The Housing Market, In A Nutshell
Two readers wrote in todays topic. The first, “We built our custom Southeast FL home in late 2004 and it was completed in 2006. Unfortunately during the construction process the home was completely destroyed in a hurricane. We missed the deadline for completing construction and lost our fixed rate jumbo loan. The only thing available to us was a pick-a-pay loan. We had no other choice - the construction loan had to convert and we thought that there would be no problem because we could refinance into a fixed rate loan at some point in the future because we had 30% on the house.”
“My husband’s business income is down - he is self employed - by over 40% this last year. We attempted to modify our loan. They said no - 75% of your income on housing is no problem. We are forced to make negative amortization payment on our pick-a-pay loan. We have had the home for sale for over a year with no takers. We are pursuing a short sale, but the bank has basically told us that they might not want to go the short-sale route b/c we are current on our payments (even though it’s negative am.).”
“We contacted them last week to offer a deed-in-lieu because even though we have the price of the house 50% less than the appraised value from 2006, we have been chasing the market down and now it’s just dead. Again, the negotiator said they are not likely to accept this because we are current on our payments.”
“I told my husband not to pay next month. That is the only way to end this. If we continue to pay negative am, they will never allow us to short sale or deed-in-lieu. He feels torn because it feels wrong not to pay *something* because we can afford negative am.”
“But under the contract, we can jack the mortgage up with negative am up to 125% of the original loan - that doesn’t seem right either. Because we will most certainly have to walk away when we get to 125%.”
“We want to do the right thing. What would you do?”
The second, “Ben, With this $8000 credit being offered up, I am wondering if that should be the push to get into housing. I have not own a home of my own ever and I am older. I am in Orlando and wonder with the lower prices, is it time, or will they go even lower than what I could negotiate and the $8000. I mean I am thinking of offering like 60,000 on 135,000 list homes. The other thought is mobile home senior parks 55+ I could get for about 35,000. But the lot rents are about 500 and goes up 5% a year and you are locked into the park as long as you own a home on the lot. Mobile have gone back to depreciating assets but owners don’t know that.”
“Rents are about 1000 in a safe neighborhood like the Williamsburg section of Orlando but even that is changing as the elderly have sold out or moved out the they had to change it from 55+ back in 1989.”
“I look at the crime statistics and wonder - maybe I just need to go somewhere else but where. Raleigh is cheaper but dull and boring. Just need to know your thoughts on first time home buyers and the new credit and if it is worth jumping in now if I can.”
The Orlando Sentinel. “Lower-priced homes and condos sent resales soaring again last month in the Orlando area, continuing a rebound that began six months ago. Pending sales by Orlando Realtors rose to 4,348 in February, compared with 2,175 a year earlier, when the local market was still pulling back sharply from its mid-2005 peak.”
“February’s median sale price for homes of all types was $145,500. That was down about 2 percent from January’s median — and a record 34.8 percent annual drop from February 2008, mostly because so many of the homes sold last month were in some stage of foreclosure. Also helping boost local sales: the federal government’s new-homebuyer tax credit, and mortgage-interest rates that remained below 6 percent.”
“‘Conditions are aligning very favorably in Orlando for buyers,’ said Les Simmonds, president of the Orlando Regional Realtor Association.”
“Still, the market’s relative lack of liquidity continues to frustrate many Central Floridians who would like to sell their home or would like to move to another area and buy a home. While the 1,219 resales reported last month by the Orlando Realtors was a marked improvement from the 951 homes sold in February 2008, it was still the second-worst showing for a February since 1999.”
“Tom Winfield, 72, of Altamonte Springs has just about given up on his dream of moving to Texas to be near a daughter in the Dallas area. ‘You can’t find a buyer, and if you find one, they can’t get a loan. So the housing market, in a nutshell, is still lousy,’ Winfield said.”
“David Senra, 24, and his friend Krizia Wake, 23, just bought a unit in the Star Tower condominium in downtown Orlando. They got a good deal and shortened their commutes to work — but they have been unable to sell their previous residence, a town house in Avalon Park. ‘It’s a good time to buy, but it’s a tough time to sell,’ Senra said. ‘I’ll hold on to it for a few years.’”
I’ve been out of internet range for most of the past couple of days. Should be back home tonight. I’ll check in today when I can. Please keep the replies to these readers constructive.
The second, “Ben, With this $8000 credit being offered up, I am wondering if that should be the push to get into housing. I have not own a home of my own ever and I am older. I am in Orlando….”
Try a little North of you in Lake County.
Mt. Dora or Eustis may be exactly what you’re looking for.
Safe, beautiful scenery and inexpensive.
$8000 is only up to 10% of purchase price. 60K would only yield up to 6K.
