Real Estate Crash thread

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Originally Posted by timvwcom

Every once in a while I am reminded there are sometimes silver linings to even big turds. I say let these bastards lie in the bed they helped make;

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You still don't get it do you?

1) Obama is coming to the rescue.

2) Obama will fix everything, asap.

3) Obama is going to save them

4) Did you read Obama's plan, everything is going to be okay. Barney Frank is also going to implement the changes he tried to make in 2002 that he was prevented from doing.

5) Did you know Obama is going to turn things around? Have some faith. Change is coming.

PS - I am actually buying an investment property. Are you willing to put your money where youru mouth is? Obama's change will make it worth even more. I thought you were an Obama supporter? Was all that blather from you just empty rhetoric? I thought you believed?

that article is retarded. the number of repubs who will actually move back somewhere is pretty low. despite all the shit the republicans throw at DC during campaigns, most of them love living there. other than the skiing, it's a great place to live.

most of the political appointees will move on to law firms or lobby shops in DC, maybe a few will leave but not many.

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Originally Posted by Bart T

that article is retarded. the number of repubs who will actually move back somewhere is pretty low. despite all the shit the republicans throw at DC during campaigns, most of them love living there. other than the skiing, it's a great place to live.

most of the political appointees will move on to law firms or lobby shops in DC, maybe a few will leave but not many.

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There was an article a few days back in the WSJ that mentioned almost no Bush appointees working in D.C. have jobs lined up. In fact only 2 or 3 of about 3,000 have anything lined up, and they had to take pay cuts, lower level jobs. Most think tanks are short on funds and are not hiring. Mass consoldiation in the finance/banking industry, republican lobbying firms hiring dems instead of repubs to lobby dem senate/house leaves a lot of repubs out in the cold.

Link to series of 3 videos from NBC Nightly News about newer Indy Mac Bank program to avoid foreclosures. Sounds like its NOT forgiving any principal, but does drop interest rate and extend term of loan to try and avoid their having to foreclose;

http://www.msnbc.msn.com/id/21134540...51249#27651249

Are YOU one of THOSE homeowners who thinks your home's value has risen or stayed level??? Good article on what we real estate agents are still dealing with out there in the market...

http://www.msnbc.msn.com/id/27648884/

Silicon Valley Apartment update - many places are offering move-in bonuses for 1bdr and Studios. As of now, not much of a problem renting the 2bdr. Call volume and walk-ins has been extremely low.

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Originally Posted by skier666

Silicon Valley Apartment update - many places are offering move-in bonuses for 1bdr and Studios. As of now, not much of a problem renting the 2bdr. Call volume and walk-ins has been extremely low.

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That could be due to the fact that November/December are not the best months to rent property out. I just had a home go vacant in October. After 3 weeks of buffing it out, $8k in improvements/maintenance, and reducing my asking rent from $1,650 to $1,575, I got a 1 year lease at $1,575:( I noticed people wouldn't even call on a really nice 2 bdrm, 3 car garage home over $1600 in San Diego.
I thought I read the mortgage mess would create more demand for rentals:confused:

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Originally Posted by timvwcom

Are YOU one of THOSE homeowners who thinks your home's value has risen or stayed level??? Good article on what we real estate agents are still dealing with out there in the market...

http://www.msnbc.msn.com/id/27648884/

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Funny article. It is natural to become emotionally attached to the idea that your home is as valuable as it was at the peak. I get numerous flyers on my door from real estate agents. Every once in a while I will bump into one that is dropping something off. They are always eager to tell me about how great the prices are right now. I never talk to them, but I always have the urge to say "no, the prices are not that great right now, they are simply not ridiculously out of line with the income of the country, which they were a couple of years ago." 500,000 is not necessarily a great deal on something that was 750,000. It is more accurate to say that 750k was an unrealistic price in an unsustainable market.

Part of me thinks what is addressed in that article is something the real estate agents deserve. I can't tell you how many times I heard "prices in Orange County will never come down, any economist who tells you they will is wrong" a couple of year ago. People were sold on the idea that prices would not fall, and they had better get in now. It is hard to blame them for holding on to that belief.

God, I love my location.
It's what matters.

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Originally Posted by rideit

God, I love my location.
It's what matters.

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I would really like to buy something in your area. Maybe next year.

