Las Vegas Speculators ‘Bit Off More Than They Can Chew’
The Las Vegas News press has the latest on that housing bubble. “As the foreclosure rate creeps up in the Las Vegas Valley, the options for homeowners in financial trouble may be dwindling. A rise in interest-only and adjustable-rate mortgages have left even the distressed-property buyers saying ‘no thanks’ to many homes a few steps away from auction.”
“Despite a recent increase in signs around town promising such things as ‘CASH FOR YOUR HOUSE in 48 HOURS,’ the market for mortgage defaults isn’t that good right now, lamented some in the foreclosure-buying industry.”
“‘We get a lot of phone calls, but only so many of those phone calls are good phone calls. Most have no equity or are upside-down,’ said Doug Kupertman, who buys properties in danger of foreclosure. He has seen the number of inquiries from his Yellow Pages ad increase over the past six months, but few are qualified leads.”
“Rising rates, interest-only loans and ARMs with balloon payments have now made a lot of deals simply unworkable, according to Kupertman. ‘In that kind of business, there is no money in it for me,’ he said. Investors often end up with unmanageable payments on non-amortizing mortgages. ‘There are a bunch of people who don’t have money but read a book about flipping houses. They find a house and want to turn it around for a profit.’”
“Non-amortizing mortgages are common deal-killers when homeowners seek fast-sell, fast-cash foreclosure buyers, according to one operator in the distressed-property buying business. ‘The market is going down and you have people in a property that is worth less than they owe,’ said the man, who asked not to be identified. ‘We get five calls a day from people we can’t help. They are stuck in their homes with no equity.’”
“Federal Deposit Insurance Corporation’s most recent numbers show 61.3 percent of Nevada mortgage loans are interest-only and ARMs, making it second only to California.”
“Affordable Housing Solutions owner Janis Rounds gets a lot of calls on buying homes with two-year, adjustable-rate loans that are about to reprice. Homeowners know they can’t the pay the rate increases, but are often subject to early repayment penalties if they sell.”
“‘Very few of the people who call have any equity to be concerned about,’ she said, recalling a California investor who offered to sell 26 Nevada homes to her. ‘He was upside down in 19 of them.’”
“Suspect appraisals on the original loan often come into play in defaults. ‘There’s no way some of these properties could sell for what they were (appraised at being) worth,’ Rounds contended. ‘Without these people knowing it, they are getting a loan in excess of 100 percent of the value of their homes.’”
“Overinflated appraisals are a common problem in the home loan industry, agreed Bill Apgar, at Harvard University. ‘Often, it was the mortgage broker that got them into a house that was overpriced,’ he said, adding that this often leaves the troubled home owner angry at the wrong people. ‘These guys are long gone now, and the person on the phone (with the home owner) is the one who purchased the contract.’”
“To make matters worse, potential homebuyers may be advised to borrow beyond their means, Debra March of UNLV surmised. ‘What I had heard is that people were being encouraged to buy as much home as they could afford by the brokers.’”
“Apgar concurred that it can be a vicious cycle for homeowners trapped in bad loans, and he cautioned against selling for quick cash. ‘People being foreclosed on are in a state of ether, then some quick-talking person comes along.’ As a result, he added, the homeowner can often end up ‘victimized twice,’ first by the broker and then by the buyer.”
“‘Most people in foreclosure don’t have a great sad story. Most people in foreclosure just bit off more than they could chew,’ Rounds said. ‘One woman refinanced her home and bought three motorcycles with cash and now can’t pay her mortgage.’”
Thanks to the reader who sent in this link.
FLIPPER ALERT:
Phoenix Arizona (Mesa area) MLS# 2542029
Property was purchased late April 2006 for $335K. Nothing was changed in the property but a fresh coat of paint. 3 weeks later house back on the market and asking $395K now.
No bubble bursting till greedy flippers get burned.
>‘One woman refinanced her home and bought three motorcycles with cash and now can’t pay her mortgage.’
This is sickening.
So much for “what happens in Vegas, stays in Vegas” — poor woman thought her MMF cycle club would stay a secret.
Vegas already has an organization to help these people — it’s called Gambler’s Anonymous.
Why is it “sickening”? Stupid, irresponsible people deserve to get their heads handed to them — that’s how they eventually become wiser and more prudent. I’ll be there (in 2007 or 2008) to pick up the pieces and finally pick up a decent house at a fair price.
What is sickening is that you and I the taxpayers are going to have to pick up the tab for this spending.
Well, we can’t expect someone named “Schadenfruede” to find it “sickening,” can we? Should we re-phase it, “delicioius”, or “delectable” ? Or shall we reserve those for a little more serious cases?
And I will pick up the fuel efficient motorcycle.
Hey,
My grandma needed those 3 bikes.
OT. One Los Angeles Craigslist reader has become irate with the volume of out of state listing for real estate being posted on the Los Angeles Craigslist. It is worth a read.
It reads:
Ok, I know this posting is a little contradictory and will probably be pulled soon.
However, I am sick of looking through craigslist for housing in the LA area and having to scroll through pages of Las Vegas, Miami, Oregon, Washington postings. WE’RE NOT INTERESTED. There is a reason we came to the Los Angeles Craig’s list and not any other city. Do you sellers feel like you will persuade us buyers to look into a completely different state? Is it working for you? All it’s doing is annoying us!
Los Angeles Friends In Deed
Trying to capture some of CA’s equity locusts…good luck…how many more are left?
Judging from my coworkers, there is quite a bit of equity locusts willing to throw themselves into the light. People who *were* sensible who are getting ready to liquidate their savings to jump into this opportunity. Bummer the light is a bug zapper.
Neil
The stories of John Doe-Flipper with 15-20 houses and who is underwater are pilling up. I still say the 40% investor # is seriously understated. 10y touching 5.13 today. All LIBOR based rates are now above 5.12. No way out for the FB’s and their toxic mortgages
10yr is down to 5.10 today actually.
The ultimate “flipper”:
Dwek’s Empire Of Debt
“Eleven banks along with 42 businesses, partners, investors and others say Solomon Dwek’s real estate empire owes them $298.1 million.”
“Last week, Lomurro released a list of more than 350 properties owned by Solomon Dwek, his wife Pearl, or companies he has an interest in. Robert A. Weir Jr., Dwek’s attorney, has said his clients’ properties are worth an estimated $300 million.”
“Last month, Dwek asked the court to allow him to withdraw $23,070 a month from his assets to cover his living expenses. That amount includes $18,000 to pay three mortgages on his home, according to his request.”
“Although the house was assessed in 2005 at $1.2 million, public records show the mortgages on Dwek’s Crosby Avenue house total $2.4 million. That includes $850,000 in two mortgages issued by Community Bank of New Jersey in 2001 and 2004. The bank was bought by Sun National Bank.”