Just making sure they’re informed.
If i could buy a house for 135K, I wouldn’t bat an eye. They’re still priced 700K+ for something livable in Orange County.
Chuck
“Mt. Dora or Eustis may be exactly what you’re looking for.”
I agree with Muir on this. If you want to stay in the Orlando area, these towns are perfect and relatively safe.
Stay away from Sanford, unless you’re shopping for antiques. It looks real nice, sucks as a place to live. The people are real sharks and phonies and take their nasty pills every day.
Two readers wrote in todays topic. The first…
“But under the contract, we can jack the mortgage up with negative am up to 125% of the original loan - that doesn’t seem right either. Because we will most certainly have to walk away when we get to 125%.”
“We want to do the right thing. What would you do?”
_________
I feel for you.
Having built my own house (I was owner-builder so I contracted out everything myself) I know the pain, anguish and frustrations of the process.
I pass no judgement and offer my most constructive suggestion.
Here it is:
It’s a contract. You have already answered your own question.
Jack it up to 125% (negative amortization) and then stop all payments and wait for the NOD (Notice of default)
Only after that notice do you have to make a moral judgement.
After the NOD you could stretch it out and stay in the house for a further 12-18 months which seems slimy to me.
But your immediate question is answered in your very question.
It’s a contract.
And, before others say something.
The contract was that you were pledging the house as collateral against non-payment.
Very well.
That was the contract.
The mortgage pledges the house as collateral. Most borrowers also sign a Note. The Note is a promise to pay. Generally the Note doesn’t say “I’ll pay if it is convenient” or “I’ll pay as long as the collateral exceeds the balance due.”
Yep. They had a contract. Pay the money, or we take the house. Conditions have changed wildly since they first signed it, and they have made a good faith effort to alter it to something they can survive. The bank said, “Nope, not till you miss a payment”. I translate that as “Fuck you, gimme our money.” My response would probably be to miss a whole LOTTA payments.
The question isn’t if you’re going to default, the question is if you’re going to bankrupt yourself running up the neg-am, and THEN default. I suggest not throwing money down a rat-hole.
But eggman, how can you go bankrupt on a negative amortization?
Am I missing something?
Its a negative “-” thingy.
She said “pick-a-pay loan” which means their is probably an option to that says no interest and one for less than principle.
Though you got me thinking.
I assumed there were like three options:
a. Principle and payment $3800
b. Interest only $3500
c. Partial Principle $1800
Am I wrong?
Anyone?
Mortgage brokers help me.
Option c. is actually “pay assuming a way below market interest rate, like 3%. The difference in payments between the 30 year fixed rate and the way below market interest rate becomes new debt, and is added on to your existing debt (principal)”. This is generally called the minimum payment option.
thx jane
Another way to look at it is that while you are paying your neg am loan, the neg am part is booked as profit by the bank(according to current accounting standards).
So by making your neg am payment every month (up until the 125% of the original loan), you are helping keep the bank profitable and you are helping to keep people employed. There is nothing to feel guilty about by doing this.
“So by making your neg am payment every month (up until the 125% of the original loan), you are helping keep the bank profitable and you are helping to keep people employed. There is nothing to feel guilty about by doing this.”
BARBARA:
And you got nothing to be guilty of
Your hov-el’s one in a million
Eyes can view that you
Got a neg-am to the sky
We don’t wanna hear your goodbye
Oh!
BARRY:
Aa-ah!
* * *
Luv,
Jen
:lol:!! You da man, Skip!
Skip for Fed Chairman!
Personally, I would say to tell the bank to make sure to make a note in their files of the previous conversion (eg: they can’t do anything until/unless you are delinquent), you make the same notes (date, person you spoke with, content, etc.), then happily continue payng the minimum on the neg-am until its up to 125% and resets. Wait for the NOD, then call them back and see if they want to renegotiate. If they bring up the level of debt, you can politely refer back to the previous conversation in their notes.
Objectively, although you’re in a bad position, it’s not that bad. When you get the NOD, you can always jingle-mail and walk, and have lived in the house at an under-market rate in the interim. Your attempts to negotiate and arrange payoff satisfy your moral obligation, IMHO. Plus, you never know what new idiotic bailouts our government will have enacted by that time; who knows, you may get lucky and get to keep the house and redo the mortgage at taxpayer expense by the time you default.
Alternatively, if you could rent for cheaper than even the neg-am payment, consider walking away now after you secure a lease for a rental. That way you can get into a rental while your credit is still good, and reduce your monthly expense. As long as the loan is non-recourse (and it probably effectively is these days anyway, no matter what the original terms), and aside from credit damage (which is going to happen anyway, and you can recover from), you should be fine.
I suggest - BUY AND BAIL!
