All this and Obama picked the low hanging fruit of credit card reform instead of one of the MAIN platforms he was elected on which was the housing crisis.
Boy when the lobbyists have control they have control....
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All this and Obama picked the low hanging fruit of credit card reform instead of one of the MAIN platforms he was elected on which was the housing crisis.
Boy when the lobbyists have control they have control....
Jimmy Carter and Hog,
Just to clear up a few issues. First, JC, just because FHA is nuts enough to allow the tax credit for a down payment, doesn't mean that the investors that do FHA loans will accept that form of down payment today. So don't worry, no one is doing that yet. Also, FHA does not allow you to finance closing costs on a purchase. I don't care what you read. Everyone misinterprets the outdated verbage used in the old guidelines.
Hog, I don't know where your sending your loans to be underwritten, but you always use the net rental income or loss on the tax return to to determine cash flow. Yes, I have a positive cash flow on my rentals. When buying a new N/O/O property the lender will use 75% of the rental income projected to off set the new PITI. that may result in a loss which is hit against you like a debt for qualifying or as income if your that lucky.
In the old days, you could move into your rental property, that you had owned forever, with a shitload of equity in it, stay there 2+ years and treat the equity at sale like a home you lived in forever. That means no taxes paid up to a $500k gain for a married couple rather than normal capital gains taxes on a rental properties equity which in CA runs about 18% Fed and 10% state last time I got hosed selling a rental.Quote:
Originally Posted by Bean
Sadly Congress changed the rules in 2008 and that sweetheart lope hole is drastically reduced/gone.:fuckyou:
I am not sure what you are smoking but the primary residence exemption still exists. There are some ownership and use tests but it hasn't gone anywhere. I have never moved into a rental and then sold before so I am sure there are some depreciation/basis issues there but I have moved out of a house, rented it for a couple years and then sold it, excluding the gain each time.Quote:
Originally Posted by liv2ski
I don't smoke, that is Mrs liv2ski your thinking about:fmicon:Quote:
Originally Posted by mcsquared
But while having my 08 return done my CPA pointed out to me there was a change in the tax code that would limit/eliminate the ability of the owner of a long term rental property to move into it for two years and be able to treat the gain like a normal always owner occupied sale.
You may want to talk to your tax guy about this, as I hope I am wrong. It was my intent to move into the rentals, one by one over the years to get out of the normal Capital Gain hit you have on the sale on N/O properties. I was told sorry dude, that won't work for you anymore on these properties you have had as rentals for 15+ years. So to Congress and Mr Bush:fuckyou:
Actually, I should probably start smoking. Because it turns out you are right. or at least kind of right. Sounds like you would have to live there for 5 years. But if you live there for 2 years you still get a break, 2/5ths is exempt
http://www.investmentnews.com/articl.../REG/517913864
Note that any property that you are currently living in (or were living in prior to 1/1/09) is exempt.Quote:
Originally Posted by mcsquared
Quote:
The rule takes effect Jan. 1. Anyone who purchases a home and is living in it as a principal residence by that date won't be subject to its provisions and can enjoy the full tax-free capital gain, provided that that homeowner has lived in the house for two of the previous five years.
Good to know. I just cut and paste the guy's whole rant because the whole mentality of "we need to get people into houses (they probably can't afford) as soon as possible!" bugs me.Quote:
Originally Posted by liv2ski
along the lines of that rant, this article is a good read, if you can get through it without vomiting
http://www.nytimes.com/2009/05/17/ma...closure-t.html
This is true, but your rental income must be qualified and verified for 12-24 months. So if you are trying to rent your primary residence, showing them a lease is not going to cut it.Quote:
Originally Posted by liv2ski
It appears as though Mr Andrews neglected to mention a few important pieces of information.Quote:
Originally Posted by khakis
http://meganmcardle.theatlantic.com/...bankruptcy.php
Quote:
The Road to Bankruptcy
21 May 2009 01:02 pm
At the end of his book's harrowing account of mortgage mistakes and credit card crises, Edmund Andrews writes: "While our misadventure had certainly been more extreme than those of many other Americans, our situation was not all that unusual." And indeed the book reads like the story of an American Everyman, easily sucked in to the alluring world of easy credit as he struggled to blend a new family. The terrifying implication is that it could happen to you--to anyone who leads with their heart and not their head.