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How about all the people who sat on the sidelines and said "no fucking way I'm paying 600000 for a shit shack that sold for 200000 just 4 years ago. I'm waiting for the market to come back to reality

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I'm in the bay area and did exactly that. No friggin way i was going to shell out that kind of money. 700K homes are now 225K where im looking. All my friends "buy a house, why dont you buy a house". Well, because i didnt want to pay a 5000 a month mortgage and i didnt want to get screwed on an adjustable. Well guess what. Half my friends lost their houses and the other half are paying out their ass for their house. Glad i waited. I'll have a nicer house than them and 1/4 the payment. suckas...

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Originally Posted by cramer

I'm in the bay area and did exactly that. No friggin way i was going to shell out that kind of money. 700K homes are now 225K where im looking.

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Are you kidding us? That is a huge decline in value. I could see a legit $700k home in 06 selling for $450kish, but less than that is crazy. Where are you looking?

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Originally Posted by rideit

God, I love my location.
It's what matters.

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You forgot the other two things that matter; location & location.

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Originally Posted by Particle

I would really like to buy something in your area. Maybe next year.

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Gimme a holler...there are (and will be more) great opportunities on my side in the low $200K's that were $350+ six months ago. I will keep my ear to the ground.

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Originally Posted by liv2ski

That could be due to the fact that November/December are not the best months to rent property out. I just had a home go vacant in October. After 3 weeks of buffing it out, $8k in improvements/maintenance, and reducing my asking rent from $1,650 to $1,575, I got a 1 year lease at $1,575:( I noticed people wouldn't even call on a really nice 2 bdrm, 3 car garage home over $1600 in San Diego.
I thought I read the mortgage mess would create more demand for rentals:confused:

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I'm getting bent over on my rental property. Still in the black, but I have been vacant for 6 weeks and it looks like I will be reducing the income on the property by $50/month rather than raising it by $300/month per my earlier competitive analysis. The whole process of finding renters has been 1000x more difficult this time; so many flakes, meth heads, people backing out, bum background checks -ugh, I am ready to take the loss and put this behind me.

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Originally Posted by rideit

Gimme a holler...there are (and will be more) great opportunities on my side in the low $200K's that were $350+ six months ago. I will keep my ear to the ground.

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You talkin' about a detached house? Condo?

Detached house, property, garage, etc.
Or a sweet condo.

No shit. Damn.

I predict we will start seeing these prospective prices widely starting in March-April, before summer. It's going to buy a serious buyers market, OAC, of course. If you have cash, you could seriously get a sweet pad cheap. And we will have trails for you to ride, I promise.
(No other realtor locally can PROMISE that!)

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Originally Posted by rideit

I predict we will start seeing these prospective prices widely starting in March-April, before summer. It's going to buy a serious buyers market, OAC, of course. If you have cash, you could seriously get a sweet pad cheap. And we will have trails for you to ride, I promise.
(No other realtor locally can PROMISE that!)

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Thanks dub, will for sure let ya know when we're ready. The hard part will be deciding: tiny condo in the cottonwoods vs something on your side of the pass...hmmmmm.

Dude, we have 1/2 hour longer of sunset to ride in the summer...something to consider. I will keep my eye on the JH market for you as well, but you basically still get absolute crap for under $700K there.

sorry if this is a repeat

Ha, that was well done, I laughed out loud at the Camaro SS.

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Are you kidding us? That is a huge decline in value. I could see a legit $700k home in 06 selling for $450kish, but less than that is crazy. Where are you looking?

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East bay, antioch/oakley and brentwood. pretty bad out there. 80% of the homes on the market are foreclosures and they losing 4% a month in value STILL. That was per the appraiser who did the appraisal on the first house i tried to get. He pretty much said, buy a foreclosure, people who selling in denial their house is worth jack shit. If the house comes back what you offer the bank, they will still sell because thats what they will be getting and want it out of their hands. A normal seller will hold out for a "cash" buyer or someone who will throw more money in above the appraisal out of their own pocket. The market out there got way out of hand.

I should probably wait another 6 months to buy to be honest. But fuck, i want a house why the pickings are good. Im getting one we can easily afford and its built in 2003. And im in it for the longhaul, not trying to make instant cash. ill have a normal 30 year fixed rate loan. So my payments will only go down once i refinance after a few years (im on fha, so i have ot pay extra insurance).
Anyways, its a buyers market for those of us who stood on the sidelines and make 100K or so a year and didnt jump into one of those crazy loans. Now im getting something i can afford.

That was funny. Downfall is well worth a look. German TV movie about the last few days in the bunker. Bruno Ganz does Hitler.

