Bits Bucket for April 16, 2012
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Well I have to go take money out of my ever dwindling personal savings (again) to make our monthly tax deposit for our little company that is holding on by a thread today. The good news is after cutting everybody who is left back to the bone is, it`s only $2,700 this month. I will leave the last 10 days of our local realestate headlines for anyone who wants to scan them. Have a great day and God Bless America.
Decent hood = “payment-free limbo”
Where the PTB have allowed prices to drop = “a stain of vacant and abandoned homes in deteriorating neighborhoods.”
Kimberly Miller
Real Estate Reporter
•E-mail Kimberly Miller here
•Call Kimberly Miller at 561-820-4435
•http://blogs.palmbeachpost.com/realtime/
The zombie files: Nearly 7,000 stagnating foreclosure cases lie dormant in Palm Beach County’s courts
10:39 PM Saturday, April 14, 2012
Nearly 7,000 stagnating foreclosure cases lie dormant in Palm Beach County’s courts, creating a payment-free limbo for some homeowners but a stain of vacant and abandoned homes in deteriorating neighborhoods.
Bank of America’s payoff to Florida homeowners draws 678 short sales
9:42 PM Friday, April 13, 2012
Bank of America’s payoff to Florida homeowners who do a short sale instead of dragging out a foreclosure has averaged $12,000 per deal and helped close 678 contracts statewide since it debuted in October.
Mortgage aid slow to flow from Hardest Hit program
9:12 PM Thursday, April 12, 2012
A $7.6 billion program for states most affected by unemployment and the housing crash was slow to start up and has helped too few homeowners since it was launched two years ago, according to an inspector general report released Thursday.
Real Time: Hardest Hit foreclosure prevention program slammed by inspector general
10:01 AM Thursday, April 12, 2012
Deborah Stockhammer, of Jupiter River Estates, applied for Florida’s Hardest Hit Fund to save her home.
Foreclosures, repos up from last year in South Florida
12:21 AM Thursday, April 12, 2012
Banks were busy in South Florida last month filing new foreclosures on 4,119 homes, an 85 percent increase from March 2011 and an indication that lenders continue to make up for time lost during the robo-signing scandal.
‘Tsunami’ of foreclosure complaints swamps Fla. Bar
8:05 PM Wednesday, April 11, 2012
The Florida Bar has fielded nearly 1,400 complaints against attorneys relating to the housing crisis, an unprecedented amount that has buried investigators and forced the group to rethink how it will handle widespread grievances in the future.
Real Time: ProPublica foreclosure song is the new Schoolhouse Rock
9:27 AM Tuesday, April 10, 2012
A generation of Americans learned the basics of history, politics and grammar through Saturday morning Schoolhouse Rock songs, but ProPublica has a catchy new tune to teach us all about the housing crisis.
Firm sells former foreclosures in bulk
6:47 PM Monday, April 9, 2012
Real Estate Asset Disposition Corp. specializes in selling bank-owned homes, but with foreclosure inventory shrinking, the company is turning to bulk sales to buoy business.
Palm Beach County foreclosure filings surge in March
6:08 PM Friday, April 6, 2012
Lenders filed to foreclose on 1,502 Palm Beach County homeowners in March, a 65 percent increase from the same time last year and up 25 percent from February.
Realtors Are Liars®
Do you think they lie about everything, or just when money is involved?
Do you think they lie about everything, or just when money is involved?
If their lips are moving…
I’d hazard a guess from what I personally know of realt-whores, that they live lives of such consumption and style-meistering that money is really all they’re all about. So lies must be fully integrated into their daily living. Lying to mates. Lying to children. Lying to friends. Lying to clients. And here’s a new development: Lying to their own bankers and utility companies, since they can’t pay their bills.
I’d hazard a guess from what I personally know of realt-whores, that they live lives of such consumption and style-meistering that money is really all they’re all about.
I have a cousin (a real estate agent in Texas) who fits that description to a tee.
The rest of the Slim family considers his very conspicuous consumption to be a bit odd. We’re just not into that sort of thing.
This person sounds very “young souled”.
“Do you think they lie about everything, or just when money is involved?”
Well…. considering their very livelihood is a function of the maximum number of lies they tell to the maximum number of people, I would say they lie about everything. Like a cancer, dishonesty seeps into every other part of their life and oozes out their pores. The stark contrast between truth and lies disappears at that point and then they cannot differentiate between truth and lie.
The taller the tale, the higher the profit. This is realtor creed.
Flood of foreclosures to hit the housing market
By Les Christie
@CNNMoney April 13, 2012: 5:33 AM ET
NEW YORK (CNNMoney) — The golden age for foreclosure squatters may soon be coming to an end now that the $26 billion mortgage settlement has been approved.
http://money.cnn.com/2012/04/13/real_estate/foreclosures/index.htm - 63k -
Why do I feel like somehow the impact of this too will be mitigated.
Sheila Bair is awsome.
Fix income inequality with $10 million loans for everyone!
http://www.washingtonpost.com/opinions/fix-income-inequality-with-10-million-loans-for-everyone/2012/04/13/gIQATUQAFT_story.html
tease:
I’ve got the perfect solution, a modest proposal that involves just a small adjustment in the Federal Reserve’s easy monetary policy. Best of all, it will mean that none of us have to work for a living anymore.
“…a modest proposal…”
That was beautiful. I read it last night. Can’t wait for the backlash to start cuz it sounds like Sheila isn’t in toe the line mode anymore.
It might be her resignation letter, effectively. Look for her replacement some January?
Resignation from what? She left the FDIC last July.
Seriously, people, no one publishes something like this if they are in office. No one.
The article did make me look at something a bit differently…
Obviously, if we gave everybody $10M, nobody would want to work, no work would get done, the economy would crash, and chaos would ensue. Inflation would go nuts, etc.
But, what have the bail-outs done for/to the banks? Have they lost *their* incentive to “work”? By bailing them out, are we actually providing a dis-incentive to loan? We’re told that these loans were necessary to save them, to keep our economy operating. But, if they have this easy profit stream on the carry trade, what incentive do they have to make money “the old fashioned way”- loaning into viable business opportunities which creates real economic activity and jobs?
But, if they have this easy profit stream on the carry trade, what incentive do they have to make money “the old fashioned way”- loaning into viable business opportunities which creates real economic activity and jobs?
Right, freakin’ on! Yay, redrum!
That’s spot on. Megabank, Inc actually has very little incentive to seek profits, especially given how the Fed handed out ZIRP money like candy to the too-big-to-fail banks that failed.
the irony is…oboma is out there lambasting the evil 1% and these are his policies from which they benefit.
the sheeple are so stupid.
sheila blair…will you marry me?
michael
William Black (S&L era-former Bank Regulator, now Professor) did an interview on Coast To Coast last night, and Shelia Blair was on the inner circle of players list.
maybe she got religion?
maybe she got religion?
More like she saw her “Let them eat cake” moment and is trying to ingratiate herself with the masses before she loses her head. There’s a storm coming…
What on earth are you talking about?