Go buy another house that you can afford, telling that bank you will sell your current house. Then bail on the first loan.
I mean seriously, fuck that first bank, those neg am loans are designed to fail. They suckered you into buying that house in the first place, let them take the loss.
Amazing. Simply Amazing.
How does anyone get suckered into buying a house?
doesn’t the Buyer have to go to the bank with the purchase papers for the house THEY decided to buy and get a LOAN from the bank.
the Bank doesn’t have anything to do with the purchase decision. IF anyone SUCKERED them into buying a house it was probably a Realtor(tm). That’s who they should be going after.
“The only thing available to us was a pick-a-pay loan. We had no other choice - the construction loan had to convert and we thought that there would be no problem because we could refinance into a fixed rate loan at some point in the future because we had 30% on the house.”
My husband and I came from SFL..to GA..we had our FL home up for sale, not yet under contract, when we purchased the GA home..we have SEVERAL choices in loans..the pick a pay was one..and we didn’t even consider going that route..we were lucky enough to sell our FL home..
Sounds to me that this was a “subprime” loan to begin with if you only had ONE choice in a time when there was a TON of products available…
It’s likely that this is the ONE choice that was given to them by their lender. Shopping around would of yielded a fixed rate loan. I’m self employed and was able to get a no documentation loan with 20% down fixed around 7% in 2006. If they have 30% into it, this was likely a case of a bad mortgage broker. Commission was much higher on this type of junk loan.
Unfortunately during the construction process the home was completely destroyed in a hurricane. We missed the deadline for completing construction and lost our fixed rate jumbo loan.
My heart goes out to you. I can only imagine all the paperwork you had to sift though, and financing on top of rebuilding after a hurricane!
I agree, sit hubby down and tell him this is what we must do for our finacial well being.
For what it’s worth, if I had a magic wand, you would move to the front of the line on this administrations attempt to keep homeowners in their homes.
Have you contacted your State or local authorities? The media may be the light you need. Find a way to get your story told.
Best Always,
Leigh
I, too, was given the ARM sales pitch. But I insisted on 30-year fixed, and that’s what I’ve got.
The contract is that you pay or give the house back to the bank. Barring a future economic miracle on the order of Moses parting the Red Sea, eventually you are going to give the house back to the bank. So why destroy yourselves financially? That said, you should check with an attorney regarding Florida foreclosure law and whether the bank can pursue a deficiency judgment (i.e., whether or not your mortgage is non-recourse).
“on the order of” LOL!
Ya’ think?!
“I look at the crime statistics and wonder - maybe I just need to go somewhere else but where. Raleigh is cheaper but dull and boring. Just need to know your thoughts on first time home buyers and the new credit and if it is worth jumping in now if I can.”
It sounds like this reader already knows the answer: Wait and find out more about where to buy. When you buy, lowball.
Orlando is now selling 1,219 homes per month. Inventory is at 44,821 last I looked… So with fractionallly over 3 years of inventory the question is if its time to buy. I’d say more neighborhoods will have a crime problem and it would be best to hold off until you know how things shake out. Although 60,000 for a home is dirt cheap. If you can get one that cheap, why not?
Got Popcorn?
Neil
Neil,
One only needs to look at the Detroit Metropolitan area (let alone the city limits) to know why $60,000 might not be a good deal. I think some of the Orlando area is going to be reduced to junk that can’t be sold for any price. $60,000 today isn’t a good deal if it’s worth $20,000 in 3 years.
What to do in the swamplands?
Plenty of housing stock on its way to zero. II expect some poor people to buy these homes and be trapped there long term. The cost of the move and purchase will exhaust them, along with minimal income in the future.
Essentially anchoring the people in ghettos or ghost towns.
If they take up a strange and regressive tax structure, like Detroit, then who knows.
I’d give crime a higher priority than future price expectations.
At some point it’s just money, though. You can’t take it with you.
There are some areas of Detroit where prices are really low, but the cohesiveness of the community keeps the crime down, they tend to be either a ethnic or racial enclaves where the people share some kind of common bond. I had friends of several different skin tones who had community roots inside Detroit city limits and had no desire to leave.
I am of the pale skin tone. And I live in a neighborhood that, for many years, was one of the few places where blacks could own property in Tucson. Some of those old families are still here.
Permit me to share a secret with everyone: If you’re moving into a historically black neighborhood, don’t be shy. Make friends with those longtime homeowners. They’ll become the best friends you’ve ever had.
As long as you’re in a similar socio-economic class–spending profile, aspirations, employment type/profile, age–the middle-class mixed race neighborhood may be for you. I’ve seen some relative cohesiveness and stability in these ‘hoods, and what community feeling there is wasn’t all based on bubble bucks and faking your way to the top. (You recall those boomtime stories about the ‘lifestyle’ at certain developments with block parties and clubs, the flipside being the ‘exclusivity’ because it was all pay to play.)