But en route to that moral, it turns out the story has been tidied up a little. Patty Barreiro, Andrews' wife, has declared bankruptcy twice. The second time was while they were married, a detail that didn't make it into either the book or the excerpt that ran in last Sunday's New York Times Magazine.
Andrews' desire to shield his wife is understandable--hell, laudable. No decent person wants to parade their spouse's financial trouble in front of the world. But this is material information that changes the tenor of his story. Serial bankruptcy is not a creation of the current credit crisis, and it doesn't just happen to anyone, particularly anyone with a six figure salary.
In September 1998, California bankruptcy court records indicate that Patty and her first husband declared bankruptcy. The financial statement they filed with the court indicated family income of $174,000 in 1996, $87,000 in 1997, and $126,000 in the first nine months of 1998. The income fluctuations are not surprising, given that her husband was in the film production industry. By the time of the filing, the couple owed about $30,000 on 8 credit cards, over $200,000 in back taxes, and almost $15,000 in private school tuition, as well as substantial car and mortgage payments.
In 2007, nearly as soon as she was eligible, Patty Barreiro filed again in Montgomery Country. When called for comment yesterday, Andrews was unavailable, but there is no question that it is his wife: his income and occupation are prominently featured in the docket.
This is really highly unusual. For starters, the overwhelming majority of people who file bankruptcy do not make anything close to $100,000 a year--the standard estimate when the 2005 bankruptcy reform was passed was that about 80% of filers had household incomes below the median income in their state. The number of affluent people who file twice is even smaller, and has presumably gone down since the 2005 filing largely eliminated abusive serial Chapter 13 filings, which used to be used, often by quite wealthy people, to forestall evictions or foreclosure.
The bankruptcy code requires filers to wait 8 years after a previous Chapter 7 discharge. Barely four months after she became eligible, Patty Barreiro filed again. And the filing shows some suggestion of strategic debt management.
Ms. Barreiro filed separately from Andrews, and had to amend the filing to include Andrews' income after a complaint from a creditor who wanted to force her into a Chapter 13 repayment plan. She filed when her income was at rock bottom, consisting only of unemployment; the timing may have just excluded having to declare $5,000 in freelance editing income Andrews mentions in the book. And she shed what appear to be jointly incurred debts, such as a Comcast account. Comcast does not service the address listed on the 1998 filing, but as I can attest (to my sorrow), it is the main cable provider in Silver Spring, where she moved to live with Andrews in 2004.
Serial bankruptcies can, of course, happen to anyone with enough bad luck. But they usually don't. And when they do, they usually hit people with marginal incomes that leave no margin for error in the budget. Most people, even in LA, are able to build a sustainable budget out of an income in the low six figures.
Moreover, pesky bad luck isn't really the picture painted by either filing. Rather, Ms. Barreiro seems to have spent most of the last two decades living right up to the edge of her income, and beyond, and then massively defaulting. If you structure your finances so that absolutely everything has to go right, it's hard to blame the mortgage company when you don't quite make it.
Andrews has been admirably open about many of the poor decisions and the wishful thinking that led him deep into debt. Nonetheless, he has laid much of the blame onto irresponsible bankers and mortgage brokers. The missing bankruptcies substantially undermine this basic narrative arc of Andrews' story. Particularly in his book, the bankers are the villains, America's current troubles are the inevitable denouement of their maniacal greed, and the Andrews household stands in for an American public led, by their own greed and longing and hopeful trust, into the money pit.
It's hard to argue that Ms. Barreiro was forced into bankruptcy by crazed subprime mortgage lenders in 1998. Greedy bankers certainly didn't keep her and her first husband from paying their taxes.
Of course, her first husband was involved too--there's no way of knowing who was at fault in the first case. If indeed anyone was: there may have been a business failure or some other mitigating factor. As I mentioned, I tried to reach Andrews for comment several times, leaving messages on both his office and cell phone that made it clear I was reporting for The Atlantic, and that I wanted to speak to him about Patty's bankruptcies. For whatever reason, he has not called me back, and so I don't have his (her) side of the story to tell you.