How will Romney’s policies benefit the 99%?
Pretty soon, the second-home market may be driven solely by the all-cash Canadian and Chinese investors.
POLITICS
Updated April 15, 2012, 11:14 p.m. ET
Romney Specifies Deductions He’d Cut
…
“I’m going to probably eliminate for high-income people the second-home mortgage deduction,” Mr. Romney told supporters at the event Sunday. His plans could allow him to keep the same level of tax revenue but to lower rates, which he said would allow small businesses to keep a larger share of their earnings and expand their payrolls.
…
“His plans could allow him to keep the same level of tax revenue but to lower rates, which he said would allow small businesses to keep a larger share of their earnings and expand their payrolls.”
Shifting tax incentives from second-home investment into small businesses sounds like a slam dunk avenue to help the 99%.
Keep ‘em coming…
Funny you sould mention Romney. William Black said some of the players that helped start this round of the finance/housing bubble are on his economic adviory panel, should he become the next presidential puppet. W’s players are his now. Like Gerald Celente said, our system is a two headed snake.
He also mention 4:1 on lobbyists to congressional clowns.We’re doomed.
evil 1%
“Evil”? A talking point word. Do cities raise sales tax because shoppers are “evil”?
i agree…it is a talking point.
Very tongue in cheek. I use sarcasm on my dog with much the same result. Judging from the comments on the WP, most people are too … oh, comment dit-on… ah yes, stupid… to “get it”.
“We can pay off our underwater mortgages and replenish our retirement accounts without spending one day schlepping into the office.”
“With a few quick keystrokes … ”
Looks like the Wall $t. Geniu$ “work ethic$” has been revealed now to everyone in America.
Her last three grafs are fabuloso:
“Some may worry about inflation and long-term stability under my proposal. I say they lack faith in our country. So what if it cost 50 billion marks to mail a letter when the German central bank tried printing money to pay idle workers in 1923?
“That couldn’t happen here. This is America. Why should hedge funds and big financial institutions get all the goodies?
“Look out 1 percent, here we come.”
Methinks that Sheila is going to be frozen out of a lot of nice luncheons she used to be invited to. Sort of like film director Julia Phillips, author of You’ll Never Eat Lunch In This Town Again.
Talked to a local small-business owner aquaintance at a bar over the weekend who has a niche manufacturing company related to the marine industry. He is mothballing his operation and claims that things are worse now than after the initial downturn which really wiped out alot of businesses. He was in the process of getting pretty drunk trying to forget about it.
Welcome to Phase 2.
Doesn’t bode well for The One’s re-election prospects. Rightly or wrongly, the state of the economy is either credited to, or blamed on, the incumbent.
“It’s the economy, stupid.”
All we need to do now is to decide whom to blame Phase 2 upon.
Rightly or wrongly, the state of the economy is either credited to, or blamed on, the incumbent ??
I agree…Here is the rub with me…What is my alternate choice for a electable candidate ??
Who would have more empathy for the small manufacturing business Liz Pendens described above…Romney or Obama ??
Furthermore, could the house of representatives be any more obstructionists then they have been for the last three years ??
They are not even shy about it…They came out early and made it clear…Their #1 goal is the defeat of Obama…To hell with the country or that little business…We want control of the white house and the power…If there is scorched earth in the wake to get to where Norquist wants then so be it…
I’ll vote for Obama…
What is my alternate choice for a electable candidate ??
define ‘electable’? Why should that even matter?
Why not vote for the person who best represents you, period?
“To hell with the country or that little business…We want control of the white house and the power…If there is scorched earth in the wake to get to where Norquist wants then so be it…”
Iffin’ they’d only $tayed “TrueFiscalCon$ervative$” …
they’d have this election in a landslide, but they went all $arah “The Barracuda” “TrueAngryNow!” “TrueEvangelistaica” “”womenhealthadvocatesaresluts!” and pretty much revealed their sorry ince$t-rece$$ive alleles of self1$t-ideas to all Americans, you know the ones that work/love/paytaxe$also and … oh, yeah, look differently.
Why not vote for the person who best represents you, period ??
Well, we have had this discussion any number of times on the board (wether you agree or not is irrelevant to me) but, the way I see it is if you vote for a candidate that clearly has no chance of winning then in essence you have voted for the ultimate winner in that you could have voted for their challenger…
I voted for Obama…I voted for Obama because I refused to vote for Palin…In other words, with my one little vote I tried to help make sure Palin did not win…I will do the same this year..
You crack me up Hwy…
And yet I have gotten more “your overqualified” in the last 3 years then in my entire lifetime before.
dj, I hope you have someone fluent in English editing your resume. Three errors in one sentence! Hopefully, you just partied too hard last night.
I should know better then to post before having coffee.
“better then”?
mo better then
+1 Skye. I generally don’t correct internet grammar, but given the posting history, in this case I believe it is warranted.
just a friendly jab.
Your what is overqualified?
I think he means his breasts are not perky enough for the jobs he has applied for. And he is not blond enough.
So much for the luxury businesses doing well.
That reminds me, Liz. I have an ex bf that I’m still friends with that works in a similarly described industry although it was megayacht and the reach was international. In the beginning he mentioned barely noticing a ding. Time to touch base and get a reading again, I think.
This guy has a pretty cool success story. Definitely comes from a blue collar background. Hands down, the nicest family I’ve ever met. He got to where he is by laser focused single mindedness and a voracious appetite for industry info. Definitely the type of person I enjoy watching do well.
The company I work for is listed as one of the top ecommerce sites in the U.S. I’m in IT.
We’ve had a total of 3 moderate sized layoffs in the 10+ years that I’ve been here. The 3rd one occured last week.
Not sure how to reconcile the above with the MSM view that the economy is growing again.
small-business owner aquaintance at a bar over the weekend who has a niche manufacturing company related to the marine industry.
Seems to me the marine industry is hurting because of high fuel prices more than anything else. The boat owners I know have either sold them or haven’t put them in the water for a few years now. Too expensive to keep/maintain for the few times the boats get used during the short boating season here in MA.
“He was in the process of getting pretty drunk trying to forget about it.”
Hair-of-the-dog cure?
Hey Suckers….. I have a few questions…..
Why do you prefer renting hundreds of thousands of dollars over renting living space?
Did you calculate the cost of renting the money before you proceeded?
Q1 is answered by my Yes answer to Q2.
Do you plan on offering any actual insight, or are you going to play parrot for the next decade?
Realtors are Liars
Realtors Are Liars
One of my regular reads, Garth Turner, says that Real Estate should be the following percentage of your portfolio: 90 - your age. So, if a 30 something has $10K and they invest it in a $250K house, then Real Estate is 2500% of their portfolio. It should only be 60%.
Maybe I am doing that calculation wrong. I forgot to subtract exit costs from the original $10K. Then the math gets hard.
