, July 16, 2007
http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/07/16/MNG9TR15PF1.DTL
Notice their back-handed little dig: “said Koval, a renter.”
As in renter = no credibility.
As in renter = no credibility.
That is changing fast. People who rented rather than buying in the last five years or so will be regarded as geniuses before long.
True that! I am not even renting, just living with parents and saving tons of money! When time comes to buy, ill get something nice in NW PA for $50k(can get one even today for that but not in a hurry)
I laughed when I noticed that (of course, we should not expect much else from the Lamest major city Newspaper in All of America or LNAA, for short).
Because if one rents in SF and takes a look at this NY Times “Buy vs. Rent” calculator (April 20007), and then plugs in their numbers, they will see that as of today:
“Renter = smart”
http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?ex=1184731200&en=3422a3f668518d5a&ei=5070
Or:
http://tinyurl.com/ysrbg7
Oh, and btw, Koval’s assertion is anything but shocking.
You just have to take a drive at night through the SOMA/South Beach/Mission Bay area. There exist more than a few empty condo buildings in various states of construction or completion.
And I think the developers are beginning to leave lights on at night and installing curtains to give a proper impression.
I’ve noticed this in Portland, too. I think they’re even putting chairs and grills out on the porch. But at night, darkness…
Notice something about the buy/rent calculator? Its by the year savings/cost. NOT THE INTEGRAL.
I would come out even in 13 years if I bought my current townhouse… for $300k. Since they’re going for quite a bit more… I’ll wait.
And oh… rents are declining…
I love the bit about curtains and patio furniture on downtown condos. Smirk.
Got popcorn?
Neil
Two things bay area related:
1. Some areas are still getting multiple bids per $1M-$2M house (not mansions, but “average” houses). South peninsula (SillyCon Valley) areas that still have good schools. Can anyone confirm?
2. Rumor (as far as I’m saying) that Intel will be laying off/transferring a “large percentage” of it’s workforce in the coming years by outsourcing to India, etc. And by “large percentage”, I mean “LARGE percentage”.
3. I’m getting sick of The Beckhams and especially the media fuss in Los Angeles about Victoria “Posh Spice” Beckham. How many photos do the paparazzi there need to take of her?
Sorry, that was “two things bay area related and one LA related”.
Intel has been downsizing for a while, about 2 yrs. Smart middle managers have taken rank and file jobs to avoid the axe. A few folks have left for the AZ campus where the jobs are a bit more stable since the cost of living is less there.
More SF Bay area:
I have also heard of multiple bids in Noe Valley. But my boss’ truck got broken into twice last month outside his house in Noe. We’ll see how long “it’s different here”, although apparently Google is busing people down the peninsula from Castro and Noe in pimped-out WiFi coaches.
Also, SF murder rate up 20% (in addition to other violent crime) “Only” 54 vs 45 same time last year:
http://sfist.com/2007/07/11/san_francisco_h.php
So as not to write like Debbie-downer all the time, the traffic on 280 wasn’t horrible today (usually take the train) and the fog turned to beautiful sun at around Black Mtn road. Renting in SF is not so bad. Still, I could use a roomie to defray costs until I move somewhere smaller and cheaper in November…
I have heard that Google wifi commuter vans are impacting rents in those neighborhoods where they have scheduled stops.
Note that smart Googlers are renting right now.
FWIW, anecdotally, in the area of my neighborhood there have been more vehicle break-ins recently than in earlier years.
Ok I bout fell off my chair when I saw the name of the CEO that agreed to a settlement: ” Mittal ” .
As anyone who knows world cultures, getting an Indian to issue a refund is harder than blood-from-a-turnip.
I have never, EVER , EVER seen an Indian give money back !!
It’s a point of honor if nothing else . .. they feel that someone has got the best of them and that is just intolerable.
I base my jingoism on 30 years experience here in the Sacramento valley, Yuba City, and travels to India herself.
Now, before everyone flames me just consider ALL the facets of Indian culture, good & bad.
I do, and willingly say so, such as endless hard work, long hours, and more. Hell, who do you think keeps all the independent motels going after corporations leave because they cant get 4000% profits anymore!?