I haven't bought any foreclosed property but I did hear a report about property taxes. It seems that buyers of foreclosed homes may be on the hook for the 'past' taxes as part of the deal. Just FYI and/or warning.....

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Originally Posted by skier666

I haven't bought any foreclosed property but I did hear a report about property taxes. It seems that buyers of foreclosed homes may be on the hook for the 'past' taxes as part of the deal. Just FYI and/or warning.....

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Jesus, i really hate buying a house. And, a quick google, you'd be correct. Looks like its easy to protect myself from them though...But thanks for the heads up although i would hope my loan or realtor would catch that. The only taxes ill have at closing is from the date i close to year end. My yearly taxes going forward i put in my monthly so i dont get hit with a tax bill every year.

http://www.thinkglink.com/Back_Taxes_Owed.htm

further research, looks like i am fine. Mine is an REO bank owned.

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You can also consider buying a foreclosed home directly from the financial institution that issued the original loan for the house. There are various databases available online that can direct you to bank-owned real estate or you can contact banks directly and ask about their real-estate-owned (REO) programs. Buying a home this way is considered by some to be the safest way to purchase a foreclosed home.

You can arrange for financing. Consider being pre-qualified for a mortgage, if possible.
There are no other liens against the property.
You will not have to evict current residents.
Make your offer on the home subject to a home inspection to avoid structural and maintenance surprises.
You will have better luck negotiating a lower price on a foreclosed home that has been on the bank’s books for a long period of time (90 days or more). Once you make an offer on a home be patient, as it may take a while for the bank to get back to you.

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Originally Posted by skier666

I haven't bought any foreclosed property but I did hear a report about property taxes. It seems that buyers of foreclosed homes may be on the hook for the 'past' taxes as part of the deal. Just FYI and/or warning.....

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I would think that is if you are bidding on the court steps. If the lender has taken the home back, due to low bids on the court's step's, then you will make an offer that includes title insurance. Reading the title prelim report would warn you of any goofy liens and you would put those back on the lender prior to closing or no deal.

Just saw a three bedroom, two story home on a few acres in the aspens in Alta (Wy) for $295k...that is probably 1/3 less than 6 months ago. If any of you are in the market, it's time to seriously think about it.

Holy crap that Hitler/housing video was priceless. I just forwarded it on to my broker. :D

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Originally Posted by rideit

Just saw a three bedroom, two story home on a few acres in the aspens in Alta (Wy) for $295k...that is probably 1/3 less than 6 months ago. If any of you are in the market, it's time to seriously think about it.

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Got anything commercial and/or income producing?

So last week, between BOTH Teton Valleys (I dunno, maybe 20,000 pop. combined) there was ONE sale. Period.
That's ~800 realtors, chasing one sale a week. Wow.

Granted, that one sale (Jackson) was $7,500,000.

I wonder what it was priced originally...I am guessing over 10.

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Holy crap that Hitler/housing video was priceless. I just forwarded it on to my broker.

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hehe, that was pretty good.

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Originally Posted by rideit

Just saw a three bedroom, two story home on a few acres in the aspens in Alta (Wy) for $295k...that is probably 1/3 less than 6 months ago. If any of you are in the market, it's time to seriously think about it.

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16 months ago I sold a 3500Sq foot 5 bed 3 bath in Brookside Hollow for 385K

I also sold a 1800 sq foot 3 bed 2 bath townhome for 190K

I wonder what they would go for now. I think I literally got out RIGHT as the shit hit the fan.

This article refers to luxury resorts as toxic assets...pretty interesting. If I had money tied up in luxury second homes I would be getting the hell out.

http://crosscut.com/2008/12/10/montana/18697/

Lending for ultra-luxury Western resorts: dumb, dumb, dumb

As resorts for the wealthy such as Yellowstone Club, Tamarack, and Promontory tumble into insolvency, you have to wonder what the lenders such as Credit Suisse and Lehman Bros. were thinking. Here's another tale of toxic assets, poor diligence, and no backup plans.
By Jonathan Weber

If you want a stark example of the kind of lending practices that created the global credit crisis, you can hardly do better than banking giant Credit Suisse's adventures in luxury mountain resort financing. At Tamarack in Idaho, at Promontory in Utah, and at the Yellowstone Club in Montana (to name just the few that I'm most familiar with) the bank doled out hundreds of millions in loans, which were than syndicated out to investors (just like those famous sub-prime mortgages). If the Yellowstone Club situation is typical, those loans were made with minimal due-diligence or oversight, and no plan for what might happen if the real estate market hit the skids.