“Washington Mutual Bank issued a third mortgage on the house for $1.5 million this January to Pearl Dwek, Solomon Dwek’s wife.”
Sorry, wrong link:
Creditors: Dwek owes $298.1M
This guy would make Donald Trump proud
lol
This story is un-freakin-belevable! What assets does this guy have to ask the court for 23K for monthly living expenses. NO WAY! He should be turned out onto the street and all assets liquidated to pay off the debts. THEN and only THEN if anything is left over, can he lay claim to it. Everyday, I am amazed at what I read and learn over and over that “Truth is Stranger than Fiction”. Guys like this skirt the law and no one knows when they get away with it, and when they are sometimes exposed the punishment is minimal. Ahhhhhhh!!!!
Wonder if Fannie or Freddie bought those three mortgages on the same house.
It is time for debtor’s prison, shall we say 5 years for each house in default.
Hell no! That would mean our tax dollars would pay for their silly asses to sit in jail.
that’s ok. Arizona’s got them chain gangs (no joke). Drove in on I-10 one day, swear it looked like a scene from Cool Hand Luke, boss man standing there w/ a shotgun over his arm. Yup, a failure to communicate!
Believe me, got no qualms with it. I gotta work for my food and shelter, they oughtta too! Road crew in August, ROCK ON FLIPPERS!
….”They are stuck in their homes with no equity.’
Not for long!
Yesterday I was helping a buddy, who is a teacher about to retire, decipher the information he was given on 403(b) plans. As I looked over the list of the funds among which he had to choose for the investment, I wondered how many of them are waaay overinvested in MBSs and what, then, will be the effect on my buddy’s retirement savings as these Las Vegas loans and others like them, all over the country, go belly up. I hope I am wrong, but to me this is one of the scariest parts of the bubble-bust — countless people who will “pay” for the excesses of crazy lending have no clue that they are on the hook and took no active part in the run-up.
Does you’re buddy have an option to get into a fixed return fund?
I’m a government employee, our savings plan allows you to put it in different types of stock funds, gov bonds, fixed rate, or a combination. Now’s a good time to get out of any sort of speculation.
The form says he has a choice of 403(b), 403(b)(7) and 457(b). IT doesn’t really explain the latter — it that what you’re describing?
There should be a fund description either in the info you were given or on the retirement systems website. The three items you are describing are different types of accounts not actual investment choices. They are for different types of workers and situations.
The fixed fund option is a fund that “doesn’t lose value” it’s essentially a money market account type fund, but it usually pays something nearer the rate on longer term investments.
For federal employees this is the fixed return fund:
http://www.tsp.gov/rates/fundsheet-gfund.pdf
You should be able to find similar sheets at the retirement plan administrators page. In those sheets should have a breakdown of the assets (MBS paper has FNM, FHLB, GNMA or something similar on the front if you are that concerned). If they don’t give specific investments look for asset backed.
If you want my advice have your friend hire a professional to advice him and worry far more about the cost of the funds in the retirement plans.
Bluto — thanks– this guy is in a State of Florida system. It’s a shame, really — he’s been a teacher for 40 years and they don’t seem to have anyone who can or will sit down with him to explain what these plans are, nor do they seem to publish the differences in fees and return assumptions among the funds.
“Federal Deposit Insurance Corporation’s most recent numbers show 61.3 percent of Nevada mortgage loans are interest-only and ARMs, making it second only to California.”
**********************************************************************
YOu are so right about the risk in MBS now.
And here is something else to think about as the stocks in funds, 401Ks, etc.
This forum has mention of the Plunge Protection Team from time to time. Some believe it exists and is active(like me) and others believe that we still have free markets.
This is interesting input on the question:
Posted at lemetropolecafe.com:
“2% Rule Update
3 Year Anniversary: This has never happened in 85 years of Dow Jones History
We have now reached the 3 year anniversary on the 2% rule so I thought it might be of interest to update the charts. For those that are not familiar with the 2% rule, it goes something like this: Since 1920 there have only been a dozen years or so when in any single year the market did not have at least a one day 2% decline or correction. There were only a couple of years when there was not a 2% decline two years in a row. When ever a 2% decline event did not occur it almost always happened in strong up markets as one would expect. Until now, never in 85 some odd years have we ever had 3 years back to back without a one day 2% decline. We are now in the longest running market without a 2% decline since 1920. As I indicated this has never happened before.”
Imagine that. With all the economic woes we have and the stock market goes 3 years without a day when it is down 2%. The angel at work again.
Economic woes? Real GDP growth has been above 3% for almost the last 3 years.
Financed by China
But Garcap, those numbers are solely because of the heavy borrowing by U.S. consumers. They couldn’t do that on their earnings.
We are living beyond our means. It will catch up with us and we will see very hard times soon.
fair enough but these last 3 years have not been hard times as your comment suggested. Over-borrowing and over-spending may be setting us up for a big hangover, but the party has been going strong for 3 years now.
garcap, you need to add a disclaimer about that number was based on some *manipulated* reality. do you really believe the inflation rate that they are putting out?
Yes, inflation is probably higher than reported, but neither you nor I know by how much. Reading this blog one would think that no one has a job, that there are people starving on the streets and that no one anywhere in the US is doing anything productive. That’s just absurd.
Sure, some people have made a lot of money flipping houses over the last few years. But those folks are learning a very hard lesson right now. The rest of us will feel pain from the fall-out but will muddle through. The bursting of the housing bubble is not the end of the world.
I have no reason to believe in the PPT. There are too many inefficiencies in the market to believe in the PPT. The October 19, 1987 debacle was an 18 sigma event “the sun would have to cool down completely before you would expect to see one of those based randomly on the distribution of the other 99.9% of all days.”
by comparison October 29, 1929 was a 9 sigma event. 3 years without a single day 2% decline is meaningful only in that there a lot of stupid people, funds and institutions chasing a high risk/low rate of return investment. e.g. the California Teachers Pension fund invests $40,000,000,000.(40 Bil) each month.
See Black Swan tradings “Risk, Volatility, and Circular Reasoning”
May 24, 2006 (caution pdf)
http://tinyurl.com/lovld
Hoz,
The PPT was the reason we pulled out of 10/19/87. On 10/20/87, there was no way you could sell anything in the morning. It was an absolute black hole. But sometime in the afternoon, heavy buying of S & P futures in Chicago, pushed the market up. That was the PPT. It served a great short term purpose in that the market was reversed and people felt better about it. But the PPT went on to manipulating the market for political purposes as it does today.