And C-stores too.
Now Ben may delete this post as borderline racistm, and that’s understandable, but each culture/race/country has their own way of doing things and not talking about them, good or bad, doesnt make it invisible.
(And in balance, I am the FIRST to yell at the arrogant caucasion BMW driver weaving down the city streets with their snotty attitude.)
One final note re the Ameriquest settlement: wonder if the wronged parties are going to receive vouchers or debit cards instead of cash !??!!?
Hahahaaaa . … while the lawyers of course get only cash.
I think a good legal revision would be that the lawyers for any lawsuits receive compensation in the same form as the plaintiffs.
No more of this consumer rebate coupon crap while Looey Lawyer gets a massive cash settlement.
Yeah, I’m in a mood today. Deal with it!
Hee hee! I love that one!
Let the tort lawyers get a truckload of worthless coupons — good for a discount at the same firm that ripped everyone off before! I vote for that!
Class-action lawsuits filed in federal court since 2005 have a very strong disincentive for coupon settlements - if you give out coupons, the lawyer fees can only be based on the value of the coupons that are actually redeemed by affected plaintiffs. The “unused” coupons can be ordered donated to charities and such, but they don’t count towards the lawyers fees.
Aquis,
Arnall, currently the distinguished ambassador to the Netherlands, is the real honcho here, and remains, with his wife the majority stockholder. And he is very plugged in politically–as noted, Bush’s earlierst and biggest financial backer- and a major dirtbag as the earlier predatory lending settlement, in 2005 was 325m.
I’m guessing Mital is just the stand-in until his ambassadorship ends in 2008. And, this settlement was just peanuts-or less-since the price of peanuts has gone up.
We should ask nhz, but with this kind of guy to represent fundamental American values, no wonder folks abroad generally are less than impressed.
Hi all…
Love this blog, been lurking for ages and learned a lot! I hope it’s not too off topic on this post and/or a breach of rules but I’d appreciate informed comments on my personal situation, below.
Basically, I’ve lived within my means renting a 2 bedroom in an upscale Detroit suburb for the last 14 years… rent at $525 plus utils in a nice area but being recently married last December finally had to move to a bigger space for me and the new wife together.
We looked at renting but nothing appealed to her, so I finally (grudgingly) started to look at houses and condos in SE Michigan, Detroit suburb areas. Nothing made economic sense, numbers did not “crunch” even with falling prices around here… until we found one nice 3 bedroom 1.5 bath condo in Harper Woods area with Grosse Pointe schools.
Listed at just under $120K but with absolutely beautiful, top-notch improvements throughout (tumbled marble bathroom, new roof, new windows, new top of the line furnace, new kitchen with all appliances etc) that the prior owner spent $50K to $75K on… we just bought it at a hair over $100K.
So price wise I think we did OK… I’m happy I waited *this* long (though of course I wish I could have waited to buy another year or two) BUT the downside of waiting was I kind of got hozed on the mortgage.
My credit is OK (fico = 680 or so) but I’m self employed and erratic income stream a bit, so the best that my sister (mortgage broker) could get for me was fixed rate at 9.35 — she tried to push an ARM at 8.6 but it could’ve adjusted upward as high as 14% so I said no thanks… we took the fixed rate deal 30 year (1 year prepayment penalty 1%) with 5% down ($5 grand and change) 3% seller concessions at closing on the condo…
SO… bottom line, how’d I do? 9.3% mortgage sucks of course but I think (hope) the condo price is not a bad deal considering how much “nice house” we’re getting for the payments.
Cost Of Living, for ME personally… is basically the same as I was paying renting, but my wife in paying 50% of our condo will be contributing the same $$$ as me now, each month. Bottom line for about a grand a month, 30 year mortgage 9% we’re moving in to the new place in a week…
Comments pro or con, appreciated. But if I made a huge mistake BUYING now, please be gentle
-JC
JC, it difficult to say. Detroit’s economy is not doing too well and housing price is bound to go farther south. I recommend you convince your wife to wait a little longer. You waited 14 years and one extra year will not hurt.