The Yellowstone Club owes Credit Suisse (or rather its unfortunate clients) $307 million, and I'd say there's a better than even chance that only a fraction of that will ever get paid back. If you'd been wondering what the "toxic assets" that are of such concern to the Treasury Department and the Federal Reserve actually consist of — and why they threaten the solvency of the entire banking system — there's one answer.

The level of recklessness in Credit Suisse's resort lending — and sources say it did more than dozen similar resort loan deals in the U.S. and overseas — is only now becoming clear. Even if you take the most charitable view, much of Credit Suisse's Yellowstone Club loan financed exceptionally wasteful spending by the club and its owners, as well as a dubious scheme to develop a super-luxury vacation time-share operation called the Yellowstone World Club. Any busboy in Big Sky could have told Credit Suisse that its money was being squandered.

At Tamarack in Idaho, the situation is a little less scandalous, but similarly dire. The resort is now operating under a receivership, and is probably just a bad snow season away from total insolvency. One way or another it will probably survive, but you definitely wouldn't want to be holding a $270 million note. Promontory, in Utah, is also staying open while in Chapter 11 proceedings, but as with its brethren, the financial model (and repayment of $275 million) depends on a real estate recovery that looks distant indeed.

It's now conventional wisdom that the financial industry's risk-assessment methods were fatally flawed because they understated the probability of a dramatic shock to the system — like, for example, a 30 percent fall in real estate prices. And Credit Suisse was hardly alone in its follies: Lehman Bros., for example, lavished $170 million on the Yellowstone Club's Big Sky neighbor, Moonlight Basin. (We know how the Lehman part of that ended, and the Moonlight Basin part is still to be determined). Financial institutions of all stripes, looking to meet investor demand for loan products in the easy-money days of the 2002-2006, thought they could spread the risk by slicing the loans up into investment instruments (often collateralized debt obligations, or CDOs) that in some cases could then themselves be insured against default (via credit default swaps). Nobody thought too much about what might happen if underlying asset values collapsed across the board.

Yet all it took was a common-sense look at a resort market like Big Sky, where prices tripled from 2003 to 2007, to suspect that the buying frenzy wasn't going to last. Credit Suisse only had to analyze its own portfolio to recognize that there was an awful lot of supply of multi-million-dollar mountain homes coming online.

And even if you accept the "everyone was doing it" defense, it still seems amazing that an institution like Credit Suisse, with access to the best legal and financial minds in the world, apparently had nothing remotely resembling a Plan B for these projects. For a while I wondered what the bank's strategy might be as the loans defaulted: Did Credit Suisse think there was long-term upside, in which case it would be looking to own and operate the properties for a while? Or was it just aiming to get whatever it could as quickly as possible, even if that meant big losses?

From watching the proceedings in the Yellowstone Club bankruptcy, I think it's now safe to say there was no strategy at all. First, Credit Suisse stood by while the club slipped into Chapter 11 in the first place. Then, it came forward with a $4.4 million debtor-in-possession financing that would last about three weeks, with no clear indication of what it planned to do then. When "then" arrived, about 10 days ago, Credit Suisse first said it would offer a few more weeks of funding, then said it couldn't even raise the money for that, then proposed floating things for a week so it could shut the club and sell the assets.


The bankruptcy judge, not surprisingly, decided that was a pretty dumb plan, and approved a $25 million interim financing from CrossHarbor Capital Partners. (A liquidation plan involving the shut-down of the club would almost certainly destroy much of its remaining value). In fact, the restructuring specialist that Credit Suisse installed as part of the three-week loan deal actually testified against the bank's proposed new interim financing plan. That has to be pretty rare.

The Credit Suisse lawyer, from Skadden Arps, has certainly been dancing energetically in the courtroom; top-dollar lawyers are evidently something the bank can still afford. But its apparent lack of attention to how it might rescue a series of loans that total in the billions is baffling. A cynic would say that since Credit Suisse doesn't actually hold most of the paper, it's just in it for the fees anyway, and therefore the more running in circles, the better. I'm not that cynical: I think it's just incompetence.
previous page 1 | 2

Jonathan Weber is publisher and CEO of New West, where this story first appeared.

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Originally Posted by doublet

If I had money tied up in luxury second homes I would be getting the hell out.