In a more practical sense, I live on a $10K boat. It used to be $16K boat, and I’ve made some “upgrades”. That home is a small percentage of my protfolio, so it doesn’t affect me much that prices are falling. It would be a nightmarish thing for a mortgage slave, making rent vs. interest calculations moot.
I live on a $10K boat. It used to be $16K boat ??
Which IMO, is perfectly fine…Framing every purchase (including a house) around the idea that it is going to go down in value misses the point and objective of the purchase to begin with…Personal enrichment…Enjoy your summer on the boat Blue Skye…I will enjoy mine in my depreciating Motor Home…
Excellent! Enjoy the open road of freedom.
“I will enjoy mine in my depreciating Motor Home…”
Ha! Just keep the refrig workin’ scdave, takes the sting out of “depreciating”, just like mud on a bee sting!
just keep the refrig workin’ scdave ??
And ice in the cooler for those weee-freshments that you & I both enjoy…
“90 - your age. So, if a 30 something has $10K and they invest it in a $250K house”
Are you sure this formula doesn’t exclude primary residence, Blue? It has to. By this reasoning, an elderly widower should have NO assets in real estate (90-90). But as we well know, that paid-off house is likely to be her ONLY asset.
And how does Turner factor in renting?
The formula is exactly about how much real estate one should own as a percentage of one’s assets. The implication is that one starts with a primary residence and then builds the rest of the estate. The idea is that if you put the majority of your wealth into a depreciating house at age 30 or 40 you are living way beyond your means and have a trajectory toward poverty.
The concept gains no traction on those who have no experience outside of “the house will make you rich.”
When you are 90, if you planned well, you will still have some means to support yourself without working. Having the expenses of a decaying 2000 sqft house on your back will crush you. Time for an appartment in an assisted living complex.
Garth’s advice is good from the standpoint that people shouldn’t be throwing all their money into RE and that they need a balanced investment portfolio. The ‘90 minus’ thing has to be taken with a grain of salt as it breaks down at the extremes.
But, Garth is ultimately a book seller, was a survival kit seller and is now an investment planner. He’ll recommend remortgaging property to invest to meet his ‘90 minus’ thing, and coincidentally he’ll be happy invest it for you.
The implication is that one starts with a primary residence and then builds the rest of the estate.
Even this doesn’t work, Skye. By that reasoning, that 30-year old is being told to buy at the beginning, before building a portfolio, at the same time he’s supposed to building enough of a portfolio to afford the house. The only ways that could work are if you inherit a whole lot of money from daddy, OR you buy a house for $9K or so.
Also, there seems to be these implicit assumptions that
1. You invest all $250K at once (you don’t)
2. The house depreciates to zero (it doesn’t)
3. If you’re not paying a mortgage you’re somehow renting for free (you don’t, at least not if you’re in your working years.)
Why should I follow any of these models?
I think that the point is you should not buy more house than you can reasonably afford. I don’t want to belabor this but it means starting with modest accomodations and if all you can afford is the house (so significant savings aside) the house is too expensive. How many people have all their housing expenses below 25% of income???
Also, the house will depreciate to zero quite handily if you do not continually chase it with maintenance and upgrades. You fight the depreciation constantly.
You’ll discover this soon enough. It’s an expense.
If all grandma has at retirement is a paid off house, she is pretty well screwed.
How many people have all their housing expenses below 25% of income???
I do, and I bet there are plenty of people here that do.
However, we are the exception as should be fairly obvious.
I think we are around 23% of gross. We don’t enjoy all the privileges of ownership, and our place is a tiny bit small for our family size. I’m fine with that rather as alternative to the consternation our neighbors will experience when try to sell, only to discover they have lost six figures in value since 2006.
…they have lost six figures in value since 2006.
This house can lose five figures, but not six!
only to discover they have lost six figures in value since 2006.
And again, you are using values FROM 2006. What if they bought in 2012? Will they lose another six figures?
“What if they bought in 2012?”
Depends on
1. how much they overpaid;
2. how much further market values drop.
Real Estate would be 100% of that person’s portfolio if they have no other assets. If they have $10k and invest it in real estate, then (assuming their house isn’t underwater), then their total portfolio is $250k.
If you are doing a net worth calculation, then that person’s networth is $10k, since that’s the amount they invested ($250k purchase price in assets - $240k loan outstanding).
Aiming for 60% of their total portfolio being real estate, then the person buying a $250k home should have about $167k in other assets not associated with their house purchase (ie, not used for the down payment).
$167k at 30 years old sounds like a really high number to me. You graduate from college at 20 - that means you have to save $15k a year for 10 years to get $167k while starting out with a lower paying job and with college loans to pay.
I would realistically put that number at about $50k-100k. If that were true, then someone buying a home at 30 should be spending $130k on their home to maintain a 60% RE ratio.
That sounds unrealistically low. I would say that ratio should be higher at a a younger age (maybe 80 -90%) and drop as you get older.
I would also say that ratio is not particularly useful, and any mathing it out makes it make less sense, which is not a good thing for an investing ratio. As an example, let’s say the person is now 40 years old. That means RE should be 50% of their portfolio. If their house has gone up to $260k in the next 10 years, then they have to go from $167 to $260 in other assets in 10 years, or less than $90k in 10 years with compounding interest. Why should they have to save so much (167k between 20-30) but less (90k from 30-40) as they get older? You should be able to save more as you get older, not less. That’s the concept of compounding interest.
The whole thing reads like a way to encourage people to take equity out of their house to invest in the stock/bond/pm/whatever markets to me.
That may well be, and fits with some of his other advice. For me it is thought provoking along the lines of our whole generation has thrown themselves under the housing bus.
Welcome to the REAL reason behind the this fiasco.
Ticking time bomb securities designed to fail while making the sellers rich in fees wasn’t just the only reason, but letting homeowners use their equity to make a quick killing in the stock market (and rack up more fees) was the other reason.
Ffftttt!
Turner’s blog is nothing more than a platform for him to peddle his books and recruit investors for his fee-based investment company. The only reason he disparages the purchase of real estate is because he wouldn’t make any money supporting it. He does however, actively encourage people to invest funds that they’re thinking of using to buy real estate and berates people who already own property who don’t want to sell it AND invest the proceeds.
His blog is also heavily censored as he doesn’t tolerate any dissenting opinions and you’ll never read (at least on that blog) of anyone who didn’t do so well following his advice.
Why do you prefer renting hundreds of thousands of dollars over renting living space?
That “living space” is/was likely financed too. As a renter you are paying PITI as well as a cherry on top for your option to leave or renew the lease.
“As a renter you are paying PITI as well as a cherry on top for your option to leave or renew the lease.”
It’s a lot more complicated than that.
For starters, whether an owner can pass on PITI and other costs of ownership to renters depends on local rental market supply demand; at a sufficiently high asking price for rent, a landlord will price himself out of the market, and enjoy paying PITI on an empty unit.
Further considerations:
1) Owners pay high transactions costs on top of the monthly nut, for initial entry into the ownership society, much higher than a renter’s damage deposit. Since tenure of ownership typically lasts less than ten years, these transactions costs are typically spread out over a lot less than thirty years.