In addition, there must be some way to improve your credit score. The mortgage interest rate should be around 6.74-7.5. 9 something is just too high in my opinion. Here is a link that might help.
http://www.bankrate.com/brm/news/Financial_Literacy/Feb07_improve_credit_score_a1.asp?s=1&caret=9c
But I think the most important thing is the price. You can always refinance to a lower rate in the future. But make sure you don’t over pay for a house (which is why I recommend waiting). Good luck with whatever decision you make!
Sounds nice enough, congrats, keep living within your means and investing, and enjoy life…that’s what it’s all about, isn’t it? If you come home, look around your place, and say to yourself, “wow, this is really nice, I’m glad I’m living here”, while at the same time not worrying about “how am I going to make the payments this month”, or “well maybe NEXT year we’ll contribute to the 401K”, you’ve done pretty well.
I have to agree. If you can make the payment and like the place. Enjoy it. Ignore this blog. $120k at 9.3% is just over $1k/month. That’s fine (as long as you can afford it), assuming you purchased 30 year fixed. You should be able to refinance in two years for less.
You’re probably only risking $30k at most. Not enough to worry about.
On the other hand, where I want to buy one can rent for 45% of the MTI and rents are dropping… Employees are voting with their feet in small numbers… but happening. I would risk $400k to buy now. Simply too much. If I could buy a 3bed/1.5 bath for $120 in a similar (less than prime) for $1k/month… But that isn’t where I live.
Got popcorn?
Neil
I would never live in Detriot. The economy sucks and crime is horrible. Houses are going for $30k there. $100k is very expensive by comparsion. I can get a house for just over $100k in north Florida and its a far better location. Better yet, leave Florida and get a house for $50k in NW PA which is a great, safe location.
Sounds great! If I could get anything nice & inexpensive like that I would, too — fat chance in SoCal.
Not much ground to lose under $100K that isn’t easily made up, the rent/buy difference isn’t worth mentioning, and it’s ALL YOURS. Enjoy.
p.s.: Pay a little extra on your mortgage payments and you’ll more than make up for the interest rate difference.
Why didn’t you get an FHA? Less than 8% including mortgage insurance. Only 3% down.
You should have gotten a prime mortgage, woulda been around 7% interest! There are ways to improve your credit. Do so and refinance into a prime mortgage. If that isnt possible, pay off the mortgage as fast as you can. Don’t take on any other debts, live frugally(cheaply) avoid vacations or restaurants.
Man, a couple of you didn’t listen (read). If he does a refi, or pays ahead, there is a penalty (I don’t uderstand why). Personally, I think your sister either screwed you on the loan, or you are not being honest about your FICO. 680 is tier 2, if I remember correctly, and you should have gotten prime + 1 or + 1.5, even with so little down and stricter standards. Though, I don’t know how “self employed” is taken into account. But, if your wife has a “steady” job, and is the primary on the loan, that shouldn’t have been an issue. Possible explanation - not going with a “reputable” lender. In my experience the big names are less likely to charge an early payoff penalty if you are a fixed 30.
For every two existing homes sold in the metro area during the first half of the year, another went into foreclosure.”
Given that the sales season is almost over and foreclosures are ramping up… we could easily see as many foreclosures as sales this year for the greater Denver metro area. Now THAT is a scary statistic, particularly given the high flow through rates.
Prediction: in many bubbly markets we will see more homes go REO annually than sell. Inventory grows even if not a singe new home is built.
Quick vocabulary question: What is a flow through rate?
WHat percentage of foreclosed homes go completely through the legal process and end up in a public auction.
Though I suppose we could also consider what percentage end up in the REO category (bank owned).
I should also acknowledge that I pulled this explanation (re phrasing) from the article posted by Ben in the main blog.
That is a scary thought. 1 sale for 1 foreclosure. Maybe I will go buy that firearm afterall.
“1 sale for 1 foreclosure” would be interesting; it would mean that only the banks are setting the market value (and thus the falling comps), and non-REO sellers (e.g. everyone else) likely isn’t selling at all. I think I forecast that on the blog sometime last fall…
O/T:Mr. Schwarzman, Blackstone’s $7 billion man, made a $90 million offer in recent months for Maison de l’Amitie , the Palm Beach estate that’s being sold by Donald Trump, according to people familiar with the offer. Yet Mr. Trump rejected the bid, saying the price was too low, these people said. The house is listed for $125 million.