I sense you are in the business. Talk to some traders. See what they think. The ones that I am in touch with universally believe that the PPT manipulates the stock market constantly.
For those who want to know more about the PPT go to:
http://www.sprott.com/pdf/TheVisibleHand.pdf
Sorry Dawnal - I was an independent member of the CME and the CBOT (I owned my seats) in 1987 - when the drop occurred, the rout occurred in almost all investments. On Tuesday when the exchanges opened, The Federal reserve cut the overnight rate for funds to 0% interest. This saved the bond, stock and commodity markets. There were no organized group of buyers it was a pure interest rate scenario that allowed quick traders to profit (locking in APRs of ~25%) on funds borrowed at 0%. I was on the floor in Chicago when that happened, I had friends that were broke in the morning and were millionaires again in the afternoon. EVERY ORDER THAT CAME IN THAT MORNING WAS SELL - when the market reversed - puts became worthless, Bonds were locked limit up for 4 days and fear ruled - Could it happen again.
Now what you might consider as a PPT could be the FED releasing funds. But like that moron in California that said he and his friends would hold up the housing market with their 50Mil line of credit, a PPT that has any interest in housing stocks with total market cap of 100BIL is no more credible. The market is too large.
think about timing and coordination. look at how the central banks of the major economies stabilizes currencies. how much do they use as a percent of the total worldwide currency transactions per day? very tiny, if i remember it right. like at one point in the late nineties or later when speculators were running up the yen, japan central bank in coordination with the fed needed less than 20B USD to scare them. well you can say that central banks have bottomless pits of resource to use, but aren’t they the same people in the ppt?
I wish there was a PPT or Fed that actually had some ability to control and stabilize the markets. The FED and central bankers only tool is interest rate! The derivatives are beyond any ones control “The charts presented today are created from data through the third quarter of 2005, so this is not even a glimpse of year end activity. Still, it’s another brand new record and by a lot. Total notional values in derivatives for U.S. banks increased at least 12.4% last year to just under $99 trillion. That’s right, trillion, 99 followed by 12 zeroes. The phenomenal growth in derivatives dwarfs the stratospheric rise of the major stock averages into the mania’s peak. Notional values have nearly tripled since the end of 1999 and are 6.9 times the size of total stock market capitalization, versus less than double market cap six years ago.” When LTCM went under in 1998 the FED called a special meeting of all the Banks and Brokers to pony up 3.8Bil to save the hedge fund at that time derivs were 7.8 trillion - “The short answer is that the banks feared that the fund’s collapse could destabilize the entire stock market”. The GM derivs on ~30 Billion in debt are ~ 200 Billion. If 1% of the 100 trillion in derivs is at risk, then a 100 Billion dollar collapse is inevitable - the fed cannot (at this time) broker or bail out. The total greater “value of deliverable bonds is smaller than the value of the potential claims”.
As I have said “the market will do whatever it can to cause the most amount of pain to the most amount of people” - If there is a run on the US Dollar (IMHO somewhat likely) - the fed has no bullets to stop without throwing the US into a ’30s style depression. The US is borrowing $3 Billion dollars every day just to exist!
See Crosscurrents “Picture of a Stock Market Mania”
http://tinyurl.com/pnpn
perhaps the TRADING CURBS started in 1987 have something to do with it?
That is indeed a conundrum.
HOZ, thanks for your input from the vantagepoint of somebody with deep market experience. I must say, however, that your argument seems to bolster support for the idea that the govt has a motive for intervening in the markets to deliberately dampen price moves by sterilizing the effect of potentially destabilizing news releases. Given the mammoth size of the derivatives market, the govt must feel very keenly aware of the risk that the whole rickety house of cards which our financial system has become will tumble to the ground.
As the PPT (aka Working Group on Financial Assets) charter document suggests, the govt believes asset price stability is a matter of national security of sufficient importance to form working ties between the Treasury Secretary, Federal Reserve Chairman, and top leaders on Wall Street. This is a foolish idea
very much against the principals of free market economics which are popular for politicians to discuss these days, as it creates a rationale for government manipulation of asset prices. This mentality also gave us the LTCM bailout (forged by Alan Greenspan after the firm blew up in 1998) and the subsequent explosive growth of the parasitic hedge fund industry. They learned from LTCM that if you are too big to fail, then our govt will provide de facto insurance — a great way to encourage reckless gambling on a scale that could sink our economy. These sort of price distortions have a natural tendency to drive a wider wedge between fundamentals and market prices of risky assets, through their fostering of pile-on effects by noise traders. The result is a ramping up of systemic risk and a bigger financial earthquake down the road than if markets were allowed to adjust naturally over time through the work of the invisible hand.
Talking about the PPT (always tongue-in-cheek, mind you) inevitably sparks a religious debate between those who say the PPT is a black-helicopter-conspiracy theory, to those who say that market forces explain all, to those who provide more detailed information on how certain individual market participants behaviors might drive prices in strange directions for given news (e.g., the “short covering” story). Like religion, the discussion is moot due to the absence of solid empirical evidence. But I have not heard any convincing alternative explanations from the naysayers for why the markets often go up these days in the wake of bad news releases, or why volatility is virtually nonexistent when risks seem to be piling on, or why the government would not intervene to manipulate asset prices given that a rationale for doing so clearly exists.
I looked over my wife’s 403(b) and my 401(k). Every “low-risk” bond fund was heavily into MBS securities. Many of the other stock funds had FNM or FRE as a major component.
Fortunately my 401(k) allows “personal choice” which works just like a self-directed IRA and I can buy what I like. Her 403(b) I just stick with the short term bond funds.
i am not expert in banking or finance but if i remember it correctly one of the positive results of the s&l debacle was to strengthen banking by requiring a much better level or reserve and exposure to such risky investments as real estate. in fact throughout this decade these are the numbers that AG always look at very keenly and reports that it looks very good except for the size problem of the GSEs which he wanted to trim down significantly. but then again knowing what we now know of him it may be just rhetoric.
Yes, he looks at them very closely as in the bank telling him they have a $300K loan against a property valued at $400K. “Well,” Alan says to himself. “That’s all good then.”
Too bad the property is only worth $250K.
Chip,
You’re a good man! Taking the time to go over some pretty dry paperwork isn’t something just anyone is willing to do. You did the guy a favor! How much of one? We’ll see. I’m not going to bore you with all of the “global politics” and FED talk. Even starting w/ the basics is all the farther your friend need go. Firstly we have a whole new wave of first time homeowners that were “recruited” as buyers of last resort. Not qualified! Then we have what I like to call “sophisticated debtors”. Some here have referred to them as “serial refinancers”. Just when the next mort. payment comes due, they refinance or refinance so often that the lenders are not being repaid the int. let alone principal. Add to that all of the IO loans out there that banks are showing as “performing loans” on their books and you have a real mess. Besides they don’t pay all that well and they are a lot of better options out there where yeah, you are taking SOME risk (but at least you’re being PAID for that risk!) You’re a good man.
