Many Investors Will Eventually Want To Cash Out
The Wall Street Journal reports on Florida. “The volume of foreclosed properties held by Fannie Mae and Freddie Mac in the state of Florida reached a new high at the end of March, surpassing the previous peak reached at the end of 2010. Foreclosures dropped sharply throughout 2011 as banks withdrew cases to correct those foreclosure filings. Foreclosed property holdings at Fannie and Freddie dropped from around 28,000 as of October 2010 to less than 12,000 one year later. Inventories have grown steadily over the last three years, to surpass 30,000 at the end of March.”
“Many of the properties going back to Fannie and Freddie today are likely mortgages that have been delinquent for a long time. Florida loans that completed the foreclosure process in the first quarter at Fannie hadn’t made any payments in more than 1,300 days.”
The Herald Tribune. “Zombie foreclosures continue to haunt middle-class neighborhoods throughout the area, a byproduct of lengthy foreclosure timelines and changing laws in Florida. There are nearly 1,600 such homes languishing in Southwest Florida alone, one of the highest raw numbers in the U.S. Banks have yet to auction off or repossess $199.1 million worth of distressed real estate assets in Manatee and Sarasota counties, with foreclosure notices that date back to the trough of the collapse in 2009 and have continued well into the current year.”
“‘There’s a lot of distressed debt still being held by the big banks because they cannot just dump it back into the market all at once. They have to slowly release it,’ said Dean Anastos, founder of Apollo Financial Group, which buys and sells nonperforming bank notes. ‘That means we’re going to continue to see new foreclosure filings, families getting locked out of their homes, and zombie foreclosures.’”
“A fairly typical zombie in Southwest Florida can be found on Siesta Key’s Oxford Road. The owners bought the three-bedroom home in May 2005 for $1.2 million. They used a $960,000 mortgage to help finance the deal. They then acquired another $240,000 in revolving credit against the home from that bank later in 2005, official property records show. SunTrust filed its first notice of foreclosure in May 2012. Although the 2,270-square-foot house has been flagged as vacant by the Postal Service — and the owners have moved — the bank has been unable to successfully gain control of the property, which was valued by county appraisers at $493,900 last year.”
“‘Looking at who you have handling these cases across the board, it’s fast-food legal representation,’ said foreclosure attorney Charles Gallagher. ‘Many are just so overwhelmed and overtaxed, they can’t properly represent their bank client — and the properties slip through the cracks. These banks are just filing lawsuits and letting them sit on ice.’”
The Ledger. “Polk County is listed as the nation’s fifth-best area for boomer rentals in a new report by RealtyTrac, which studied population and rental income data. The top two spots went to Pasco and Hernando counties, which are part of the Tampa-St. Petersburg-Clearwater metro area. Tim Davis, franchise owner of All County Polk Property Management in Lakeland, says the company frequently rents homes to boomers. He speculated that many boomers have turned to rental housing after bad experiences during the housing market collapse.”
“‘A lot of people in that group got burned in the downturn and lost their homes to foreclosure,’ Davis said. ‘I think a lot of them may be scared to even buy a house again.’”
The Miami Herald. “Miami’s latest condo construction wave is attracting buyers from around the globe: Brazilians, Argentines, Venezuelans, French, Russians, to name a few. Miami residents? Not so much. That is primarily because condominium developers are requiring large cash deposits — typically 50 percent of the price of a unit — paid in increments during the construction process. Most Miami residents don’t have that kind of cash.”
“Indeed, few locals could afford to purchase the high-priced condominium units currently going up even if mortgage financing were available. ‘We don’t have a local market capable of making those kind of payments and progress payments,’ said Lewis M. Goodkin, president of Goodkin Consulting, a Miami-based real estate consulting firm. ‘If it weren’t for Latin American and European sales in Miami, it’s really kind of a scary thing to think about: We’d have a very weak market.’”
“In the eastern swath of Miami-Dade County where the boom is concentrated, 40 condo projects with 6,781 units are under construction, 56 others with 10,807 units are planned, with approvals to go forward, and 36 more projects with more than 8,300 units have been proposed at early stages, according to Peter Zalewski, a principal at a Miami firm that closely tracks condominium construction in South Florida.”