The middle class mixed race ‘hoods are going to be the silent story of these bubble … values went up but maybe not as rapidly, as they were peopled by those living within their means. (Even the idiot I know who did a MEW can still make his payments with no problem–phew.) The problem with the bubble is that everyone wanted to “trade up” and take their place in the upper crust. McMansionville has cratered.
Arizona Slim, where roughly is this neighborhood? I’ve heard about Rillito off Tangerine Rd, but was not aware of other historically black neighborhoods in Tucson.
This neighborhood is what used to be called Sugar Hill. It’s south of Grant Road between First Avenue and Stone Avenue.
I think Slim mentioned being in midtown. I’d hazard a guess that Slim is talking about the neighbordhood around Grant and First. The neighborhood just south of Grant and West of First there is [AFAIK] one of the “blackest” in town.
Full disclosure - I haven’t been in Tucson in several years, so I might mean “Grant and Stone”. But I don’t think so.
I live in the area that was once called Sugar Hill. It’s between Grant Road and Speedway, just west of the University of Arizona.
Thanks! I’ve been through there fairly often since I moved down to Tucson; decent neighborhood with character.
I lived in Redford Township for a number of years. Great community. Today a house will run you about $20,000.
RE: I think some of the Orlando area is going to be reduced to junk that can’t be sold for any price.
It’s not just Orlando.
I just read a post from Joel Skousen’s “Strategic Relocation” site by some poor SOB formerly from Texas that
had bought in a new subdivision somewhere outside Phoenix. Appears some members of an Asian drug gang subsequently moved in across the street with a newly divorced skank who then started runnin’ a prostitution ring with 14 to 18 year old girls.
Once day he came home to find his fence tagged with the gang’s logo.
Between the drug parties and john’s comin’ and goin’ he could never get any sleep. Couple of times he’d see gang members in the front yard and they’d give him the slit throat sign.
His adjacent neighbors were terrorized and never came out of their houses.
Says his life was an unending nightmare and he was scared to death that one of family members might catch a bullet from a driveby.
Of course the cops told him there was nothing they could do, unless it was to come and outline a body with chaulk.
So much for life, liberty, and the pursuit of happiness.
USA, no more Numba #1 GI.
I’ve thought about this answer for hours…
Bad Andy, its one idea that concerns me. South-Central LA was once upon a time the latest greatest new suburb of LA. Then… it went into foreclosure hell. The ghetto has all of these lovely victorian homes will all of the extras… they just haven’t ever been repainted and many of the windows are boarded up. Heck, there are even mansions hidden in the area!
But I pay over $2k/month for rent for a small home. So prepaying 3 years+ rent just seems unreal to me.
To think, I once owned a home that cost $150k (and lost money on it!).
Got Popcorn?
Neil
There are few nice areas of Orlando. I really doubt $60K would get you in there. Orlando is cheap, but it’s not THAT cheap.
I am finally under contract on a home in Cape Coral, yes the foreclosure capital of the country. 69K for a 3/2/2 on a .25 acre lot with newer roof, AC, city water sewers is cheap living. Taxes are $2400 without homestead and HO about $1600. Home will not be mortgaged.
While this home has been owned by same owners since mid 90’s comp’s were going about 250K during the height of the boom.
The bonus to the home is a tenant is in place month to month at $850, thus it is cash flowing.
I don’t know if I will be eligible for $6900 tax credit, but will try as it is going to be my primary residence but renter is in place up front.
It is in the SE Cape which is fairly built out. I wouldn’t touch the far NE, NW or SW Cape.
I’m just glad I finally will have a place to call home before I get too old to enjoy it.
Walt,
Home insurance seems high on that. Did you get a windstorm inspection? Actually it seems quite high. I’d shop it.
I was actually thinking it was going to be much higher, no I did not shop it. With Windstorm I don’t consider it too bad, I will revisit once I am in place in the home this fall. I know that there is a menu of things that can be done to discount the cost, ie hurricane shutters, but I will not be adding until I am living in the home.
It’s funny, the the replacement cost calculated by the agent is $155K.
“the the replacement cost calculated by the agent is $155K.”
Insurance premiums.
It doesn’t cost that.
I don’t understand why folks get to be so delusional about “cash flowing” properties. For example, @ $69k with 20% down and a traditional 6% mortgage is $331/mo. For the two other expenses, ($2400 + $1600)/12 = $333/mo. So now the inwestor is at $664/mo, not including cost of maintenance, cost of vacancies, cost of future lower rental rates, cost of future depreciation of value of house, etc… IF there is in fact any cash flow from this ( I doubt it), it MAY be enough to buy you and your partner a 1/4 steak dinner once a month. So why bother with this land-lording crap?