DinOR - thanks. I think I’ll suggest he consider dropping the money into USAA, to which he belongs, and try to get it all into short-term bonds or similar, as recommended by others here. Presumably, he can get into a non-churnable account and their fees are not outrageous.
-
fyi -
Mortgage Payment Problems: What If You Can’t Pay?
http://tinyurl.com/mz66q
Bankruptcy Act 2005 - Checklist of Key Changes
http://tinyurl.com/raxmj
General Comparison of Chapter 7 and Chapter 13 Bankruptcy
http://tinyurl.com/p32gx
One Californidiot.
26 Properties out of state.
19 Under water.
Priceless.
To quote Trent Reznor, “Bow down before the one you serve. You’re going to get what you deserve.”
Seems to me I’ve heard that Dwek name before…..oh ya:
BREAKING NEWS: Real estate mogul Solomon Dwek arrested at his home
Posted by the Asbury Park Press on 05/11/06
A prominent local real estate mogul was arrested early this morning by federal and local law enforcement officials at his Ocean Township home and faces charges of scheming to defraud PNC Bank of $50 million.
Solomon Dwek was released on a $10 million bond after appearing in federal court this afternoon. He was arrested without incident by a task force that included members of the FBI, the Monmouth and Ocean County prosecutor’s offices, and the Brick police department, according to FBI special agent Steve Siegal.
“real estate mogul”
__________________________________
How about - Foolish Charlaton who pilled up massive amounts of debt with no intent of ever paying it back
Hey C&C - what part of “real estate mogul” didn’t you understand?
I am seeing more and more advertisements of real estate where the ad state the property is not listed on the MLS.
Here is one recent example I found on craigslist. In this case the ad directs you to another website which has the ad saying “Not in MLS! For Sale!”
I found this very interesting, considering there has been much discussion following the explosion in number of MLS listing.
I wonder how many of thes non-MLS properties there are for sale and how much that may be skewing the data.
And of course for every property for sale that is not listed with the MLS, it is also that many that are not being included in the total number of properties for sale, which is what the NAR uses to manipulate buyers.
It may be that our data of increase in total number of properties for sale is increasing much faster and higher than we originally thought
Any comments?
Los Angeles Friends In Deed
Agreed … the numbers are alot higher than the MLS’s when you add, FSBO’s, exclusive listings ,new homes and condos not listed on the MLS’s. Note: Exclusive Listings are listings by realtors that are not put on the MLS’s that they think they can sell without the help of other real estate offices . They will usually take a lower commission but that realtor gets all the commission . It works in a hot market ,but in this market you would need all the help you could get IMHO.
The question is whether they are a higher percentage now than when the bubble was building. Look at it this way, if the non MLS listings= a constant 20% of the MLS listings, than a doubling of the MLS listing - a doubling of the total listings. I suspect however, that the percentage is greater now. People in general (myself included) are more concerned about loosing say, 10k than with making 10k. In a rising market when they’re making money anyway, they’ll ignore the 5% broker fee and just smile about the money that they ARE making. When that 5% puts them underwater they’ll do anything to avoid bringing money to closing.
Jim …So based on what your saying , the number of listings that are not on the MLS’s is higher now because people are trying to save money on the commissions .
Well that’s my suspicion anyway. Not like I have any actual data to back it up, just fuzzy reasoning.
“‘Very few of the people who call have any equity to be concerned about,’ she said, recalling a California investor who offered to sell 26 Nevada homes to her. ‘He was upside down in 19 of them.’”
The hoarding of houses has become a titanic load of angst for these RE agents/speculators. This delusional distortion in prices and demand will regress beyond the mean, and create a crater at the bottom. The mean is probably around 1999-2000 price levels.
tommy_trojan,
God love Sir! This has been my contention all along. As the bubble unravels we see that there was very little if any economic fundamentals to support it past well……. frankly 1999-2000! The rest is fluff and hot air. We (as potential buyers or re-entrants) need to see “pre-bubble” prices before we would be spurred into action. We’re just now learning that 2005 was an absolute joke! Very few people that bought in 2005 were able to sell in 2005 (as was their plan in many cases). Sellers showing me a 2004 price? Yawn. 2002 price? Yawn, then scratch inappropriately. Show me “pre-bubble” pricing and I may get up off the couch.
Remember when markets soar they go well above the mean. When they fall back they go well below the mean. So pre-bubble prices may not be the bottom for prices!
dawnal,
And God love you dear! You know that is so true. I certainly have witnessed it first hand in the stock market on many occasions. We do have a tendency to overshoot on both ends but my point as simplistic as it may sound is that I don’t grudge anyone a “reasonable” profit! Really, I don’t. In “normal” RE markets equity is a hard fought long term battle. And not without risk I might add. If a homeowner has made a concerted effort to maintain and improve their property, stayed current on their payments and taxes well then no, I don’t have a problem making sure that you will be pleased with the transaction. Notice though I said “pleased” not ecstatic, not elated, not euphoric, but pleased.
But of course pre-bubble pricing IS below the mean. I was fortunate enough to have bought right around the previous price nadir, in ‘99. The question is: will the inventory fueled high velocity unfolding of THIS bubble bring prices even deeper below below the mean this time? It’s perfectly possible, but I don’t regard it as proven. ISTM just as reasonable to assume that there are enough vultures to prevent prices from dropping further below mean than ususal, but that the huge liquidity soaking debt levels would KEEP us below mean for a looong period of time, say 15-20 years.
As is said before explaining reversion-to-mean Sometiems prices are high, and sometimes they’re low, but on average they’re average.
I would have to agree with you despite what some posters say.
Irrational mania at the top.
Irrational mania at the bottom.
There just simply aren’t enough rational people to prevent either.
I dont think so. Mania at the bottom, you are a fool to buy real estate. ofcouse end of easy money will help that
That is the irrational mania I was descriibing just at the opposite end of the spectrum.
Ah, the “if money were no object, what would I buy for myself” scenario. Well, with not one but TWO daughters in college the “I’ve always wanted a Harley” bug will just have to wait. Or does it? This gal in LV lavished upon herself not 1 but 3 Harleys! (Actually the article didn’t say they were HD’s but in order to completely deplete all of her equity can we agree they were expensive motorcycles?) This is the promise that the HB dangled before every man (and woman). You CAN have it all! (For a while).
What is it about the baby-boomers and Harleys?