2) Renters avoid the capital losses that come with owning a home during a period of falling prices, which owners get to fully enjoy, unless walking away is an option.
3) Homeowners may find themselves stuck in a home which will not sell for their reservation price.
4) Owners who walk forfeit any amounts of their monthly payments which went to paying down principle, and may also face the consequences of a damaged credit rating.
The above negatives to homeowners are offset by special privileges from politicians and banks which are not available to renters, including
a) The right to live in a home without making any mortgage payments for an open-ended period of time;
b) Principle write-downs and other household-level bailouts which are only available to homeowners;
c) Special tax breaks which are only available to homeowners (MID, exemption from taxes from mortgage debt forgiveness income, etc).
It’s a lot more complicated than that.
I realize that. I should have mentioned in a normal market driven environment free of silly money. Too bad that basic needs such as shelter have to be gamed.
That’s part of why I anticipate a rental squeeze in DC. There are quite a few failed condo towers in the area with giant banners, trying to rent or rent-to-own. But they have to charge enormous rents to cash-flow the bubble cost of construction. They’ve tried the hip/urban live-here-work-here-shop here marketing, but I don’t think it’s working.
Geez Louise! How many hipsters are there in DC anyway? I thought it was a rather straightlaced government town.
“But they have to charge enormous rents to cash-flow the bubble cost of construction.”
Did you even bother to read my post before typing?
You were hoping for traction?
It is really too late there. Others may beneift from your post. I found it interesting.
No, Bear, I didn’t read your post, probably because it was still stuck in moderation. Our posts were nine minutes apart.
I had an answer to your post, but it doesn’t matter because you yourself have refuted all of your points with this:
Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-13 23:42:50
“P-Bear, rents would have to fall 23% in order to fall to the level of my PITI payment.”
I suspect you are fine, so long as Romney doesn’t get elected and eliminate half the DC federal government establishment.
I am in a unique position. I am one of the lucky 7% who actually found a job at equal or higher income after being laid off in the 2008-2009 recession. I have a stable job, an interest rate that will never go up, a payment that is less than rent and will never go up, and a strong local housing market that MAY go down slightly, but probably not enough to put me underwater. It is not a great time to buy. For someone in my situation, it is a neutral time to buy. I would NOT recommend buying as general advice without a very close look at each individual situation.
The article about choosing Paul Ryan as VP was amusing. Oh yes, please. Make Ryan the VP candidate, and we can revisit that whole little episode about how Romney bascially invented Obamacare while Ryan voted to turn Medicare in Vouchercare.
Was just reading yesterday’s Bucket and was surprised to see how home prices are going up in Northern Virginia. What happened to all those government cuts that were supposed to crash the market, and all those retirees which were supposed to go poof and leave us their houses?
Well here’s the short version:
1. Gov is hiring at a low level to replace valuable techs and professionals who finally retire.
2. Retirees are not leaving the area. DC winters aren’t bad enough to drive anyone south.
3. Educated kids are finding good jobs, uneducated young bilingual citizens are finding Lucky Ducky jobs.
The net result of all this is that you have growth in the DC area, even if there are “cuts.” I foresee a rental squeeze for at least the next five years. So sorry, while I’m surprised at a 10% increase in NoVa (likely spring hopium), I don’t see house prices going down either.
‘The net result of all this is that you have growth in the DC area, even if there are “cuts.”’
That, or the cuts that haven’t happened yet are still in the pipeline, along with lots of shadow inventory.
‘I foresee a rental squeeze for at least the next five years.’
Perhaps you haven’t heard about all the many efforts currently underway to make more vacant SFRs available as rentals? It might be different where you are. I realize that all real estate is local and all.
Hoping For Payout, Investors Become Landlords
by Chris Arnold
Listen to the Story
Morning Edition
[4 min 9 sec]
Renzo Salazar maintains the yard around a foreclosed house in Miami after the bank hired him to keep the home from falling into complete dilapidation.
Enlarge Joe Raedle/Getty Images
April 16, 2012
The housing market has a new frontier — turning foreclosed homes into rental properties. Some big-time investors are starting to buy up thousands of homes to turn into rentals. That might help shore up home prices. But some housing advocates are nervous.
For decades, most single-family homes available for rent have been owned by mom-and-pop landlords. Sometimes it’s the nice old guy up the street who owns a couple of rental homes, and some even offer advice on the Internet.
But, it’s not just mom-and-pops anymore. With the collapse of the housing market, some professional investors with a lot of money smell an opportunity. Right now, there are fewer people able to own a house and more looking to rent. That’s driving up rental costs. Meanwhile, there’s a glut of foreclosed properties being sold on the cheap.
Jack Macdowell, the chief investment officer of Carrington Capital Management, is looking to spend nearly half a billion dollars buying up foreclosed homes and turning them into rental houses. And he’s not alone. Doug Brien, a managing director of Waypoint Homes in Oakland, Calif., is buying in California and around Phoenix.
“We’ve purchased almost 1,300 homes; we actually bought 137 homes last month,” he says. Brien, it turns out, is a retired NFL field goal kicker who played for the New Orleans Saints.
“The entire time I was playing, I was investing in apartment buildings, learning that business, and when I retired in 2005 I went to work for a real estate investment firm for a couple of years,” he says.
It works really well if you do them in your own neighborhood and you buy five homes and you manage them yourself. It gets a little dicier as you get to 100.
- Scott Simon, managing director at PIMCO
One thing led to another and Brien co-founded this company buying up foreclosed homes. Now he’s lined up $200 million from an investment firm. Brien says companies like his are looking to consolidate and professionalize the single-family home rental market.
…
“Now he’s lined up $200 from an investment firm.”
Breakthrough! The big bucks are awaiting him in the form of OPM.
The wonders of using OPM to get rich has to do with the risk/reward ratio: If the money manager is right (or lucky) then he gets to reap the rewards. If he is wrong (or unlucky) then … well, shucks, the money that becomes lost sorta belonged to somebody else.
welcome to the slums of the future. This field goal kicker is about to get fleeced. Neighbourhoods with high rental units tend to spawn a lot of crime.
Neighbourhoods with high rental units tend to spawn a lot of crime.
Especially if Section 8 in paying ‘da rent.
“It works really well if you do them in your own neighborhood and you buy five homes and you manage them yourself. It gets a little dicier as you get to 100.”
That’s because when you have five rentals and you manage them yourself you have at least a chance of screening out the Tenant From Hell. But when you manage a hundred rentals then your screening cannot be all that extensive and that allows the (oh, so very clever) Tenant From Hell to slip in and destroy your bottom line.
have at least a chance of screening out the Tenant From Hell ??
Ding, Ding, Ding….We have a winner folks…
Spot on Combo…And the “tenant from hell” comes in many forms including the ones that know the HUD fair housing laws to a T…They are your worst nightmare…I am sure Eddie found that out down in Atlanta in short order…
My apartment building doesn’t seem to have any problem getting a few hundred good enough tennants. This is how they seem to do it:
Locate building in good neighborhood.