“One key question is what will happen in the market when a growing supply of new condos is complete. The many investors purchasing pre-construction units will eventually want to cash out of their holdings — possibly sooner rather than later. Almost half the 192 units delivered to buyers at MyBrickell were listed for sale or rent shortly after the building was completed in January, according to Zalewski. Edgardo Defortuna, president of Miami-based Fortune International, said the pre-construction condo market is logging more total sales than a year ago, but per-project sales and absorption is lower. ‘Overall demand is stronger today, but there is a lot more to choose from,’ said.”
“With the swell of new condos in the pipeline, sales of existing, or previously owned, condominiums in Miami-Dade are feeling the brunt. In May, sales of existing condominiums in Miami-Dade plunged 11 percent from a year earlier even as the inventory of existing condos for sale expanded 36 percent to total 10,941 units, according to the Miami Association of Realtors. Buyers opting for pre-construction units are paying a substantial premium over the price of an existing condo of comparable size — sometimes several hundred dollars per square foot more.”
“How long this gilded age of luxury condo construction will continue is anyone’s guess. ‘I wish I knew where in the cycle we are,’ said Miami condo kingpin Related Group CEO Jorge Pérez. ‘How long does demand last? I think a very, very long time.’”
“The volume of foreclosed properties held by Fannie Mae and Freddie Mac in the state of Florida reached a new high at the end of March, surpassing the previous peak reached at the end of 2010.
What fraction of the 25 million excess, empty and defaulted houses are these train wreck organizations on the hook for?
Many “investors” will be left destitute bagholders as the asset bubbles blown by the Fed and ECB ultra-easy money policies implode and true value discovery begins.
http://www.zerohedge.com/news/2014-07-10/futures-tumble-bunds-soar-record-gold-surges-europe-broken-again-espirito-santo-halt
It’s starting to look as though the stock market has achieved a permanently high plateau.
It will go up forever.
I’m ready for it. I plan to keep buying stock forevermore.
http://www.kitco.com/market/
Looks like the flight to safety (in real, tangible assets) just kicked up a notch.
Not just in tangibles; the Treasury bond market is on fire today!
http://wolfstreet.com/2014/07/10/unsustainable-real-estate-bubble-is-inflating-mortgage-bankers-tell-fico/
We may need to change “inflation” to “deflation” as the asset bubbles Janet Yellen claimed not to see, begin bursting.
“‘There’s a lot of distressed debt still being held by the big banks because they cannot just dump it back into the market all at once. They have to slowly release it,’
I have wtched this happen over the last 5 years in Jupiter Fl
I read FL has 300,000 in foreclosure/distress = 1 years unit sales
A slowly released fart still stinks up the room.
Not in this case. The PTB is controlling the stink in two ways:
Make sure that the release is so slow that the noxious molecules diffuse or decompose faster than they are released. Density of stink never increases. Example: Holding foreclosed inventory on the books.
If the PTB can’t control the rate of release, they just make the room bigger, so that the same stink is spread over a larger volume. Density never increases. Example: printing money to inflate the damage away.
“Example: printing money to inflate the damage away.”
It doesn’t work the way Donk. As much as you seem to wish it did.
The printing of extra $10 billions to snap up MBS and Treasurys is scheduled to end this October.
So what then?
“That means we’re going to continue to see new foreclosure filings, families getting locked out of their homes, and zombie foreclosures.”
“Their homes”, they are going to get locked out of “their homes”.
Bahahahahahahahaahahahahahahahahaha
These homes are not “their homes”; These homes belong to whomever it is that holds the title to the property to which the BUYER is making payments so as to one day become the OWNER.
Does anyone get this? Does anyone understand that buying is a process and after the buying process is complete the buyer stops being a buyer and then moves his status up to becoming the owner, but until such a time the buyer remains mired (mired for maybe thirty years, or even longer) in the process of buying?
Apparently not, and this is a good thing for the lenders because if buyers believe themselves to be owners then they will treat the property a bit differently than they would otherwise.
Its more socially acceptable to make payments to the bank rather than the landlord. You have made it if you take on a mortgage.
Isn’t that the fabric of our system?
Prices have gotten so high most people will never be able to actually own some day without taking on a loan.Bankers have people by the b@lls.
When FBs can and will walk away from their underwater homes, the bankers no longer have them by the balls. And with monetary policies that promote and reward fiscal irresponsibility, FBs will have no compunction about shirking their debts.
exactly It is getting easier for people to walk away from debts.
Who cares? The taxpayer foots the bill, so Mr. Banker still gets paid.
However payments to the landlord are half that of payments to the bank.
I overheard a realtor say, “Why buy when you can rent for half the monthly costs?
fraud
J._Fraud indeed.