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If you were stupid enough to buy in one of those places, sure. But if you have something in a really nice place, there are always going to be people with money.
You make your money when you buy it, not when you sell it.
I'm looking in the islands right now. If I don't make any money, so what. It's not like I'm killin it in the stock market. At least I'll have a really nice place to go to, that I enjoy.

^^^^^If you are serious about the Islands. My family has some of the finest properties avaliable Big Island and Maui....PM if you are for real.

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Originally Posted by Shredhead

If you were stupid enough to buy in one of those places, sure. But if you have something in a really nice place, there are always going to be people with money.
You make your money when you buy it, not when you sell it.
I'm looking in the islands right now. If I don't make any money, so what. It's not like I'm killin it in the stock market. At least I'll have a really nice place to go to, that I enjoy.

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Good point. Having a place you are excited about and aren't relying on to produce cash flow is much different than having leveraged luxury real estate hoping to make a bunch of money on it. I think anyone hoping to make a bunch of short term gains on luxury real estate is fooling themselves.

I'd still kill for a place in Jackson.

I read a piece this morning on Option ARMs that stated the subprime meltdown over the last few years was nothing compared to the Option ARM shit storm that will happen over 2009-2010.
http://www.msnbc.msn.com/id/28035238
"The first wave of home foreclosures that hit in late 2006 and early 2007 followed the resetting of subprime adjustable mortgages with two- and three-year "teaser rates" written during the height of the lending boom earlier in the decade. But pay-option ARMs — which often don't "recast" for five years — have a longer fuse. Unless defused by aggressive public and private foreclosure prevention programs, the bulk of these loans will explode to higher payments in 2009 and 2010.

The scope of the problem was highlighted in September in a study by Fitch Ratings, one of the bond rating agencies that assesses the risk of defaults on mortgage-backed investments. Of the $200 billion in option ARMs outstanding, Fitch estimates that some $29 billion will recast in 2009 and another $67 billion in 2010. That could cause delinquencies on these loans to more than double, Fitch said.

To make matters worse, only 17 percent of option ARMs written from 2004 to 2007 required full documentation. Many of the borrowers who took out these loans also took out a second mortgage, which means they likely have little or no equity in their home, according to the report. That means many could owe more than their house is worth when the loan recasts to unaffordable payments."

Throw in unemployment at 9-10% at that time and this is going to get real ugly IMO. Good time to sell if you don't have a shit load of equity and a long (10+yrs) ownership window for prices to come back to 2004-05 levels??

This is serious. This has been building since 03 when then Golden West Financial aka World Savings then Wachovia now Wells??? Bailout recipient started with the "Kool Aide". This loan product was copied then marketed hard with many banks. Come on you remember pick a' payment loans marketed heavy with GM's Dietec and Country Wide, usually attached to the MTA index. Not the GWF...COSI These products are the root of the funny business.
anyone with 70% CLTV could qualify no questions asked in to a negative amortizing loan. Banks paid 3 points to the brokers...now let me see I'll get my calculator 3% x $500,000.00 = http://www.tetongravity.com/forums/s...t=bailout+time

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Originally Posted by liv2ski

I read a piece this morning on Option ARMs that stated the subprime meltdown over the last few years was nothing compared to the Option ARM shit storm that will happen over 2009-2010.
http://www.msnbc.msn.com/id/28035238
"The first wave of home foreclosures that hit in late 2006 and early 2007 followed the resetting of subprime adjustable mortgages with two- and three-year "teaser rates" written during the height of the lending boom earlier in the decade. But pay-option ARMs — which often don't "recast" for five years — have a longer fuse. Unless defused by aggressive public and private foreclosure prevention programs, the bulk of these loans will explode to higher payments in 2009 and 2010.

The scope of the problem was highlighted in September in a study by Fitch Ratings, one of the bond rating agencies that assesses the risk of defaults on mortgage-backed investments. Of the $200 billion in option ARMs outstanding, Fitch estimates that some $29 billion will recast in 2009 and another $67 billion in 2010. That could cause delinquencies on these loans to more than double, Fitch said.

To make matters worse, only 17 percent of option ARMs written from 2004 to 2007 required full documentation. Many of the borrowers who took out these loans also took out a second mortgage, which means they likely have little or no equity in their home, according to the report. That means many could owe more than their house is worth when the loan recasts to unaffordable payments."

Throw in unemployment at 9-10% at that time and this is going to get real ugly IMO. Good time to sell if you don't have a shit load of equity and a long (10+yrs) ownership window for prices to come back to 2004-05 levels??

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