Charge substantial rent.
No more than two tennants per bedroom.
Forbid food from being stored outside the kitchen (they don’t actually enforce this, but it can be used to end the lease of anyone who becomes a hoarder or attracts vermin as they will almost inevitably be storing food outside the kitchen).
Get access to the apartments at least twice a year to make sure the place isn’t completely trashed to change the central heat/ac system air filters.
Lease rules include no unreasonable noise after 11:00 PM.
Don’t chase off good tennants with unreasonable rent increases.
Limit rent to income ratio to about 27% (utilities included and enforce by checking pay at the start of the lease.
My apartment building doesn’t seem to have any problem getting a few hundred good enough tennants. This is how they seem to do it:
Locate building in good neighborhood.
Charge substantial rent ????
Well, in the context of what combo & I were discussing how many of those 1300 homes that Brian from the NFL purchased qualify under the criteria you suggest above…
One of the advantages of a 200 unit complex is that it is contained, maybe even gated and it can be monitored and controlled rigorously if one chooses to do so…That creates a sense of neighborhood and safety… Impossible to do with 1300 homes in 1300 different locations..
They can also afford and have the resources to kick out the problem tenants ASAP.
You can decide to only buy in fairly good neighborhoods with pretty decent fair market rents. You can’t then decide how many you are going to buy within X months. You have to decide only to buy houses that meet your criteria when they become available.
As for the rest, yes, it is easier to maintain a single building as you don’t have to pay the maintenance crew for driving from house to house. But with GPS, you sure as heck can keep track of the people you have doing repairs and make sure they don’t stop for a movie or a beer in the afternoon. Look, I’m not saying this is an easy venture. It clearly isn’t. I’m just saying that it isn’t impossible. I don’t know if they will bother to do it right. If they do it right, then the volume won’t be that high. If they don’t bother to do background checks, limit rent to income ratios, visit the houses every few months, put in reasonable restrictions on the lease so they can get rid of problem tennants, etc. then they are going to have problems.
I’ve worked for big corporations. Most don’t like doing the hard work part of making money. Finance people in particular have demonstrated that they think they can substitute some magic number mumbo jumbo/risk assessment for doing the work. If that is what is going to happen, well, they are going to fail spectacularly.
If they do enough of it, they won’t fail spectacularly because they are too big to fail at all. Sorry Polly, that’s precisely what happened.
There is a huge difference between the major investment banks and anyone who puts together a large investment fund to rent out houses. There just is. The latter will never have the same clout as the former.
My apartment building doesn’t seem to have any problem getting a few hundred good enough tennants.
Is there a doorman?
Yes, but not of the classic NYC/actually open the door for you type. There is a 24 hour receptionist who takes calls, monitors and sells tokens and hangtags for the guest parking lot, keeps an eye on a few security cameras, hands out packages, takes orders for maintenance, and has a little button that can open the automtic door if you don’t have your fob out or a guest or food delivery person is arriving. They also call up to make sure a guest is expected. And they can give you your spare key if you lost yours or need to leave it for someone to enter your apartment without you. And I think they schedule appointments for the rental office during the day.
I’m currently working for a law firm defending the landlord against the tenants. The tenants were convinced to sue the landlord through ads in the local rag.
The pictures seem to indicate tenants living 5 or so to a room - including the living room, food and stuff everywhere. A lot of the problems complained about could easily be handled by the tenants just cleaning up.
The tenants are by and large Hispanic illegals who were afraid to contact the landlord about any problems which allowed things like clogged drains to happen.
Good luck with that owning hundreds of rentals thingy.
R E Refugee
We’re in a Hispanic Tenement and Hispanic Illegals are pigs. They have no respect for the property, the laundry equipment, trash all over the place, and lots of family crammed into a unit. Noise, Filth, Smells, oh my.They brought the 3rd world over the border.
We came from a very nice hilltop home and got caught in the housing bubble nightmare, now house hunting to pay cash. I knock on doors and observe neighbors. Never will I live by these animals again. Their kids are freak’in animals.
When you’ve come from a place with dirt floors, no indoor plumbing or electricity, and an indoor-outdoor tribal living situation, it takes a few years to learn about Windex,dish soap and vacuum cleaners. When your backyard is the wide open spaces, dropping trash and leaving it where it falls so “the wind will take it away,” is not necessarily considered an anti-social act.
Maybe these lawsuits will convince the landlords not to rent to undocumented tenants and to be more stringent in enforcing the occupancy laws. Sending a manager in to check the “ventilation system” a couple of times a year does wonders for discouraging the five-to-a-room syndrome. As does calling the county zoning inspectors. And noise and filth issues can be addressed by calling the sheriff so many times that they finally get on the landlord to start evicting habitual offenders.
Ironic, isn’t it that so many illegal immigrants end up washing our dishes, pots and pans, cleaning our houses and yards, tidying our hotel rooms? But at least it’s a good way to learn the new culture.
The dirt-poor Brazilians are clean and have clean shacks, (that don’t look to good but they are clean) most all Brazilians are clean people.
“We’ve purchased almost 1,300 homes; we actually bought 137 homes last month,” he says. Brien, it turns out, is a retired NFL field goal kicker who played for the New Orleans Saints.
Here in Tucson, there was an outfit called the Fina Company. Started by a former University of Arizona and pro football star by the name of John Fina.
ISTR reading that said company went bust not too long ago. And a friend’s son was managing an apartment complex that was one of Fina’s biggest assets. That is, until it was bought by another student housing complex management company from Texas.
Friend’s son said that the Texans really knew their stuff. But, alas, the complex was recently sold to another set of local yokels. Who don’t have a clue about apartment management.
The army of contractors will NEVER stop growing.
Correct. A “cut” just means that the army’s size won’t grow quite as fast as originally planned.
The Golden Age of Reductions in the Increases.
A lot of the kids that I knew that got jobs after the initial 2008 slowdown did get them in one of two places: DC or finance. By finance, I mean Wall Street, one of the top 5 banks or other major lenders. Yes the banks were laying off at that same time. Apparently they were rebalancing. Probably laying off higher paid groups while hiring the underlings.
It’s true that people get good schooling here and often don’t have jobs to go to but they do apparently seem to find footing elsewhere in the good resume padding employers. This is nothing new for CNY. It’s the story of every single one of my husband’s friends. He’s the only one that returned to the area and the only reason that happened is 9/11. We wanted to be closer to family.
There is a very high percentage of my friends and his friends that ended up in Northern VA.
That trend is your friend Oxy. Just don’t start crowing about your Zillow profits.
I do wonder about the trajectory of this trend: The whole in serious decline while wealth is drawn to the center. To those at the center, it looks like things are improving.
It would be interesting if we moved our Capitol every four years, like the Olympics. It would spread the Capital around.
The whole in serious decline while wealth is drawn to the center. To those at the center, it looks like things are improving ??
I agree…Thats what I see…
It sounds very… Roman.
Hail Ceaser!