The reason some people gravitate towards this lunacy (in any business, not just RE) is because they have a need to believe they are a VIP, and being in business gives them a feeling of importance and stature. This is the wrong reason to be in business. These people would be better off taking their marching orders from an employer, leaving the day to day running of a business to people with common sense.
TCM,
Check walt’s comment
1) No mortgage, thus mortgage payment = 0. Forgone interest on 69K is about $180/month at 3% before taxes.
2) walt’s planning on moving in after the tenant moves, thus the cashflowing from the tenant is just a bonus for awhile.
Walt,
Sounds like a good buy.
Walt &Al,
I should have clarified I understood Walt was looking for a home to move into. What I was ranting about was the more general statements the wanna-be and make-believe inwestors make about cash flowing properties that are not cash flowing.
I understand Walt, and most of the people in this blog, are not inwestors
Walt - sorry for the confusion.
Walt..I hope that remains to be good deal for you..the problem I see is that in the future these great deals may turn out to be great low class, high crime areas…I have seen it before in the SFL area..particularly parts of Miami that had the “cheap” housing run…
Just watch the area carefully and keep up with it..there may be a point that you may have to sell instead of moving in…
My former landlady had five rental properties. One was the front half of the duplex that she and her family built. That was the place that I rented.
She also had four other rental houses. Two came her way via an inheritance. She bought the other two outright. As in, she put 100% down. No mortgage.
Okay, so she had a nice fat balance sheet on the asset side. But, here in the great state of Arizona, you have a lot of people who don’t make a lot of money. Which means that there’s a limit to how much you can charge for rent. And that puts a pretty low ceiling on the income you can earn from rental properties.
My landlady improved her profit margin by doing all the maintenance and repair work herself. And that gal was GOOD. I mean, she could work on anything. She was even a better auto mechanic than her boyfriend.
Congratulations Walt. If you really want to live there and would be willing to pay at least $850/month yourself, then you have a good deal there. I reckon that your $69k equals about $575 a month using the 120 times rent rule which covers your forgone interest and likely maintenance expenses.
Lets hope that the neighborhood stays attractive, that hurricanes stay away, and that you need few major repairs. Ownership is always risky, but you seem to have somewhere to live that you both like and can afford. Just don’t expect to flip it for a profit for the next 5 or so years.
Dull and boring beats high crime excitement.
I lived in Raleigh, it’s not a wonderful place, but it rates pretty high in my book.
I had a friend there tell about how in Orlando he could not leave the garage door opened unattended because all the stuff in the garage would be stolen in hours.
In times like these dull and boring is an asset.
And, in fact, if you’re retired I’d bypass Raleigh and look either at the coast or the Boone area. The NC coast is a little pricey, but not like elsewhere, and the water is warm, the beaches sandy and the people are pretty nice as long as you don’t come off as an arrogant outsider.
“I had a friend there tell about how in Orlando he could not leave the garage door opened unattended because all the stuff in the garage would be stolen in hours.”
Hours? Shoot, that’s safe! Try seconds around here. They cruise the alleys all day in the most decrepit pickup trucks you can imagine. (picture Beverly Hillbillies on ‘roids) Their numbers have skyrocketed this past year too.
I can leave my garage door open all day here in Ottawa Ontario and not worry a bit. Can’t say that’s true for the entire city.
Al: I can leave my garage door open all day here in Ottawa Ontario
me too, but the bikes are chained together
But now that you’ve published that info here, all the street gangs from Casselman will head into Ottawa for the easy pickings.
NR
I’ve lived in Fl for over 40 years and have never had any problem with a crime.
Well once, 30 years ago I left the keys in the car, windows open.
I have never owned a gun.
(I know how to use one well.)
I have left the door unlocked to sleep many times in the last 40 years.
I am not the only person who does this.
It does depend where you live.
It does not depend on what you can afford.
It’s amazing that some very creepy areas are more expensive than the safer areas.
Muir, I have to agree with you. Crime’s not really a problem here either…certainly not as much as the media would like to play it up to be. I’m from the safer suburbs of Detroit and had a lot less happen to me here than there.
cape carteret county NC
no crime , low taxes sea breezes
Orlando area people seem more delusional than most in Florida. There is a slight uptick insales, lots of knife catchers, decent marketing ploys by area real estate groups. But the Orlando market is going to come crashing down much further, it is only a matter of time.
A few years ago, I was planning to build a retirement home in Orange County (on a large 20-acre lot I own adjacent to WDW). Those plans have been abandoned, due to concerns about crime and deteriorating infrastructure. I’m relatively young (46), so I may reconsider this in 10 years or so, but not until I know what’s going to happen out here.