True story. My wife and I have been looking to rent another house here in San Diego. Our current landlord wants to try and sell the property. We looked at about seven houses in the Carmel Valley, Carmel Mountain, and Penasquitos areas (North/North Central San Diego). All but two of them were owned by real estate agents who were anxious to show us their other properties that they were trying to rent. They are asking something like $3000 for a 3BD SFR. That is in the top 2% of rents in San Diego. I’m trying to see how far down they will deal. The downside is I’m afraid they will go to foreclosure while we are leasing from them.
Just ask for a penalty clause. If they don’t agree you don’t want to rent from them anyway.
This is real estate. No one should have a gun to their head in any transaction. If you sense a gun somewhere walk away. Same thing for all these other stories. There were no guns at the purchase signing. It is not allowable for therem to subsequently be angry. There are 18 would be responsible homeowners out there that have every right to be angry. When these floppers start to suggest government intervention the proper response is review their mortgage applications for any irregularities such as the owner/occupier check box. The public sentiment for mortgage fraud in 6 months is going to be where we see real anger and real guns.
Robert,
Just curious - what is the typical number of residences a single investor typically owns? These double-digit numbers seem a bit excessive to me for not being apartment buildings and such. But I know I’m not experienced in this realm.
Here in Warrenton, VA, the local property management firm just listed all four of their older apartment buildings. They have invested heavily in new commercial properties, and I’ve also noticed that those aren’t filling up quickly, but perhaps they will eventually . . .
Just a guess from all the investors I know; 4 plus/minus 4. Two of the smartest I know have sold all within the last year, starting last summer and finishing two months ago. Those that own 1-2 are usually SFRs or duplex/triplex. In every case None pay HOA or assosiation or common fees. Ever. One of the recent sellers even sold his LA “rat trap” apt complex he’s owned since the Nixon Administration. Laughed all the way to the bank. GRM something like 400+. I thought I was being clever at GRM 270. Another who hasn’t bailed entirely but is increasingly cautious and slightly diversifying has maybe 15 properties with 35 units ranging from SFRs to a couple Califonia crackerboxes with 4-6 apts in SFR type neighborhoods. They are the exception but he also takes active day to day management responsibilities.
So to roundabout answer your question, people with 15 SFRs are not real estate investors, they are idiot real estate speculators. It should take 20 years of careful shopping and accumulation to get 15 properties for an investor. And remember, it isn’t a realized gain until you sell. In the greater scheme those of us who got out at the peak are the only ones who can benefit from the coming ummmm… -excitement-.
Robert,
Are SFRs bad investments, overall, for an individual? I mean for the usual renting out option. Or are apartments better?
I have a strong personal preference for SFRs although duplex/fourplexs seem to be more profitable with little more work and more reliable cash flow, each tenant is only a portion of the monthly revenue. There’s a small rent premium for SFRs and there’s no common areas that need watching. As to invesment the tax benefits are awesome and long term it was a no brainer. Even in a slow market however expect to be flat to down the first few years. And that is the problem today. Anything with even a whiff of investment potential has amateur idiots crawling all over it until it has no investment potential. A case where the stupidest person in the room “wins.” Oh and since the language has gotten so badly broken; long term means never less than 5 years and almost always 8-10 plus.
Thank you for the reply.
Keep us posted! I’m very interested…
I share your concerns about foreclosure. I would love to rent a house for my son and I right now, but I don’t want to get a great deal now that turns out to be a nightmare later - obscene rental increase, or foreclosure/walk-away with my rent.
And remember that if he goes bankrupt, you’ll probably be in line BEHIND the bank when you’re trying to get your deposit back.
Hail the chimp:
We are going through the exact same process, for exaclty the same reason. One repeated comment we have heard from potential landlords is the lack of credit-worthy applicants, and the surprsing number of people who would otherwise be buying who are renting instead.
We found a nice 3-bed 2 1/2 bath twin home in Scripps Ranch for $2150. That seems to be pretty typical of rents in that part of town. The property manager was ecstatic to find renters with decent credit, and made the comment that everyone with a pulse had already taken advantage of the loose lending practices to get a mortgage. She was definitely of the opinion that 1) prices are already falling, and 2) the overwhelming number of ARM and neg-am mortgages in San Diego are going to cause enormous problems.
Damn Ben you know how to raise the BP of an old fart to the boiling point real quick! This article did it really quick…
‘Often, it was the mortgage broker that got them into a house that was overpriced,’ he said, adding that this often leaves the troubled home owner angry at the wrong people.’…..‘What I had heard is that people were being encouraged to buy as much home as they could afford by the brokers.’……’ As a result, he added, the homeowner can often end up ‘victimized twice,’ first by the broker and then by the buyer.”
I see no victim here. What I do see is more people trying to avoid any responsibility for their action. I’d like to see them roll the dice on a LV table and when they loose try to get their monies back because of a mental lapse!!!!!!!!
I agree with you to a point, but as a mortgage broker I’d have to say much guilt does lay upon my industry. I believe I’ve managed to keep my hands clean of sending folks to there doom, but what I’ve seen in my industry over the last few years does indeed sicken me. I believe those with the knowledge, in any field, have a responsibility to educate those without. That is why they come to us seeking guidance. Now I do agree that many who jumped into this mania were blinded by greed, but there were just as many who were standing at the edge, looking for guidance, and were pushed in the wrong direction via some unscrupulous sales tactic. I know this to be true becasue I’ve had more than a few clients this year alone that I’ve talked out of transactions that made no sense whatsoever. In these cases I could have easily sold the deal - very easily. Yes, I’ve recieved the wrath of realtors involved, but recently, now that evidence abounds that our market has turned for the worse, I’ve recieved phone calls of thanks for “not letting them make that mistake.” I know we would like to demonize everyone that bought into this stupidity, but I do believe there are innocent victims in all of this.
This may sound old fashioned and corny, but doing the right thing feels better than making money.
Oh and by the way, I sleep pretty good at night.
Good for you . I’m glad some people in the business cared for their fellow man and women . Keep up the good work .
as a mortgage broker in california,i agree with you,it is good to be able to sleep at night.i killed another deal today…i could certainly use the commission,but not at that price.i tell the realtors that get upset that i don’t want to have to change my name,leave town,and start wearing a kevlar vest…then i give them the look.i’ll get by just fine for now,and it pays off in the long term,as you know…too many in this biz take a short term view or are just greedy and ignorant…they are leaving the biz now and almost all will be gone soon,good riddance
How is volume? I know our local title company is very slow and doing their second round of layoffs for the year.
I love you man
Our country has hope.
LV_Landlord -
Where are you? I wonder if you own 3 Harleys!??!