“It sounds very… Roman.”
Spiraling towards… Ramen.
I spoke to several of my friends from that area (NoVa) at a recent get together. I don’t think they had the feeling they were raking it in, just lucky enough to have avoided what some others are facing right now. One of them reported having both up and down years since 2008. He kind of approached his small business ownership as riding the wave while it was there.
Our hometown (coastal NH) that we are all from is reportedly feeling the pain. One of my HS best friends reported laying more and more people off at her long time employer until finally she was the one laid off. She does already have another like position though. Her husband who does commercial construction appears to have kept busy so far. But she told me the Seacoast was hit pretty hard w/layoffs.
I intend to crow about the Zillow profits about 10 years from now. And then compare it to 10 years of throwing cash in the trash.
In the meantime, enjoy your growing losses.
Indeed I will, RAL!
“throwing cash in the trash”
Oh, that is harsh. I believe you have completely gone over to the dark side.
If things somehow do not play out as you have bet that they will, foreclosere isn’t a good thing for security clearances!
Yeah, and if I somehow foreclose BEFORE losing my job, I’ll take that into consideration.
HA!
In my office, it isn’t so much that the retirees love DC winters (last year was easy, but that doesn’t always happen). Their issue come with being the classic sandwich generation. Their kids have found jobs here (don’t want to leave the grandkids) and they are discovering just how hard it is to take care of aging parents who live in Florida while you are working hundreds of miles away. They don’t want their kids to have that burden. I hear people talk about keeping the house until they can’t manage it anymore and going directly into senior housing or at least an apartment where their kids can do what it needed for them without getting on an airplane.
I can certainly relate to what you’re saying about jumping on the airplane to tend to elderly parents.
One of my reasons for moving here was the hope of attracting my folks after they retired. They were in their sixties when I moved here back in 1987.
Well, wouldn’t you know it, my dad continued working as an engineer until he was no longer able to. That was three years ago.
Mom retired from teaching back in 1993, but guess what. She made it clear in every way possible that she had no intention of pulling up stakes and moving to some place where she only knew one person. (That would be me.)
So, there they are in PA. And that’s where they’re going to stay.
As for me, let’s just say that when I was back there in February and March, I really felt like I was a visitor who wouldn’t have any further ties to the area after my folks are gone.
Time again to reshuffle the deck chairs on the Titanic?
April 16, 2012, 7:42 a.m. EDT
Correction arrives as key trend line breaks
By Bill Gunderson
Now that the S&P 500 has broken its six-month trend line:
…
And the Dow has dipped under 13,000 and moved below its 50-day moving average:
…
The chances are pretty good that we have now entered into a long anticipated correction.
I wrote here two weeks ago on MarketWatch :
“Of course, all bets are off once this current trend breaks. It will then be time to re-shuffle the deck a bit.”
“The chances are pretty good that we have now entered into a long anticipated correction.”
Meh.
Watching the whipsaw of the futures numbers over the last 24 hours, I’d say the international equivalent of the PPT are once again out in full force.
Is the author trying to say the central banks have run out of tricks up their sleeves? I can’t help but think we’ll watch them get more and more desperate before that happens.
Everything that I’ve read and seen makes this look like a replay of last year. A correction in equity prices as the Fed jaw-bones about pulling the punch bowl of QE and Europe’s debt debacle continues to ripple through the PIIGS. Then, when it looks like the equity markets and the economy are faltering and confidence is failing, another round of QE… By August/Sept, equity prices will start to recover and rally into year end.
The only “black swan” I see that could upset the similarity to last year is whether Israel attacks Iran over Iran’s nuclear program. Oil going to the moon would not bode well for anyone, and that is guaranteed if Iran is attacked.
‘Global politics and economic theory don’t lend themselves easily to punchlines. But in January this year, Christine Lagarde managed to inject a little light relief into proceedings at the World Economic Forum. Holding up her Louis Vuitton handbag, the new managing director of the International Monetary Fund (IMF) turned to her fellow power brokers in one session and said: “I am here, with my little bag, to collect a bit of money.”
‘The joke broke the ice and the room rippled with laughter. But, beneath the disarming charm, Lagarde was deadly serious. For months now, the IMF has been trying to coerce its 187 members into committing as much as $600bn (£378bn) more to the fund to build what she described at the Brookings Institute in Washington last week as a “global firewall” to defeat once and for all the European sovereign debt crisis.’
‘Ever since “the Greek problem” flared up again in July last year, the talk from Brussels to London to Beijing has been about “big bazookas” and “giant firewalls” – a vast bail-out fund available to rescue any struggling nation from bankruptcy.’
Wasn’t the IMF conceived by JP Morgan and his cronies in an effort to effect global monetary policy preferential to bankers like himself or is that just a conspiracy theory?
I’m not an engineer or an economist, but I’m pretty sure ‘giant firewalls’ don’t make debt go away. Paying it back or defaulting does.
If you are even close to being right, then life as we know it will cease!
“Paying it back or defaulting does.”
Wouldn’t routinely dousing financial crises with global bailouts of printing press money be the effective equivalent of an ongoing, financially-engineered debt default?
Or am I missing it?
Speaking of walls, it does kind of seem like we’re trying to build dikes and attempt to live below sea level long term, as the ground we’re on slowly sinks.
Ahansen, apologies for the gruff response to your response to my post from Friday. I got my feathers in a ruffle when I misread your use of “asses”. I thought you were poking fun and only realized later that you meant to say “assess”.
My bad…
Ha Ha Ha! That’s funny!!! It’s an Emily Litella moment.
It lika my daddy always toll me….
Who’s that? Oh, never mind.
Tea all over the keyboard, easty.
Lexdysia and defensiveness have taught me that commas are our friends.
I figured you were beset with kids-on-your-lawn-itis and honestly thought nothing of it.
Thanks for sharing this laff.
kids-on-your-lawn-itis
LOL. For me, it’s dog-crap-on-my-lawn-itis… Damn dogs come from all over the city just to crap on my lawn.
This is why the gods invented pea shooters. Load o’ fun for the whole family!
(A small hole cut in the lower corner of your screen can be plugged with a cotton ball for easy access.)
I can top that one.
Yesterday, I was on the radio down at good old KXCI. I was the techie running the mixing board, and I was also expected to do a bit of talking on the air.
So, I opened the mike and said “Stand by!” to all who were gathered in the studio.
Oops. I was supposed to say “Stand by!” and THEN turn on the mike.
Oh, well. The producer and one of the other people on the show congratulated me for making a big enough boo-boo to join the official KXCI Flub Club.
Negative equity concentrated in a few states.
Here’s the money shot… “The aggregate amount of negative equity in four states (California, Florida, Arizona, and Massachusetts) makes up over 50 percent of the approximately $700 billion of nationwide negative equity overhang. ”
Turns out that Massachusetts has an average negative equity amount of $127,772. The only state with a higher average negative equity is New York, at $130,341. That’s more than double the US average of $65,000 according to the article.