Of course it’s more socially acceptable to pay the bank than the landlord. You had to jump through a lot more hoops to get a mortgage than to get a lease. You DID arrive… you proved you had a good credit rating, a stable job, and the discipline to save up a down payment. As a reward, nobody raises your rent, and you if you work at it long enough, you eventually have no landlord at all.
Of course. At 2 times the cost of renting.
Gee wiz Donk…. You make a slave seeking the approval of a master seem like paradise.
Why is that?
“These homes belong to whomever it is that holds the title to the property to which the BUYER is making payments so as to one day become the OWNER.”
How is that working out for the OWNERs whose BUYERs have made no payments in over 1300 days?
“How is that working out for the OWNERs whose BUYERs have made no payments in over 1300 days?”
It works out good because the buyers believe themselves to be the owners thus they will maintain, maybe even improve, the property as if they were the owners and by their doing this they in effect place the property in a holding pattern which is a good place for it to be until the decision is made by the true owner as to when to sell it.
Keep dreaming. More likely those deadbeat occupants are letting the place go to the dogs, since they know they’ll eventually get the boot. When they actually get evicted, they might just completely trash it on their way out.
If they trash the place then I’ll set it up somebody else (taxpayers, maybe) gets stuck with the bill.
Insurance pays for that.
Is there such as thing as pig destruction insurance?
Nice Drug money laundering scheme you got going there in Miami Mr Banker. The half of Americans strung out on drugs can’t afford houses but their drug suppliers in South America can.
Thank you.
The biggest drug money launders of all - the TBTF banks - are literally above the law.
http://www.theguardian.com/world/2012/jul/21/drug-cartels-banks-hsbc-money-laundering
Did I tell you guys that I met my neighbor at the mailbox? He was wearing his underwear. When I introduced myself, he acted snobby, and stressed that he OWNS this one house on like the worst corner of the development.
I wanted to ask if he had an underwater mortgage, but I let the man-panties speak for themselves.
The house on Siesta Key has pix: http://www.zillow.com/homedetails/5121-Oxford-Dr-Sarasota-FL-34242/47505770_zpid/
I don’t know the value of a location on the canal, or a boat dock. Is this worth a $700K short sale or a $500K tax assessment?
It’s not Longboat Key, but anything on the water with a dock, in a town known for very wealthy retirees and second-home owners, will be more highly valued. I haven’t been there since February, but I’m guessing that there are McMansions in that metro area that sell for around that sum. Unless there are structural problems or major work needs to be done, that price is at least plausible. On the other hand, look at the 2005 bubble sale price: $1,200,000!
Yep. Sarasota has been going gangbusters throughout this second bubble. Unbelievable.
The usual “experts” are assuring us that Portugal is a one-off problem that does not indicate a systemic banking crisis. I feel comforted.
http://www.theguardian.com/business/2014/jul/10/markets-
“The usual “experts” are assuring us that Portugal is a one-off problem that does not indicate a systemic banking crisis.”
+1 The fed agenda: Portugal, 15-minutes.
Chinese embezzlers, er, buyers, and Wall Street kleptocrats engorged on the Fed’s free money may be buying homes for cash and distorting the numbers, but that party may not last.
http://www.theburningplatform.com/2014/07/10/wall-street-the-chinese-govt-account-for-all-the-cash-purchases-of-houses/
‘If it weren’t for Latin American and European sales in Miami, it’s really kind of a scary thing to think about’
The article mentions they are trying to get the Chinese in.
‘China’s finance minister said Wednesday that the country is not planning any new stimulus measures and it is up to the United States to drive the global economy. Lou Jiwei said China is emphasizing structural reforms to spur economic growth and is unlikely to repeat the kind of massive economic stimulus it did in the wake of the 2008 global financial crisis. “Therefore the global economic recovery depends on the situation in the United States,” he told reporters.’
‘Domestically, Lou said that industries that have visibly suffered from a high-profile anti-corruption campaign spearheaded by President Xi Jinping, such as high-end hotels, tobacco and luxury liquors, have adapted to the conditions. “Some of the luxury hotels and restaurants have started to sell takeout food,” he added.’
I wonder if Kung Pao to-go will save these “luxury” hotels? Several months ago, I posted a report that said there were 4 5-star hotels opening in China each day. It went on to say they weren’t expected to make money on their own; the developers got side deals from the local governments on land to build houses if they built a luxury hotel. Jeebus, what a disaster.