Crispy - I was wondering the same thing. She is probably looking to scoop up a bunch more rental properties now that over-extended LV investors are starting the inevitable flame-out.
Remember her smug posts from a few months back, when she was bragging about lounging around on a weekday afternoon having a cold drink, and all her rent checks had come in early?
Feeling better now, LVL?
lol … I was thinking the same thing!!! Where are you LV Landlord?!? Yoo-hoo!
she may be avoiding this thread out of denial that the LV market is headed for rough times
The downside is I’m afraid they will go to foreclosure while we are leasing from them.
I am having this same problem here in Central Florida.
Some “Yankee Flippers” came down and paid twice what my 12 unit complex sold for in 2002. They bought three months ago and now they want to increase my rent by 26% when my lease expires July 1.
I want to tell them to shove it.
But when I look around there are some nice condos and even houses for rent that I can afford…however, most are flippered, never-lived in places.
I am paranoid that renting a condo or house financed on these toxic loans may come back to bite me when ( not a question of “if” ) these sheeple go into foreclosure.
I may stick to renting in a complex or may even stay where I am at until more of this stuff shakes itself down here over the next few months.
There is a BUNCH of unlived-in housing down here in Polk County, FL right now….most is “For Sale” but I expect the rental market to flood this summer and fall as the greedy flippers panic and try to get what cash flow they can when they can no longer flip..
LP, Put an ad in your local paper - Great tenant seeks apt kind - and let the landlords come to you.
Don’t put up with a rent increase because some fool overpaid. You will find a place if you give yourself enough time to sort through all the junk that will be offered to you.
LP, Put an ad in your local paper - Great tenant seeks apt kind - and let the landlords come to you.
Don’t put up with a rent increase because some fool overpaid. You will find a place if you give yourself enough time to sort through all the junk that will be offered to you.
I’m in the same situation. My lease expires August 1 and I refuse to pay the rent hike in my complex. I contacted a few of the people who listed their properties on craigslist…Let me tell you, these people are desperate. Some of these people want so much cash upfront, there was even someone who wanted me to pay a deposit, first and last months rent, befor I even saw the property. I’m thinking thes “landlords” must be extremely close to foreclosure. What does that mean for me? What happens if I rent from them?
I think I may be finished with Central Florida. I’m contemplating a move to Atlanta. The salaries are higher and housing is less expensive.
Tell them to shove it and find a new place. When they try to rent out your old apartment at their new jacked up rates, it will sit empty for months. Since they probably can’t pay the mortgage with whats coming in on the rentals, you’ll only hasten their exit as landlords and give somebody the chance to snap up the building at a bargain some months down the road.
Agree. I heard the same story where someone bought a house with an additional cottage on the property and they are trying to raise the rents by 30%.
The renters are going to try to persuade the LL that their asking rents are ridiculous, but when they won’t accept it, I’m sure they’ll have to move out.
I’m don’t know the tenant laws in Florida, but in California, a rental agreement is still “valid” after foreclosure. The bank will take over the landlord duties. You will send the bank your rent check. If anything needs fixing, you call the bank’s real estate property manager. For all intents and purposes, there’s very little effect on you. The only impact would be if someone buys the place and wants to evict you so that they can move in. But generally, the new owner can’t make you move until your lease expires. So make sure you sign a long lease - not a month to month.
Ben -
Do you think there would be enough interest to do a thread on the issue of renting in a bubble?
I would like to move, but have a VERY financially stable landlord. I inquired about a house that looked really nice but when the landlord sent an e-mail from work which indicated that he worked for a creative mtg. company, I passed. In that particular case I had already looked up the last purchase info and figured rent would come close to covering PITI, but have to worry about lls current occupation!
Any help from experienced landlords would be great - regarding laws in various states, etc. Is using a property mgmt. company your best bet? OTOH, they are usually lazy and don’t accept pets - around here at least.
Finally, there is the problem of giving theses people you don’t know your SS number and financial info so they can do their credit check, and who knows how secure that is. I saw an ad on craigslist where the ll wanted you to bring a credit report and deposit check to VIEW the property!!
Around here more and more lls are also doing criminal background checks - are people seeing this in thier area?. (Not that I blame them!)
It is stories like this that makes the hours spent tracking down and following extreme flippers so worth while.
Just found 4 foreclosures in a single condo complex in Chula Vista (San Diego).
Bubble Markets Inventory Tracking
OCRenter,
Your appetite (and passion) for data are to commended! I’ll be watching you! Like your web site too.
ocrenter- thanks for the info. my stepdaughter just bought a condo about a mile from these, she asked my advice and I said wait 2 years for much lower prices but she’s an agent for Coldwell so what do I know?
Well, this is certainly the kind of article we have expected to see for some time now. People are going to learn how leverage works both ways.
Once this thing starts to feed on itself it won’t matter if you have an interst only loan or not; all the recent buyers will be underwater.
…and all the recent refinanciers. Let’s not forget about the people who ‘cashed out equity’ (what an absurd term for borrowing money.)
Steve,
So obviously when you say “recent” buyers you are not including those that “way back in 2003?”
Give it time…give it time. Fear is stronger than greed, so the downward side of this will be less orderly than the way up.
Houses used to be immune to people dumping them on the market like stocks because if you were losing money you just lived in the house and made the payments.
That won’t be true for people with ARM’s and 26 houses.
I’ll tell you something about banks as well. They don’t try to get their money back on a bad deal. They just cut their losses and move on. They will dump these houses for whatever they will bring and get the bad loans off the books.
The press will make a lot of noise about how people were misled, the government will require that you sign even more disclosure forms at a closing, but the bottom line is that prices are going down.
Here is some more bad news to rally the homebuilder’s stock prices. (Interpretation: cooling rapidly = crashing.)
“U.S. April pending home sales fall 3.7%
By Rex Nutting
marketwatch.com
Last Update: 10:00 AM ET Jun 1, 2006
WASHINGTON (MarketWatch) — Pending home sales fell in April for the third straight month, further evidence the housing market is cooling rapidly. The pending home sales index dropped 3.7% in April, the National Association of Realtors said Thursday. The index is down 12.8% from its peak in August and is down 11.7% from a year ago. “I see this time of adjustment as being a trough in home sales that will more or less level out toward the end of the year,” said David Lereah, chief economist for the realtors. “Over time, homeownership remains the best investment a family can make.” The index fell 9.8% in the West, 5.6% in the Midwest and 5.5% in the Northeast. The index rose 1.4% in the South.”
“I see this time of adjustment as being a trough in home sales that will more or less level out toward the end of the year,”
…towards a permanently low plateau?
FYI. I have seen at least a couple confirmed listings on Los Angeles Craigs List in the real estate “for sale” section where they state that the property is being sold by an agent and is not listed on MLS.