Of course, no matter what he told me, it wouldn't let the bankers off the hook. Whatever Patty Barreiro's spending history, it's still true that she and Andrews were able to dig themselves in a lot deeper because of fantastically easy credit from a variety of fantastically stupid bankers, most of whom now seem to have gone fantastically bankrupt. But while the willing lenders amplified the problem, given Ms. Barreiro's history, it seems unlikely they were at the root of it. It's hard to see them as victims either of those bankers, or a mass mania.
Andrews married a woman with a lengthy history of debt and spending problems. Serial bankrupts were getting into trouble long before there was a credit bubble, indeed long before there were credit cards or 30-year self-amortizing mortgages. In fact, the literary history of America is littered with them; we owe much of Mark Twain's later work to his catastrophic financial mismanagement.
Credit encourages people to spend more by separating the pain of payment from the pleasure of consumption. For many, maybe most, people, this means at least one brush with unpleasantly large overdrafts or credit card balances. And for a small subset of folks, that easy accumulation leads to real, often repeated, trouble. Those kinds of problems can't be fixed with tighter mortgage lending standards or a 500 basis point uptick in the Fed Funds rate. And they aren't the main problems facing most Americans today.
Hog, you need to quit putting stuff like this out there, as it isn't 100% correct. If you are getting a FNMA loan, the present home you live in needs 30% equity to count the rental income to offset the PITI. A new FHA loan, the present home needs 25% equity in it to count the rental income. VA or Jumbo loan, no problem counting the rental income as long as present home loan/value isn't upside down.Quote:
Originally Posted by H0G
For those with less than the required equity, that are wanting a FNMA or FHA loan, I suggest they move out of the present home and rent it out for 6+ months prior to applying for a new loan, so the rental income can be counted even though they don't have the 25%-30% equity position.
This is a clearer explanation on the rules you tossed out there.
EDIT: I find it interesting that FNMA and FHA came up with the equity required in the present home rule, so as to make it tougher for people to qualify. I mean, if you don't have the equity in the present home, they are making you qualify for the present and new mortgage payments, unless you rent the present home out for 6+ months, as I suggested as a work around. I guess prior to the rule change, people that were upside down on their equity would buy a new home saying they were going to rent out the present home, when in fact they just let the first home go back to the lender at the close of escrow on the new place.
No matter what rules the lenders come up with to try and slow down foreclosures, this shit is just going to happen more and more as unemployment goes up and values continue to fall. People getting squeezed will say fuck it and mail in the keys. To slow that down, lenders could do at least 2 things IMO. Send the person a 1099 on the deficiency balance once the home is resold, without exception and tell them they can't apply for a new home mortgage with less than 20% down for 7 years. Knowing those two issues were there to deal with would make many people pause from just mailing the keys in.
Sorry, but if i was dealing with some stupid mortgage on a house that is so underwater the fishes have built a home to stay (and Luca Brasi floats down to spend eternity), the smartest thing to do is take a deep breath, make sure you have an exit strategy, which is key, and walk. The penalties really aren't that bad, which is the problem. The fact that just seven short years from now you could be in a home again is kinda absurd to a non homeowner, but I've heard a lot of really absurd stories the past few years about some warm bodies getting big loans. From what I've seen over the last year and a half, and from the way that the whole auto bankruptcies are progressing, is that when the shit really flies in the coming year during the accelerating foreclosure bubble (give me a break about it slowing down), The Obama led Congress will focus on adjusting loans by lowering principal values without tax penalties. The banks will be pressured, and they'll do it, and, it will probably be necessary, considering how fucked up the economy will be. But talk about moral hazard. And the first people who foreclosed will be back in at the rock bottom wheeling and dealing and inflating prices with stupid credit. It's will be stupid because they, of all people, can get it.Quote:
Originally Posted by liv2ski
Actually its 3 years you can be in a home again is what's absurd. You are a first time buyer again and a 620 credit score is more than attainable. FHA will give you another shot as long as you had stellar credit since your foreclosure. 7 years if you file bankrupt.Quote:
Originally Posted by Benny Profane
Really pisses me off that i sat on the sidelines all this time and waited for the houses to get affordable. Meanwhile friend upon friend, family member upon family member had these big houses, brand new cars, boat, jet ski's, etc and where are they now? No worse off then i have been the last 10 years. Renting a nice house or condo, and essentially got free toys from the loans they foreclosed on. Such bullshit.