Right now, I wouldn’t touch anything anywhere in Florida. It is in deep trouble for many reasons.
Reuven,
I admire your optimism. Me? Not so much. Over the last several years I’ve watched on in horror as nearly -every- place I thought I could retire/snowbird to has developed more issues than you can shake a stick at!
Mexico? Uh… you’re kidding, right?
Anywhere in Baja? How are you supposed to enjoy all that sunshine in a bullet-proof vest?
I’ve never minded the idea of “slumming” ( as long as it could be done at slumming prices!? )
And I thought I was smart–buying land outside any development, with no HOA or CC&R issues…. At least I didn’t pay much for it, and there’s no mortgage.
Reuven,
I hear… you. Whether I like it or not, I’ll be spending some weekends around Klamath County for the next 6 years or so ( Guard duty ) There are countless Ebay/C/L listings for off-grid, off-the-beaten-path properties all over.
“2 acres, river access, partially wooded $6,000 or make offer? Owner will carry”
In a way, I think being -outside- of HOA’s etc. is a plus.
The tip of Baja down around Cabo San Lucas is not bad. There are only 3 ways out of town - airplane, boat, or 1,000 miles of bad road.
Summer time in K-falls presents you with mosquito’s, trillion upon trillions of the little B^%%^$%d’s that all want to take you home to
the nest. It’s worse than Yellowknife or
Fairbanks.
From this I think we can all see that the “system” has not yet wrung out all the bad lending…
Unmarried 24 and 23 yr olds still “buying” condos; even though they are holding other unpaid-for properties that won’t sell….and probably couldn’t rent to cover the loan….and I personally can’t fathom renting from a 24 yr old “landlord” either….
Wake me up when they stop this stupid $h!t and then maybe I’ll consider buying. But not yet. Not while I have to get into bidding wars, at any price, high or low, for condos being sold to basically unmarried, “almost-teenaged” couples.
When I was 23 and in college I had a live-in girlfriend. We rented.
No way in Hades would the banks have financed this “puppy love” live-in condo back in 1989.
..
Les Pendens,
I believe that’s referred to as a “MEW-based relationship.
I wouldn’t specifically trash the unmarried couple part of it, since married can become unmarried fairly quickly. And I wouldn’t fault the ages either except that it might prevent them from having much history of making payments.
But bingo on the owning another property. The underwriting process for buying a new property when your old property isn’t sold should include producing years of tax returns, pay stubs, employer references, credit card year end summaries and bank statements. Habitually overdrawn? Habitually maxed out cards? Recently out of work? Bank balances not increaseing year over year (absent good reason)? Can’t afford both payments nidefinitely? Less than 20-30% cash downpayment? Sorry. No loan.
polly,
No ’slight’ intended. I have kids that age and they’re about as mature as any. I just don’t see them being capable of that much responsibility.
Oh btw, MEW-based relationships needn’t even be sleeping in the same bed?
I’m trying to figure out if they’re trustafarians or crack dealers.
“and it was completed in 2006″
I’d love nothing more than to find something to be “constructive” -about- but given similar scenarios we’ve seen play out countless times, I don’t see anything more here than this home was “built to flip”.
This looks like just another case ( hurricanes aside ) where there was no sustainable plan in place for long term occupancy. I guess all anyone in this position need do is simply insist to the contrary, but without hard evidence to indicate otherwise…
You know anyone who took on a loan like that, 30% or not, really either didn’t have a clue and was taken advantage of, or was just a flipper. Either way I fault the banks for loaning hundreds of thousands of dollars over what these houses were worth.
and they probably thought they were safe when they put 30% down.
The moral of the story is:
When you are buying - or building - at the cusp of a massive housing bubble, thirty per cent is nowhere enough skin in the game.
IOW if you HAD to finance in SE Fla in 2004, most likely you are forked right now.
I can’t get around the impression ( as often was the case w/ flippers ) that the financing ‘thing’ didn’t matter until -after- things went bad.
That’s the way RE ’should’ have been “marketed”!
Buy this sucker and you’ll HAVE to sell within 2 years! Why, it even has numerous “built-in’s” Built-in imploding loan, built-in disintegrating HOA, built-in escalating tax bill! So you see, it’s all those wonderful “built in’s” that assure… you’ll be selling in no time at all!
I am interested in buying a cheap home in the Ft. Myers/Cape Coral/Bonita Springs/Naples areas.