I am wondering how much of this is going on and what the history of this has been over the last year or so.
If their is an undercurrent of realtors opting to “not list” on MLS to make the total number of properties listed on MLS less. Then our data on the increase in number of properties being offered for sale is much more than we have been led to believe through NAR reports.
“If their is an undercurrent of realtors opting to “not list” on MLS to make the total number of properties listed on MLS less.”
I doubt that — it wouldn’t seem to be in the property seller’s interest. I suspect, instead, that the agents are the owners.
perhaps so. That was something I considered.
I also get the knawing sense that there are some realtors, albeit of poor judgement perhaps, that may be attempting to do damage control by not listing through MLS.
I am wondering if the sale price can be hidden or manipulated for less negative impact to comparables for appraisal values in the area.
And I am wondering if a piece of real estate is sold outside of the MLS system, if the sale price is excluded from the sale price statistics.
I have a hunch that if a non MLS property is sold for an “under market” price that it may not become part of the overal real estate price statistics quoted in the newspaper.
And if that is true, then it can keep the misleading impression that real estate prices are higher than the actually being sold for.
Any thoughts?
Los Angeles Friends In Deed
I’m wondering about that, too. We had an apartment in our building that had been on the market for about two and a half months, and had had three price reductions. It didn’t help that it was selling for $595000 (after the reductions, down from $629K) at the same time a very similar two-bedroom apartment was advertised for $2400 a month rent (this is West Hollywood). At any rate, this morning I checked the MLS to see if, after last weekend’s open house, there was yet another price reduction and — poof! — it’s no longer listed in the MLS. And yet the flyers are still on the front lawn, and the place is still empty.
BTW — I know for a fact it’s not owned by a broker.
Any theories as to what’s going on here?
No they are doing that because they are not looking too pay a commission.
Don’t look now, but gold has resumed crashing (along with other commodities formerly known as “hot”)…
Crashing? Up 50% in a year. Correcting is more accurate.
Gold is currently about $622. The 200 day MA is ~$530.
Oh, and the fundamentals haven’t changed. There are still lots of dollars overseas, and the $ looks as shaky as ever.
Buying opportunity, especially for those who *still* don’t own the yellow metal. Personally, I intend buying all the way through four-digit prices. Of late we don’t seem to have much spare cash for the purpose in our household, unfortunately. That suggests to me the CPI figures have gotten even more bogus.
Let’s not forget about the people who ‘cashed out equity’ (what an absurd term for borrowing money.)
No! You liberate equity!
I cashed out my equity in June 2005 and since then purchased an apartment in Buenos Aires and will buy another in Uruguay and possibly a third in Florianopolis, Brazil for the winter. The reason is I am getting old 58 and my kids are all grown. I want to get out of the US $ as much as possible and invest in two counties that are basically European and the last one Brazil has a great economy. If I leave my money here the US the dollar will tank and I will be left penniless. The fundamentals are very evident. The US is broke and the government believes that by printing money we will carry on business as usual. The US economy is dynamic but in the last six years has changed. We are no longer the leader we once were and our economic problems multiply as our government blindly sanctions debt. This is evident in the present real estate boom and consequent bust which will I believe will officially happen in the third quarter of this year. Although, in reality everyone here knows it is happening now. When it begins it will be world wide and will affect every corner of this globe. I hope you are all prepared because will be back to the 1930. The next five years will make life very tough for the US. I hope we are resilient enough to tough it out. As for me I am moving to countries where I must speak Spanish as opposed to one where I am forced to speak it. Good Luck to all.
THIS IS SOME OF THE FUNNIEST CRAP I’VE READ IN A WHILE. UPSIDE-DOWN ON 19 PROPERTIES. LMFAO!!
TIME TO LIBERATE MORE EQUITY, YOU DUMBASS FLIPPERS. FLIP THIS YOU MORONS. I HAVE ZERO SYMPATHY FOR THESE GREEDY IDIOTS. JUST LAFFING AT THEIR IGNORANCE.
This is no joke: On one of those pimpadelic real estate “shows” (ie commercials) on Saturday talk radio, a guy called in saying he had freed up his equity by taking out 20K and sticking it in a savings account. His question was: I’m now paying more interest on the loan than the bank is paying me in savings. This “free up” your equity stuff isn’t working for me.
You must be kidding. Are you for real??
I said it was no joke. That was an honest-to-god, call in question.
what did the genius hosts steer the Moron into ? Let me guess , REAL ESTATE !
When these ‘useful idiots’ either turn over the keys or go into foreclosure I hope that the lending companies are quick to send out the repo men to capture (hee,hee, I mean liberate) the toys bought for cash (like those three motorcycles) on the HELOC loans. Damn, stripped of their house and toys at the same time. Watch for fire sales of boats, BMW’s, MB’s, motorcycles, motorhomes, etc). I guess some might even relate the cause of the melt down to global warming!
You couldn’t find a city with more qualified for well-trained repo men (except perhaps NY). When all the ratings fall on the home flipping/selling TV shows, they can replace them with “Las Vegas Repo Man”, “Florida Repo Team”, etc.
Suzanne,
Funny comments! Over at Patrick.net we were kidding about the same kind of things. Kind of along the “CSI Flopper” line of thinking. What’s more telling though is that this gal couldn’t sell her “bikes” to help cover the mortgage for a while at least. She probably checked and got insulted by what she would be offered but she DID get three really nice motorcycles out of the deal!
We are getting more patrick/ben crossover aren’t we? I’m ready to be Simon LeGree, well at least Simon Bar Sinister or maybe Snidley Whiplash. There will come the day when the Sheriff comes a knockin’ and I’ll be there with a clipboard, digital camera, moving van and LEPDLs (limited english profeciency day laborers). Of course I’ll have already had the place under surveilance for a few weeks documenting any funny business. I’ll also have some storage units under contract, just sign here and oh… cash or the check clears before you get the key. Man, the used DVD market is going to be flooded. Perhaps the new currency for these people; 2 gallons of gas for the Star Wars set. A quart of milk for anything by Adam Sandler. Hometown Buffet is going to have to change their policies. Oh and anyone seeing a BMW R 1200 GS give me a call, I’ve got cash.
How much for the little girl?
I suspect it may be in part to some kind of post 9/11 syndrome.
People developed a kind of nerosis that affected a part of the brain that makes rational real estate decision making.
It may be an acute condition that may last 5-10 years or as long as bush and his people are in power, which ever is longer.
However, the self damage caused to self, family, friends, and community may be ir-reversable.