I need a car. What they got?Quote:
Originally Posted by cramer
agreed. i should be more clear.Quote:
Originally Posted by liv2ski
Giving them a 1099 and barring them from buying is harsh, but that may be what it takes. This has been a wild ride, but things are getting better in Denver.
2007 maxima and 2006 7 series bmw, 4000+ surround sound w/ tv.Quote:
Originally Posted by Egon
motor home, 2005, jet ski's 2007, boat 2007, scooters 2007, quads, 2007
shall i go on?
PAID OFF ill add....let me take a 2nd on the house and pay these off in full...
Oh, i have no more money, some im going to WALK. Understand, these toys were paid off when they took a 2nd on their house. The bank, well tell me what they are going to do. I dont know. They still all holding their shit.
Comprende?
You know this whole bail out / mail the keys back in mentality is a slap in the face of every person that ever managed their money in a sound manner. I can't begin to tell you how bitter this shit has made me. I am like fuck the US guberment. I will sell all my real estate and move back to Canada and fuck them out of about $300k in capital gains because they are such douches.:fuckyou::fuckyou:Quote:
Originally Posted by cramer
Now it's like "Dog, the House Bounty Hunter". But this one won't make it to cable.
May 24, 2009
Amid Housing Bust, Phoenix Begins a New Frenzy
By DAVID STREITFELD
PHOENIX — Every weekday morning, Lou Jarvis drives the sun-baked suburban streets looking for investment gold: a family that will lose its house in a foreclosure auction within a few hours.
If the property looks promising, Mr. Jarvis puts in a bid on behalf of any of his dozens of clients eager to become landlords. When he wins, he offers to let the family stay in the house and rent for much less than their mortgage payment.
With this sweltering desert city enduring one of the largest tumbles in housing prices for any urban area since the Depression, there is an unrelenting stream of foreclosures to choose from. On some days, hundreds are offered for sale at the auctions that take place on the plaza in front of the county courthouse.
There is also a large supply of foreclosed families who can no longer qualify for a loan. And that is prompting a flood of investors like Mr. Jarvis, who wants to turn as many of these people as possible into rent-paying tenants in the houses they used to own.
Real estate got just about everyone into trouble in Phoenix, and the thinking seems to be that real estate is going to get everyone out.
The low end of the real estate market here — and in some equally hard-hit places like inland California and coastal Florida — is becoming as wild as anything during the boom.
One real estate agent was showing a foreclosed house to a prospective client when a passer-by saw the open door, came in and snapped up the property. Another agent says she was having the lock changed on a bank-owned home when a man happened by, found out from the locksmith that it was available, and immediately bought it. Bidding wars are routine.
Absentee buyers, who can be either investors or individuals purchasing a vacation property, bought nearly 4 of every 10 homes sold in the Phoenix metropolitan area in April, according to the research firm MDA DataQuick. That is up 50 percent since late 2007, and is nearly the same ratio as at the 2005 peak.
Once again, just about everybody seems to be buying as many houses as they can, positive it will make them rich — or at least allow them to recoup some of their losses.
“I bought too high a few years ago,” said Jason Fischbeck, an entrepreneur who lives across the street from Mr. Jarvis and is one of his clients. “It cost $225,000. Now it’s worth $110,000. So I just paid $80,000 cash for another. ”
Mr. Jarvis, 47, the former co-owner of a wood moulding company that thrived in the boom and faltered in the crunch, also made some mistakes. Last spring, he contracted for three new homes in the distant suburb of Copper Basin, convinced that real estate was bottoming.
He was wrong. He managed to get out of two of the contracts but had to buy one of the houses, which is now substantially under water.
“You need to buy when there’s blood in the streets,” he said with a shrug. “Even if it’s your own blood.”
In January, Mr. Jarvis began working as director of investor relations for Brewer Caldwell, a property management firm that had been approached by the CBI Group, a real estate fund based in Calgary, Alberta. In its first foray into the American market, CBI is buying 175 rental houses in Phoenix.
One of them belonged to Mary Lou and Jorge Aguilar, who purchased it new for $111,000 in 1999. Three years ago, after a series of financial difficulties, they refinanced for $185,000 for reasons they no longer understand. “Our lender talked a pretty picture,” Mrs. Aguilar said bitterly.