My questions about these areas are:
1. Are these areas safe/low-crime?
2. Are taxes a killer in Florida no matter what the circumstances?
3. What’s it like to live in these areas?
This is intended as a retirement move — no interest in packing up and moving once I’ve found a home to move into. My skillsets are in the merchant marine area (operation/service). It’s been a long time since I’ve lived in Florida (15 years), and back then I used to live in Volusia County (ENE part of the state). Also: How has Florida changed in the last 15 years?
Thanks!
Keith,
I’m from the east side of the state but frequent the west side for the calmer way of life. If you haven’t been around in 15 years you won’t recognize the place. Very little is the same. A lot of stuff was built during the boom and some of the older neighborhoods are even suffering. I’d wait to see how everything shakes out before deciding to buy something. I still like Cape Coral though!
check city-data.com
has super stats
Keith,
I left Naples two years ago, it is very laid back and quite a beautiful setting, really the Disney appearance of a city.
Qualify “cheap”, a cheap house in Naples would be in Golden Gate or Naples Manor, not really desirable areas. Condo’s in East Naples are coming back down to earth, if you don’t mind dealing with the associations, many of the condo’s you are not allowed to have a truck.
View my comments above on Cape Coral. Fort Myers has it’s good and bad, so areas of Fort Myers Shores are ok, as are some areas of San Carlos Park, stay away from Lehigh Acres, it is overbuilt, overforclosed and too far out. If you looking in Cape Coral try to stay in ZIP’s 33990, 33904, some of 33914, and some of 33909. The SE area of the Cape is the oldest and most built out and provides a better atomsphere. North of Pine Island Rd is nowhere land still, the NW and SW parts of the Cape tend to be iffy.
Currently, foreclosures in most of the Cape are going at or above asking price I know this from my recent experience.
Also when looking at the Cape try to find a property where sewers/water are in and paid as the Cape is doing away with all well septic and the cost can be up to 30K.
How has Florida changed in the last fifteen years? It’s a lot more crowded and it’s a lot more expensive to live here, but both of those trends are reversing themselves.
To the woman from the first story,
It looks like you know you need to stop paying the mortgage. It’s just a case of convincing your husband that it’s necessary. Point out to him that the bank is telling you to do so. You need to stop going down a dead end path. You know it, the bank knows it. The bank reps have told you what to do, so do it.
For the ppl with a house they can’t afford: Walk away from it. Your loan will hit 125% long before your husband’s income ever makes it back to a point where he can cover the full monthly payment. Continuing to pay now is a waste of money.
For the senior who wants to buy in FL: FL has really high crime, hurricanes, and it’s too hot there. Move somewhere else.
My 2 cents.
Fl has really high crime, really poor law enforcement, really high corruption, and really stubborn ignorance.
Prices still haven’t crashed all the way–remember, FL’s main virtues were sunshine and cheeep.
Fl is in a long-term secular drought, and the waterways are being polluted on top of that. Basically, a lot of BAD decisions are destroying the waterways and draining the water table, and to top it off, there’s been less rainfall. I would really be skeptical before putting down some cash on some land here!
Property taxes are ridiculous, and good luck getting an assessment that matches reality. If you’re determined, I would wait for this mess to shake out. In 3-4 years even the local govs will have to accept reality and you could be able to find bargains.
I’ve never understood the appeal of living in these deed restricted communities. Seems like a host of grayhairs with or without obvious moneybags screams “easy marks!!” to local criminal element. Either you’re poor and in trailer park, easy to steal all your portable stuff, or you’re rich and protected by a bored 18yo min wage guard–like she’s going to defend you with her life when some thug from her ‘hood shows up with some guns in the trunk. Uh, no.
Typically, it’s trivial to get past these guards even w/out threats, because they really don’t care. And often you have situations where the gate is only in use part of the day. Whatever.
Oh, one last thing, Fl is terrible about health codes, consumer protection, etc. Expect to overpay and not be satisfied for any sort of work you hire, expect to be potentially ripped off every time you try to buy a car or any other big ticket item (repainted wrecks imported from GA is a nice scam, sold as new), and expect to get food poisoning eating some of the local catch at least once a year.
It’s not too hot there. It’s too cold in just about every other part of the U.S. When we lived in Sarasota I could frequently be found on the local public golf course during the summer months, pulling my golf bag behind me. Where I am now, golf is only a mid-March to mid-November activity for me.
Bill, we were trying to make the same comment at the precise same time!
It’s not too hot here, just too cold everywhere else. I like early summer and early fall where it’s in the mid 80’s during the day and upper 60’s to low 70’s at night. Perfection!
If we all liked the same thing we’d all be jammed into the same place. I just love warm weather - in the summer. I just love tons of snow and really really cold - in the winter (it keeps the population down too).
Enjoy where you live, life is uncertain.