People close to the situation say Mr. Trump rejected the offer quickly, since he wants to get at least $100 million for the place.
“He wants to hit the magic number of $100 million,” says one Palm Beach realtor. “Getting the price is more important to him than selling it quickly.”
blogs.wsj.com/wealth/2007/07/11/schwarzmans-90-million-bid/
Why do I get the feeling that Schwarzman’s “bid” was phony?
Why do I get the feeling this is more bs from the king of bs?
Thats a marked improvement over the fact Trump origionally was “firm” in his $125m price, he would not negotiate. Now he will bulge and go as low as $100m. Funny cause he won it in an auction for $40m and paid about $20m in renovations. But hey Trump is rich enough to sit on that house for 20 years if need be.
Hey, 125 to 100 is a 20% drop!
Remember Trump was broke not too long ago. . .
“Even in Douglas County, once viewed as immune, new foreclosures filings raced ahead 38 percent in the first six months of this year. ‘There are a lot of houses that were bought as investment properties. Those are going under,’ said Dianne Bailey, the county’s public trustee.”
It’s important to note that a lot of these homes were probably bought with a standard zero down residual mortgage intended for primary homeownership. Most investment loans require 10% to 20% down. Most of these investors were just ordinary people with little to no interest owning a rental long term. They wanted a quick flip and the mortgage brokers were happy to help out. I am wondering how the resort properties are doing. How many of these new condos were bought as quick flips vs long term second homes. I watch the Crested Butte MLS a lot. In the last few months, it has been flooded with condos and hotel rooms.
In my neighborhood, 8 new towhomes went up recently. The
realtors have been pitching the new townhomes for about one month now with only one “SOLD” and 4 as “Sales Pending”. However, recently I noticed that the unit that was on “Sold” revereted back to “Sales Pending.” Is this a case where the potential buyer changed their mind?
Pending sales are reported when buyer and seller reach and agreement. Usually sales are pending a number of potential contingencies such as (1) financing; (2) inspection; (3) insurability; and (4) sale of buyer’s home. More and more frequently, pending sales flip back to active when a deal falls through, but I’ve not seen a “sold” flip back to pending. Perhaps it means that the realtor jumped the gun (?), because if it closed then it closed.
Simple questions, what is the meaning of “Sales Pending”.
An offer has been accepted. It may have contingencies such as, contingent on the buyer selling his old house for at least $XXX,000 within XX days. Or contingent on inspection - i.e. buyer can negotiate for cash back for repairs or even walk away if the inspection uncovers certain defects. Ultimately, it just means that there’s a contract in place but the sale hasn’t closed. As lending standards tighten, I think more and more sales will fall apart due to buyers not being able to get the loan for which they were originally pre-qualified. “For Sale”, “Pending”, “For Sale”, “Pending”…rinse, repeat.
I would say Douglas County is a middle/upper middle class suburb with single family homes and I would venture most owner there don’t have a 2nd home. These people fill typical Denver employment positions. ARM’s and HELOC’s from 1999 to 2004 were prevalent to make up for the decline in overall household income here. The bill is due.
I am wondering how the resort properties are doing.
I was in Steamboat over the weekend. They are building like crazy, which surprised me as the place is hard to get to from Denver (its about twice as far as Vail and can take a good 4 hr drive to get there).
It’s very hard to build in Vail they’re squeezed into a small valley and they’re, frankly, snobs (thought not as bad as Aspen or Telluride). Steamboat has scads of open land to build on and they are not quite so anti growth. There are more real people living in Steamboat.
AMEN Climber!!! As far as resort communities go, I picked up a Mountain Homes Illustrated (for sale magazine) on my last trip two weeks ago. The thing is twice as thick as just a couple of years ago. For those unfamiliar, it only covers Colorado, and almost exclusively those in the mountains (not the flats of east and west), therefore, no Denver, Grand Junction, C Springs, etc, and it expensive to advertise too, so of course not all homes for sale are actually listed. Anyway, point being, it was 190 pages! Huge inventory! There is NO WAY that prices will remain sky high, and places like Vail and Aspen are not immune.