When the couple’s mortgage payment adjusted to $1,242 a month, they fell behind and ended up in foreclosure. They now pay $1,014 in rent, which they say is bearable.
Still, their feelings are mixed. “It’s not our house anymore; it’s someone else’s,” said Mrs. Aguilar, who works for the state welfare department.
For CBI, the deal is sweet. At that rent, it would recoup the $52,000 it paid for the house in about five years. “This type of deal is absolutely not available in Canada,” said Jarrett Zielinski, a CBI executive. “No city here has fallen by 50 percent, the way Phoenix has.”
The investment group is opening a new fund this week to buy another 160 Phoenix homes.
As CBI continues to buy, it is planning investing seminars for its tenants. “Our goal is to be able to sell them their house back,” Mr. Zielinski said. “Wouldn’t that complete the circle?”
First up for Mr. Jarvis’s inspection on a recent morning is a three-bedroom on a cul-de-sac in the suburb of Gilbert. A rival investment crew is already there. “You don’t want this one,” one fellow says. “It’s no good.” Mr. Jarvis just laughs.
Once they are inside, the reason he is trying to send Mr. Jarvis away becomes clear. The house, built in 1991, is clean and well proportioned, with an opening bid of $76,000 — $200,000 less than what it sold for three years ago.
Not every property gets his nod. He considers an older condominium but deems it unlikely to appreciate. A three-bedroom seems promising until he sees the power lines looming just feet from the back fence.
In the end, he makes just one bid this day, for the three-bedroom he saw first. He offers $110,000, which is not enough. At the courthouse, it goes for $114,000. Every week, the foreclosure market is more competitive.
As the day’s auctions wind down, Mr. Jarvis goes back to the office to meet with a group that wants to put $5 million into the Phoenix housing market. A few miles away, the owner of that house with the monstrous power lines, Robert Corr, is being told his house was sold and he has five days to vacate.
Mr. Corr smiled when he heard the news, happy to be the latest of the 78,738 foreclosures in Phoenix since January 2005. He had already rented a van to take him and his family back to Alabama, where they would buy a mobile home and live on 10 acres of land.
Brewer Caldwell has bought about 125 houses this year for its clients. Only a quarter had owners who were living there already and willing to stay on as tenants. Filling up the rest, and all the other houses the company intends to buy, will depend on a steady supply of people who cannot afford to buy for themselves.
“If Phoenix loses population,” Mr. Jarvis says, “then buying houses here is a bad bet.”
As Mr. Jarvis scouts for houses, he sometimes finds a familiar one. In February, he saw a home that one of his brothers bought from a builder in 2005, camping out overnight for the opportunity. With its value now shrunk, the brother was letting it go to foreclosure.
Mr. Jarvis’s daughter Jade also bought a house at the market’s peak — in her case to live in. The other day she asked for advice: should she keep paying the mortgage on something that had declined in value by 60 percent? His conclusion: “probably not.”
“Am I teaching my kids right by letting them walk away from something they made a commitment to?” Mr. Jarvis wonders.
Wow, maybe not the cars, but there must be a couple sleds hidden in there somewhere...Quote:
Originally Posted by cramer
no all my family down here is basically my wifes family. Fillipino's. They are weekend warriors at the resort at best. My immediate family is either to poor to buy a house or bought one 15 years ago and still own the same one.Quote:
Originally Posted by Egon
I liked that above post from Benny on the Pheonix foreclosures and how big investors are coming in and buying up $5M blocks of homes. I am guessing some of those are coming out as REITs, so I need to find some info on CBI out of Calgary and see what they are offerring. Could be a good investment in another 12 months. Not sure I am ready to pull the trigger yet on RE, as I am concerned about further down turns in the stock market. See the stock market thread comments I left.
San Ramon Ca.: Co-workers sister lost a house to multiple bidders. Just bought a house and was lucky because multple bids higher than hers were waiting. No homes for sale on my street in a crappy Bay Area neigborhood.
Though I see some things that seem to show the end of this "rainbow" of real estate melt down... other things still not looking so good;
Quote:
(CBS/ AP) An industry report shows that a record 12 percent of U.S. homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit.