Check out New Mexico:
New Mexico
Neg Equity Mortgages: 36,898
Avg NE Amount: $82,371
Total NE $: $3,039,337,194
Aggregate Nationwide percent: 0.42%
I’m pretty sure the median home in NM is not much more than $82k. Large ranches/multimillion dollar purchases must throw the averages off in most states - they should have used medians instead of averages.
I don’t take our state numbers too seriously. Downstate which is a whole different world pricewise throws everything off.
Back from a week of school in DFW. Dallas Metroplex still sucks.
Has dinner with a cousin who works for one of the credit rating agencies. She would be right at home with us. Was telling me about her 70 year old co-worker that took out a 30 year, $200K mortgage.
Shop talked with some other guys. Business is as screwed up as it was three years ago. No jobs around that pay anything. Nobody wants to hire full time help, so the 1099 guys are busy, but have no pricing power.
Son in Law may have gotten a promotion out of the Wichita tornado. Flight crew didn’t want to move the aircraft out of town Saturday afternoon before the SHTF. The Mother ship tried to get ahold of the Crew Chief to make sure the airplane was tied down, but he never answered the phone, so they had to call SIL. HE got the airplane secured just in time……tornado passed approx 4 miles south of the airport, sustained winds of 84 mph at the airport from the air inflow.
Storm/tornado may have finally nailed our old house, according to reports. Barely missed by tornados in 1991 and 1999.
Glad you were out of the danger zone, GS. I was thinking about you over the weekend.
Drove thru Norman, Oklahoma less than two hours before the one hit there Friday. got out of class early on Friday just to avoid that scenario (trying to get thru OKC with thunderstorms during rush hour).
Went storm chasing with middle daughter Saturday afternoon. At one point, had to make desicion to go south, or go to Salina, KS. Made the mistake of consulting daughter…..she said go south.
Missed two (big) tornados (see Wichita NWS website for pictures). Asked daughter why she chose south……was it to “split the difference” between two equally strong storms? NO.
She went south, because an ex-boyfriend lived in Salina, and she didn’t want to be in the same town on General Principle……..
Note to self: Ask more questions
Nobody wants to hire full time help, so the 1099 guys are busy, but have no pricing power.
No pricing power and no benefits power either. Makes one wonder whether a Public Option/Single Payer health care is a good idea at all. If we somehow get Single Payer, companies would have a good excuse to fire everybody — I mean engineers, lawyers, accountants, and then hire them back by the hour, when they feel like it, like the guys I see on the sidewalk outside Home Despot. And that’s assuming the job can’t be done in India.
Even the Foxconn workers in the dorms have greater job stability than that.
There is a definition of employee. You can’t just make it up.
The definition of employee is bent six ways from Sunday on a regular basis across many industries. The only time there is any enforcement (or even checking) is when there is a complaint or it is politically expedient; sort of like immigration law enforcement.
Labor laws? Don’t make me laugh.
Unfortunately, there is the Beltway illusion of how Labor markets and laws are performing, and then there is the real world.
Seems that the regulators view the lack of complaints as proof that their laws are working.
The reality is that J6P and the 99%ers are getting bent over six ways from Sunday. Turning full time people into 1099ers, but still treating them like employees. Stiffing people on overtime pay. Collecting payroll deductions until the end of the quarter, then filing Chapter 11 before making the quarterly payments.
Nobody files complaints, because everyone knows that nothing will be done about it. Filing a complaint as a contractor? Get real. That’s a guaranteed way to make sure you don’t work anywhere again. Even if you are right, it will take five years for the DOL to get around to slapping someone on the wrist.
Eventually, this will end. Maybe not in our lifetimes, but someday. The serfs are bravely taking the floggings now, but they won’t forget. It may mean that the next two generations will have to do the “paying back”, but payback there will be……
I’m not saying that all is sweetness and light now. What I am saying is that if all the big corporations tried to move all/most of their employees to 1099’s in response to a change in the health insurance situation, there would be a few very high profile cases to scare most people back in line.
Yes, there are always going to be people who break the rules and people who get screwed over who won’t complain. But you can’t assume that 3 years after the health care exchanges coming on line that there won’t be any more employees in the private sector. If nothing else, it would be obvious because the IRS would have to spend gobs more money to deal with quarterly filings from indivduals rather than whatever big companies do to send info over electronically. It isn’t like that sort of change would go unnoticed.
What’s wrong with being a 1099er if you have single payer health care coverage? It’s not like anyone gets a pension anymore. Single payer frees us from servitude to big companies that offer health care coverage. We can go where the jobs are, work for start-ups, or become entrepreneurs ourselves. It’s pro-business, and pro-little guy.
What’s wrong with being a 1099er if you have single payer health care coverage? It’s not like anyone gets a pension anymore. Single payer frees us from servitude to big companies that offer health care coverage. We can go where the jobs are, work for start-ups, or become entrepreneurs ourselves. It’s pro-business, and pro-little guy.
That’s why I keep saying that, when single payer goes into effect, that the National Anthem will temporarily change to “Take This Job And Shove It!” I’m especially fond of the Johnny Paycheck version.
That’s the way the movie/tv industry works.
The fraud, graft and corruption of the Housing Crime Syndicate transcends silly and intentionally diversionary topics like _____.(fill in the blank).
+1
Topics like - Cute Kittens.
This should make for some sparks:
Argentina just nationalized gas and oil producer YPF.
Argentina is nationalizing oil company YPF, which is partly owned by a Spanish company. The Spanish government says it will defend the companies’ interest and has the support of European allies.
The euro is surging at the moment but I doubt Argentina would be doing this if Spain wasn’t already so weakened — that’s politics.
http://www.forexlive.com/blog/2012/04/16/old-worldnew-world-battle-heating-up-as-argentina-nationalizes-ypf/
I was thinking the same thing. A wounded giant with a gutted military. Now we know why the US military gets so much money. I fully expect China to do the same when they realize they can’t squeeze anymore blood from the US.
Isn’t an all powerful and massive government just grand?
They are just doing it for the people, making things fair and making sure those evil businesses get what is coming to them…
I predict they will be freezing in the dark before too long.
Kinda like Venezuela
and making sure those evil businesses get
You said “evil”. Did you make that up yourself?
saw geithner being interviewed by George Stephonopolous on Sunday. George did a pretty good job and Timmy looked uncomfortable and tried to politicize every answer to his questions.
Timmy is not a very good liar.
just after that interview he got the “panel” together.
the topic? how romney is going to connect better with women voters.
this election is a comedy.
A tragic comedy.
You guys are singing my tune. I liked it when Gerald Celente (a trend analyst) said our system was a two headed snake.
William Black had some not so nice things to say about Geithner last night. Black is a pretty good guy and a straight shooter, imho.
Ah yes, Ann Romney, who “worked” to raise her five kids … with the best maids, nannies and yardworkers that $200M can buy.
When I was growing up, I had neighbors with four kids. The mother in that family came from money, and oh, did she know how to spend it. Good thing she married a guy who was a Delaware River/Bay pilot. He was bringing home some big bucks.