Hurry! Wont Last!
Downtown San Deigo condo on $1,035,000.00!
BTW its 916 square feet!!!
And that’s even smaller than my house! For which I paid much less!
link: http://tinyurl.com/2upvw2
“Downtown San Deigo condo on $1,035,000.00!
BTW its 916 square feet”
that better be paved with jewels!
LOL! That condo is probably worth more like $300k
How did Ben miss this article from the News-Press in SW Florida?
http://www.news-press.com/apps/pbcs.dll/article?AID=/20070715/COLUMNISTS42/70713060/1118/COLUMNISTS42
“If you keep a sign in the yard long enough, the market will catch up with any seller’s expectations. It’s amazing the difference 100 years make.” That’s got to be one of the best lines I’ve read.
This guy deserves the “tell it like it is” award. If realtor’s give out advice like this, there’d be a lot less unrealistic sellers out there. The myth’s and propaganda they spread are just drawing out the correction.
I didn’t know that I need to stop hiding, liquidate my investments and buy a house NOW, but this guys says so:
http://realtytimes.com/rtcpages/20070713_closuredeal.htm
“The sellers market — at least nationally — has been over for about 20 months now and buyers who were waiting for the bottom need to come out of hiding, liquidate their investments and come to the table with a good contract that can garner them equity in a home as they walk in the door. Prices have stabilized, interest rates are still low (but not for much longer, according to some), and sellers are now willing to help with closing costs.”
and come to the table with a good contract
You mean like one for 50% of the 2005 price? Or would that be an “insult”?
“Prices have stabilized, interest rates are still low (but not for much longer, according to some),”
This guy doesn’t even see the contradiction in his argument. He’s implying that interest rates are ready to rise, which would only put more downward pressure on prices. So any “stability” in prices would be temporary, until rates rise. Buy now before rates rise and prices fall further. Great advice.
As one who “gets” interest, rising rates are good news.
“Love this blog, been lurking for ages and learned a lot! I hope it’s not too off topic on this post and/or a breach of rules but I’d appreciate informed comments on my personal situation, below.
Basically, I’ve lived within my means renting a 2 bedroom in an upscale Detroit suburb for the last 14 years… rent at $525 plus utils in a nice area but being recently married last December finally had to move to a bigger space for me and the new wife together.
We looked at renting but nothing appealed to her, so I finally (grudgingly) started to look at houses and condos…”
http://www.youtube.com/watch?v=Ubsd-tWYmZw
Just my opinion, but you could act like a bona fide member of the male species and tell the new bride you refuse to make an idiotic mistake like buying right now, just to satiate her misplaced and ill-informed need for “security” [which translates into short-sighted, tunnel-vision stupidity]. You’re the man of the house - start acting like one.
Ya know men pay for it one way or another, hers is a house that might bankrupt you someday.
Just tell her you are cheap and we are already paying too much for rent, and if she can find a house that is cheaper then renting that doesn’t have ghetto bars on all the windows and razor wire on the garage, you will buy.
“WHAT? WHAT? THE KIDS WILL GROW UP!
THE SCHOOLS!
I LOVE THAT HOUSE!
WE CAN DO THIS!”
A true classic!
Besides south pardre island is there anywhere in the Rio Grand Valley worth looking into for a future retirement spot. Maybe Harlingen, Brownsville, Or Kingsville?
Visit the North Padre area - I think Port Aransas would be a great place to retire. Slow, layed back place, but only about 90 minutes from Corpus Christi and major hospitals.
You got screwed at 9%. You should have waited 2 years and cleaned up your credit (which cannot be 680+ by the way). If interest rates rise you would get a lower rate due to improved credit and prices fall as well.
Bottom line is, it sounds like the wife and stable life are more important than losing a little money. If you are certain you are not going to leave the area who gives a damn if you end up losing a little? Don’t make it about economics when it’s about family.