The Mortgage Bankers Association said Thursday the foreclosure rate on prime fixed-rate loans doubled in the last year, and now represents the largest share of new foreclosures. Nearly 6 percent of fixed-rate mortgages to borrowers with good credit were in the foreclosure process.
At the same time, almost half of all adjustable-rate loans to borrowers with shaky credit were past due or in foreclosure.
California, Nevada, Arizona and Florida accounted for 46 percent of new foreclosures in the country.
Meanwhile, new U.S. home sales were almost flat last month, indicating that the housing market's recovery will likely be a slow and gradual process.
The Commerce Department said Thursday that sales rose 0.3 percent in April to a seasonally adjusted annual rate of 352,000. But the increase came from a downwardly revised rate of 351,000 in March.
April's results missed the expectations of economists surveyed by Thomson Reuters, who expected a sales pace of 360,000 units.
This had a very interesting graph by metro area for YTD and over the last 5 years. Check it out as it would appear some areas have hit bottom.
http://articles.moneycentral.msn.com...cesByCity.aspx
By MSN Money staff
U.S. home prices actually rose 0.4% in the first quarter of 2009 and fell just 3.3% over the past 12 months, according to data released today by the Federal Housing Finance Agency. That's a major reversal.
"Our latest data are consistent with growing evidence that housing market conditions may be stabilizing in some parts of the country," said director James B. Lockhart. "I am hopeful that this first quarter data combined with recent market stimulus programs, such as the first-time homebuyer tax credit and President Obama's Making Home Affordable Program may mean that home price depreciation may be easing."
FHFA's house price index includes data from mortgages for both home purchases and refinancing.
Of the 20 cities with the greatest price declines over the past four quarters, all but two -- Las Vegas and Phoenix-- were in California or Florida.
In 70% of the metropolitan areas tracked by the housing agency, prices dropped at least somewhat year over year. On a five-year basis, though, just 25 metro areas are in negative territory, mostly from economically devastated Michigan and now-deflated inland areas of California.
I certainly haven't sold enough $30,000,000+ homes this year!
Quote:
Originally Posted by ABC News
THIS home is so swanky they built a mountain growing out the top of it;
I think if all us Dentist's here at TGR charged each of our customers a buck a visit, we could pool the money and make this ^^^ the official Mag club house?Quote:
http://a.abcnews.com/images/Business...070130_ssh.jpg
What does $155 million get you? Apparently, a home. With a 30-car garage, a bowling alley, and its own ski lift at the Yellowstone Club near Bozeman, MT. And the title "The World's Most Expensive Home" from Forbes magazine. The Disneyland-sized estate eclipsed the record previously held by the $139 million "Updown Court" in England, and makes Trump's renovated $125 million estate in Palm Beach look like a beach shack.
OK, 17 days ago. we officially put our San Francisco 'condo' up for sale. Traffic at the two Open Houses have been stronger than they've seen in a long while, and have had around 3 private showings but no offers as of yet. Just to compare, when we bought this place, we literally had to run to the real estate office and make an offer before it sold. The 20 units in the building only took a few weeks to completely sell out.
I've been researching non-stop for our next property on the North side of town for the last 2 months with only a few selling, most have reduced prices 5-10%. Very few places going for list. The day of overbidding is gone.
Financing has been, well, interesting. It took us a while, but after 2 months we finally found a lender that will lend for a SF 'condo' at 20% down for a jumbo loan. Most lenders are requiring 30% down no matter what. FHA loans don't apply. Hell, I don't blame them. since I don't see prices rising anytime soon, or see many people with $300K in their back pocket to throw down on a $1 million condo.
Bottom line, I'm trying to get the equity out of our place asap, and use that to get a better deal on the next place before other countries refuse to buy US Treasuries/Greenbacks and the rates start to skyrocket.
Fun times. :)
You lagging markets may still have some paying to the piper left to do...
Quote:
America's Most Troubled Luxury Neighborhoods
The Collapse in Prices Has Finally Come Home to the Rich
By STEPHANE FITCH and MATTHEW WOOLSEY
Forbes.com
July 4, 2009—
Has the housing market scraped bottom? Not in some of the wealthier neighborhoods -- places like New York City's Greenwich Village, Santa Monica, Calif. and Chicago's Lincoln Park. They held up nicely while the rest of the country slumped last year. This year such Tiffany zip codes are on track to fall 15 percent to 25 percent.