Despite the fact that this family was quite affluent, the kids were expected to do housework, yard work, home repairs, and the majority of the tending of the vegetable garden.
I can remember many trips to the grocery store with one of the girls, who was my best friend. She was a super comparison price shopper, even at the age of 10. I’m told that she grew up to be a stock broker in Palm Beach, FL.
someone has a bad case of the mondays.
saw geithner being interviewed by George Stephonopolous on Sunday. George did a pretty good job and Timmy looked uncomfortable and tried to politicize every answer to his questions.
Timmy is not very good at being interviewed. Or at public speaking.
And, while I’m on this topic, someone really needs to get on Obama’s case about all the “ummms” and “uhhhhs.” I know the guy has/had speech coaches. Everyone at the senior governmental level does.
Speaking of said level, Transportation Secretary was in Tucson last week. I heard him speak, and let me tell you, the guy can really nail it. One of the better public speakers in the Obama Administration.
if I were timmy and George asked me to respond to a quote from Dr. Roubini about the current state of the economy I would be very uncomfortable responding with “that point has no basis”.
More buyers are seeking homes in ’shadow market’
Article by: JIM BUCHTA , Star Tribune
Updated: April 14, 2012 - 9:00 PM
With inventory at historic lows, many Twin Cities house deals are happening behind the scenes, long before the properties hit the market.
hide
Mike Blood found this house in Blaine before it went on the market when he spotted a trash bin in front while in the neighborhood.
House hunters frustrated with the area’s scant supply of homes have shifted their search from the streets to underground.
More buyers are targeting homes that haven’t yet hit the market, a trend agents say will grow as inventory shrinks and the mismatch of what’s available and what’s desired continues.
Such back-pocket deals used to involve mostly luxury homes where buyers and sellers wanted to keep the sale hush-hush. But lower-priced houses are becoming a bigger part of the mix because even those are in short supply.
Working behind the scenes gives buyers access to the deep well of Twin Cities homeowners who would like to sell, but don’t think the market is healthy enough to list. Agents say they identify these sellers through referrals, as well as track those who listed their homes but backed out when they couldn’t sell. There are also buyers who work with agents to make unsolicited bids on homes they think fit their needs.
“There is a shadow market out there with a lot of people who want to sell,” said Joe Grunnet, broker at the Downtown Resource Group. Homeowners “just don’t know they can sell in this market. They still think the world is coming to an end.”
…
The “shadow market” sounds like a great way of price discriminating against prospective buyers, who don’t have the advantage of seeing what a publicly advertised listing does on the MLS over time.
Buy at your own risk!
Bet against Uncle Buck at your peril.
Asian stocks slumping late
Chinese shares decline, dented by fresh concerns about economic growth, while Japan loses hold of gains in afternoon trading.
• China allows banks to short-sell U.S. dollars
April 16, 2012, 3:13 p.m. EDT
Gold futures end at lowest in a week
By Claudia Assis and Sarah Turner, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures declined Monday, as investors looking for a safer harbor turned to the U.S. dollar and bonds and after data on March U.S. retail sales came in upbeat.
Gold for June delivery (GCM2 -0.06%) fell $10.50, or 0.6%, to $1,649.70 an ounce on the Comex division of the New York Mercantile Exchange. That was gold’s lowest finish in one week.
China loosens daily currency trading limits on the yuan, a move coming ahead of the International Monetary Fund’s spring meeting.
Resurfacing concerns about the euro zone’s debt problems weakened the euro, said Jim Steel, analyst with HSBC in New York.
That provided steam for the dollar, which spent most of the session stronger.
Gold found itself in the same situation as last year, when problems in the euro zone were so great the metal suffered, unable to catch any safe-haven flows, Steel added.
The metal also “has been unable to resist the general downward spiral” that hit commodities and some equity markets earlier on Monday, analysts at Commerzbank said in a note to clients.
The U.S. currency was higher for the most part, continuing a trend from last week when concern about Europe’s finances rose along with Spanish 10-year government bond yields and as data on growth in China, the No. 2 global economy, disappointed. Read more on dollar
…
Metals Stocks Archives | Email alerts
April 17, 2012, 2:10 a.m. EDT
Gold futures slip in electronic trading
By Virginia Harrison, MarketWatch
SYDNEY (MarketWatch) — Gold futures extended declines in electronic trading Tuesday, amid broad losses for commodity futures as the dollar index edged higher.
Gold for June delivery (GCM2 -0.08%) fell $1.70, or 0.1%, to $1,648.00 an ounce on the Comex division of the New York Mercantile Exchange during Asian trading hours.
The metal closed at its lowest level in more than a week on Monday, after investors sidestepped gold and instead sought out the safe-haven of the U.S. dollar as euro-zone debt concerns resurfaced.
…
April 16, 2012, 4:40 a.m. EDT
Spain stocks turn negative as bond yields jump
MADRID (MarketWatch) — Spanish stocks gave up earlier gains to turn negative on Monday, as banks slipped further into the red and the yield on the 10-year government bond (ES:10YR_ESP +0.05%) rose 14 basis points to above 6%.
…
Time to add the Indian economy to the worry-wart watch list?
April 17, 2012, 2:09 a.m. EDT
India cuts rates more than expected
By Nick Godt
MUMBAI (MarketWatch) — The Reserve Bank of India on Tuesday surprised investors with a bigger-than-expected half-percentage-point cut to its key lending rate, sending it to 8%, saying the state of India’s economy is “a matter of growing concern.” At the same time, the central bank said that the economy’s deviation from its growth potential was “modest” and that inflation risks persisted, “inherently,” limiting the scope for further rate cuts. Growth forecasts of 6.9% for the year ended in March were close to the RBI’s own projection of 7% growth, the central bank said. Assuming a normal monsoon season, continuing improvement in industrial production and in the global outlook, the RBI said it expects growth for the current year at 7.3%. After trading in negative territory ahead of the announcement, the benchmark Sensex (IN:1 +0.44%) gained 1% to 17,320.
The Growing, and Dangerous, Investor Market in Foreclosed Properties
By: David Dayen Monday April 16, 2012 8:54 am
I’m seeing way too many stories about this boomlet of investors buying up foreclosed properties to resell as rental units that don’t challenge the basic assumptions. They take a detached view of a phenomenon once limited to local investors that has now branched out into hedge funds and capital management firms. And they’re not questioning whether it works to scale that business up.
One of the only voices in this NPR story urging caution is, believe it or not, Scott Simon of PIMCO. He questions whether large investment firms will meet the challenge of being effective absentee landlords. But he adds that “there’s a tremendous amount of money in the private equity space, for example, that’s chasing these kind of investments,” so in the end he doesn’t view the challenge as much of a problem.
Only Andrew Jakabovics lets out a little more truth here:
You need some standards here in this market, or you’re going to lead to slumlords. Letting the big private equity firms dominate this space, rather than designing a program to market and sell only to local investors who will manage the property themselves, and you’re really asking for trouble.