55+, you are in the lucky position to easily run the numbers. If I read right, your rent would be 12K a year. Let’s say you are 60, let’s say you can live independently until 85. Let’s assume that you will be able to sell in 25 years for what you buy for today. Likely you will make money on your home sale by then, but just to make things simple, say you make nothing.
25 years X 12K is 300K, so renting will cost substantially more than buying a house, even with prop taxes and such. Find a nice safe location and buy now while you still have the energy to do so. Energy to find the right property, energy to move, energy to fix things at your new home the way you like becomes an important consideration. Price on the home you buy may drop another 10-15% over next few years, but long term, it will not make much difference. Good luck and have fun!
I am going to weigh in with a VERY Strong opinion on the mobile home option of reader #2 - DON’T.
A couple of years ago I was at a local county council meeting and watched several hours worth of seniors who had sold their primary residences and purchased much cheaper mobile homes. The parks had been bought up by a group who were gouging the seniors for their space rent - it was heartbreaking, 80 and 90 year old widows who couldn’t afford food any more because the space rent had been increased from like $200 to $1400 per month. Apparently it costs a fortune to move those things, so these seniors were really being forced to abandon them, and many of them paid cash for the mobile. The new owners didn’t care as they bled the seniors dry - it was disgusting.
Plus I wouldn’t want to be in a mobile anywhere near hurricanes - don’t they get smashed like pancakes in hurricanes?
Older mobile homes are not really all that mobile and tend to fall apart when you move them.
When I was a kid it wasn’t unusual to see rural properties where someone bought an acre or so and plunked a trailer on it. Cheap way to live. I think the zoning ninnies don’t allow that anymore, though.
It’s illegal to be poor and self sufficient nowdays. They’d rather have you on welfare and under their control.
“It’s illegal to be poor and self sufficient nowdays”
Ain’t it da trute. I could rant on about this. Also the means by which a less well-off, but self sufficient person could make a little cash here and there are getting choked off by corporate and government dicks. Don’t get me started.
Bad Andy
can you give a rolling quick summary of what areas in DEtroit are good..
medium..and bad..
Like NW is good but watch out for blahblah?
I have my moms house in suburbs of Hartford CT ..taxes 7000$ we get 1750 a month rent..absolutely makes no sense to rent a house …in USA
while in Argentina Buenos Aires..115k apartment you can rent for 950$ and
for the moment condo fees are 60$ us and yearly taxes are 600$ us..
makes no sense in USA..that FL example of 69K$ doesnt make sense..
Folks;
Thanks for all the feedback.
Looks like a move to Florida would be a mistake (at least for now). Does anyone have any ideas about a timetable for a move there — i.e., how about in 1-2 years? Or do the crime/taxes issues still remain? Probably, Florida is going to be a problem for a long time to come; so I’ll stay put in Arizona (which ain’t a bad place to be, if your circumstances are O.K.).
Florida is starting to appear to be a lot like California. Entire regions of California are in total-meltdown mode, and are now simply too dangerous a place to live (gangs, etc.). In Maricopa County, AZ, Joe Arpaio and the rest of the police departments are managing to keep things relatively safe.
Maybe . . . the folks in Florida should come here instead!
Walt — followup question: What’s wrong with SW Cape Coral area?
Thanks,
Keith
Thank you for all your feedback. I think I have convinced my husband to stop paying. He realizes that we are just looking at potentially a higher deficiency judgment in the future if we continue to pay negative am.
Thanks for all the replies. We are going to stop paying in April. Hopefully that, coupled with another agressive price drop on the house will give the bank some short-sale buyers to negotiate with.
If we continue to pay negative am, we’re not really “paying”, but adding $3,500 to our principal balance every month. And to any potential deficiency judgment against us.
And we can get into a rental before our credit is trashed (if we get one this month), have lower expenses and then we also won’t have to let go any of his employees in order to keep this train wreck going any longer.
I appreciate that some people think “a contract is a contract” and we should continue to pay no matter what. I understand that - because we have felt the same way. But all the ends up happening is that we continue to dig an early grave for my hard-working husband who is trying to keep his business going without laying off any of his 20 employees during our company’s worst downturn ever - and keep a roof over our heads. And we’re going to lose the house eventually anyway if it gets up to 125%.
We don’t want to ride it out and live there “free”. That doesn’t feel right. We’re going to move out - keep the electricity on and pay for the yard upkeep so the realtor can continue to show it until they foreclose. It’s the best we can do.
Don’t worry so much about credit on the rental. Fact is there are so many rentals out there that credit isn’t even that big of a factor. I am also in your position and have found no problem getting people to rent to me. Save up some money while not paying the bank.
Just an opinion…but at least it’s from someone who is there with you.
You guys are doing the right thing given the circumstances. I was able to convince mom to do the same thing and she is very happy now, less stressed too.