I subscribe to a completely different philosophy…the world is always full of idiots, it was only by extending undocument credit to all comers did they get a “voice” in the economy. As soon as the credit spigot runs dry, the idiots and their money and credit will sink back to the gutters as mute morons at the bottom of the economic pile. The troubling part however, is a smaller percentage become life-long bubble-addicts and will pursue pyramid schemes, MLM, and other out right criminal fraud schemes to feed their addiction to money-for-nothing. The very best of these become public figures like Mark Cuban.
Without a place to store the stuff they’ll be selling anyhow. The main reason houses are so big these days isn’t for the occupants, it’s for the stuff (I’m guilty too, I have lots of stuff). If I got kicked out of my house I’d have to sell off a lot of junk cheap too.
I work with an asshole who ridiculed me (last year) for saying we were in a bubble. Then yesterday he spent 10 minutes trying to convince me to buy his jet skis and / or boat!!!
i am so hot for a nice barely used motorcycle. call it part of my mid-life crises.
harley, triumph, dirtbikes & trailers…. doesn’t matter
of course i’ll need a repossesed truck to pull my repossesed dirt bikes around.
‘One woman refinanced her home and bought three motorcycles with cash and now can’t pay her mortgage.’”
What a loser! Hate to be this poor sap. Maybe she can live on her motorcycles?
Maybe this woman is very, very “under-attractive” and one night, after a few too many six-packs and listening endlessly to the country song, “Betty Got a Bass Boat,” she decided a few bikes would attract a tall, dark & handsome drywall guy.
Did anyone else hear the commentator on financial news this am make the statement on RE market ‘collapsing faster than anyone would have thought’…..
salinasron,
No actually I hadn’t. I thought I was “on top” of everything? What station? Do you recall?
I just realized. Many of the posts early on were concerned with the viability of Mort. Backed Securities and here we are talking about all of the “toys” that were aquired during the bubble. I’ll have to go w/ Salinasron on this one! Like a lot of posters parents me mum is very reliant on her “fixed income” portfolio. It’s hard to steer clear of MBS b/c they are a part of so many mutual funds etc. How is this fair to retirees that they eat the defaults and Mr./Mrs. “Flipper in Disguise” gets to keep their toys?
Life isn’t fair. But it could be worse. At least we weren’t born in Zimbabwe. Just check that place out. It’ll put the MBS debacle into perspective.
And if you think about the inevitability of death, then everything becomes even more “perspectified”.
climber,
I’m sure I don’t know how Zimbabwe got into the discussion but the truth is if your parents are very reliant on MBS for income (and many are) when they default you won’t have to “move” there at all. It’ll come to you.
Get the heck out of your MBS assets. Shift your mum’s portfolio. Sit in cash if necessary while all this blows over.
You are lucky… you see the issue before the crash. It isn’t fair that they get to keep the toys… but who says they will in th end. As a security owner, do not rely on the asset value in a firesale to secure the paper- it won’t.
It is very funny to be talking about this reality now. About a year ago we had a big discussion about steering clear of MBSes.
Just wait until Chinese investors figure out MBSes aren’t very secure anymore.
tweedle dee,
Oh I’m long gone, that and REIT’s too but it’s hard to totally divorce yourself from them b/c some retirees fund choices almost always include some of these issues.
Bubblefucius say:
“Nowadays much better to be long gone than gone long.”
Every day it gets better. This is just the tip of the iceberg. As Warren Buffet says, it isn’t until the tide goes out that you can see who is swimming naked.
“UNLV Lied Institute for Real Estate Studies”
————————————————
perfect name for the institute
Comment by salinasron
2006-06-01 06:50:38
When these ‘useful idiots’ either turn over the keys or go into foreclosure I hope that the lending companies are quick to send out the repo men to capture (hee,hee, I mean liberate) the toys bought for cash (like those three motorcycles) on the HELOC loans. Damn, stripped of their house and toys at the same time. Watch for fire sales of boats, BMW’s, MB’s, motorcycles, motorhomes, etc). I guess some might even relate the cause of the melt down to global warming!
Reply to this comment
Comment by Suzanne, I researched this!
2006-06-01 07:01:23
You couldn’t find a city with more qualified for well-trained repo men (except perhaps NY). When all the ratings fall on the home flipping/selling TV shows, they can replace them with “Las Vegas Repo Man”, “Florida Repo Team”, etc.
*snickers* Yes, Vegas could become the top repo city of the world. We already have plenty of criminals who are good at stripping cars and burglerizing houses at astonishingly fast rates (and they have no qualms about hitting up the upscale areas of town either). I even have a friend who was a Vegas repo man before he was married, and he loved the job, because in his description, “it was like being paid to legally steal stuff from people”.
The owner of the home I am currently renting officially put it up for sale this month, a 1100 square foot home for the low price of $250K (*insert laughter here*). I vaguely call this a home, because with less than 10 feet between my house and the neighbors, its really a detached townhome on a tiny lot. Three years ago this home would have gone for maybe $120K tops.
So far, no one has come by to even look at the house.
The owner has called us 3 times already offering the home for us, along with a sob story about “just having an unplanned baby and needing the money really badly.”I told them that they needed to drop the price of their home at least $100K for me to be even slightly interested.
I wonder if my rental homeowner will go into foreclosure? Me and hubby did the math for this house, at the current price the owner bought this house for (yay for being able to pull up home sales via the internet), we estimate that our rent maybe covers half their house payment on it every month. Since I went through a property management company to get this house, I will probably see my deposit back should this place foreclose or be actually sold, but man, what a pain in the ass it will be to have to move out before my lease is up.
Hell, even if I lose my rental deposit, its no big loss to me really. It was only a thousand dollars. You think investors would heed my warning and do the math here…a home that last year was sold for almost $300K was rented out to someone for $990 a month, with a $1K down as deposit (and according to the property management company, this was only after it sat vacant for about 6 months). And how is this generating a profit???
“Hell, even if I lose my rental deposit, its no big loss to me really. It was only a thousand dollars. You think investors would heed my warning and do the math here…”
I hear ya. After all, a rental deposit to people like us with excellent credit ratings, et. al., is simply the price of doing business. Personally I could care less if my landlord kept my deposit. I made 30 thousand dollars just by NOT BUYING this year.
“The owner of the home I am currently renting officially put it up for sale this month, a 1100 square foot home for the low price of $250K (*insert laughter here*). I vaguely call this a home, because with less than 10 feet between my house and the neighbors, its really a detached townhome on a tiny lot.”
This would be really funny except our 900 sq. ft. home would sell for around $600K.
And people wonder why a lot of us say “It’s a bubble.”
OT: I plotted all the latest OFHEO data released today:
http://www.housedata.info
Whoa! thankyou Poguermahone!
these are great graphs and tons of cities are there- check them out people!