“… it is up to the United States to drive the global economy.”
Translation:
It is up to those smart citizens of the United States to spend money they do not have in order to buy products that are made somewhere else and thus support jobs that used to exist in the United States but have been moved elsewhere.
It’s bad enough that fugitive Chinese money is distorting the market, but countries actually seem to be competing to woo it.
On a recent trip, my in-flight magazine had an upbeat puff piece on a Chinese city that would be called “second-tier” or “third-tier.” The air pollution was obvious in all the daytime photos. And the downtown featured a gigantic luxury hotel, named Shangri-La. The neon sign was in English of course.
adan will swear on his mother’s grave that China is the world’s economic leader. China seems to think its’ us.
http://www.zerohedge.com/news/2014-07-10/did-china-just-crush-us-housing-market
A few days ago we finally closed the door on any argument who the marginal buyer in the US luxury housing segment was - the answer: Chinese oligarchs, scrambling to launder their “hot” domestic money abroad (as we predicted first two years ago) and now that Switzerland is no longer a safe offshore venue where one can park cash, they picked US luxury housing as the best money laundering alternative.
Are you the administrator of that blog? I read it, and your phrasing looks familiar.
Me? No, I’m not a blogger.
“The volume of foreclosed properties held by Fannie Mae and Freddie Mac in the state of Florida reached a new high at the end of March, surpassing the previous peak reached at the end of 2010.”
I thought the foreclosure crisis ended years ago.
For how many more decades do they plan to drag out this ordeal?
“Florida loans that completed the foreclosure process in the first quarter at Fannie hadn’t made any payments in more than 1,300 days.”
It must be nice to enjoy four years of rent-free living. No pesky monthly payments to the bank could free up a lot of money for toys and vacations.
From what I’ve seen the money goes to meth, cigaretts, beer, easily equaling a monthly house payment. It would take strong drugs to live very closely with these people.
“It must be nice to enjoy four years of rent-free living. No pesky monthly payments to the bank could free up a lot of money for toys and vacations.”
I know a guy who has been doing exactly this for the last four or five years. Every once in a while the property preservation people cruise the house just to see that it is being kept up. He thinks the ride is going to come to an end soon, though.
Why doesn’t he save up and buy something with cash?
‘Almost half the 192 units delivered to buyers at MyBrickell were listed for sale or rent shortly after the building was completed in January…In May, sales of existing condominiums in Miami-Dade plunged 11 percent from a year earlier even as the inventory of existing condos for sale expanded 36 percent to total 10,941 units…Buyers opting for pre-construction units are paying a substantial premium over the price of an existing condo of comparable size — sometimes several hundred dollars per square foot more’
It’s difficult to believe the people involved can’t see what’s coming. The Herald article quotes some saying, ‘oh, we’ve got to keep the speculators out. The 50% down will do that.’ How do you explain these condos being put on the market right after they’re completed?
Fed money or drug money, it’s all just OPM, and they got it like fleas on a Detroit Muslim.
Those are ticks.
More to the point, how do you explain ppl paying more for preconstruction than nearly new? Blueprints are worth less than houses.
“The owners bought the three-bedroom home in May 2005 for $1.2 million. They used a $960,000 mortgage to help finance the deal. They then acquired another $240,000 in revolving credit against the home from that bank later in 2005, official property records show. ”
They put 20%($240K) down and then recouped it with a $240K revolving credit ? This sounds like Hialeah banking.
“This sounds like Hialeah banking.”
A sunny place for shady people, Florida. -unknown
‘I wish I knew where in the cycle we are,’ said Miami condo kingpin Related Group CEO Jorge Pérez. ‘How long does demand last? I think a very, very long time.’
Sharks live to eat.
It’s Miami.
The Latin Builder’s Association has a lock on Miami.
Sharks gotta eat.
“A fairly typical zombie in Southwest Florida can be found on Siesta Key’s Oxford Road. The owners bought the three-bedroom home in May 2005 for $1.2 million. They used a $960,000 mortgage to help finance the deal. …
Although the 2,270-square-foot house has been flagged as vacant by the Postal Service — and the owners have moved — the bank has been unable to successfully gain control of the property, which was valued by county appraisers at $493,900 last year.”
Why would the bank even want to take control of the property if it entailed recognizing a $466,100 loss (nearly 50%) on the $960,000 loan? Wouldn’t it be prudent to extend and pretend as long as possible?