Why haven't you heard about this? Statistics lag. With relatively low unemployment, high-end addresses don't have foreclosures to hasten capitulation. If they've attracted luxury high-rise developers, these markets may be propped up by recent condo closings at foolish prices agreed to two years ago.
But talk to experts who know the regions block by block -- or to people who've sold (or tried to sell) a home or co-op. There is a still-growing supply of wildly overpriced, unsold homes--60,000 U.S. properties priced above $2 million listed on Realtor.com. Experts get these gloomy vibes by dividing inventory by the current monthly rate of purchases.
Click here to learn more about the 13 most-distressed cities of the super-rich at our partner site, Forbes.com.
"Any result over seven months generally means falling prices," says David Stiff, chief economist at Fiserv in Brookfield, Wis. In some tony neighborhoods the level of glut is higher than the national average of ten months.
Unsold inventories in Manhattan are at their highest levels in a decade. You can't tell by looking at data about its condo market. According to Radar Logic, which generates national realty info from its New York City office, condo values fell only 4 percent last year -- far less than the 12 percent drop for the city as a whole. It's been held aloft by new-construction condo sales above the $1,200-per-square-foot level, says Radar Logic founder Michael Feder, reflecting deals struck a year or two ago. Once they pass through the system, the average price of a condo will plummet to $900 a square foot, reckons Feder.
In addition to the 10,500 properties already listed, there are another 9,500 in the wings, estimates Manhattan appraiser Jonathan Miller. Some 2,500 of these shadow listings belong to sellers who have some flexibility to keep their listings off the market in hopes of better pricing. Developers hold the rest. Both groups are likely to rush their listings onto the market once it's clear prices are falling.
Some folks can't wait. Françoise Pourcel, 62, listed her 2,100-square-foot Tribeca loft last August at $3.5 million, in line with the sale price of a similar unit on a lower floor of her building. In June she accepted a bid for $2.5 million.
Condo prices in Manhattan would have to fall 50 percent to return to values relative to rents they had in 1999, a relatively sane year in real estate. A condo owner could then lease his home and garner net rental income (rent minus property taxes, insurance and fix-up costs) equal to about 7 percent of the property's fair market value. The current yield is around 3.3 percent. Far too low.
It's a similar story in Lincoln Park, where single-family home prices slipped only 2.2 percent last year, far less than in the rest of Chicago. But inventory has since tripled. Wagner Appraisal Group figures there's a 16-month supply. A year ago "I was almost cocky about our position compared to the rest of the market," says Jennifer Ames. No longer. After 11 months of lowering the $2.1 million asking price on her 3,400-square-foot house, Ames sold it in June for $1.6 million.
Given the glut of unsold homes, Lincoln Park's prices may well slide at least 15 percent this year -- as Chicago's did in 2008. If you look at Fiserv data going back many years, you find values in Lincoln Park track the rest of Chicago pretty closely with a one-year lag.
In Santa Monica's coveted "north of Montana" area overlooking the Pacific, listings are up 60% since last year and the number of days on the market for those listings has doubled to 140. Homes once sold in as little as a week here. Closer to Main Street, Bill H. Meyers has struggled for more than a year to sell his condo.
In April 2008 L.A. was hurting, but Santa Monica values hovered around their peaks. So Meyers tried to unload his property for $850,000, roughly in line with what another unit in his building sold for. He turned down bids near $800,000 after he found a renter at $3,500 a month.
Now that his tenant is gone, Meyers hasn't found a replacement at that price, and getting another $800,000 bid is impossible. The data still say Santa Monica is stronger than other nearby markets. It's just 14 percent off peak prices, versus Los Angeles, down 38%. But the beach city's inventory of unsold homes has just crossed the 15-month level, as high as Los Angeles' were last year. By that grim logic, Santa Monica's values are likely to tumble as far as those in Los Angeles did last year, 27 percent.
Like Meyers, anyone who can afford to will hang on as long as possible, banking on the faith, he says, that "the market is going to come back." Meantime, excess supply is piling up.
Copyright © 2009 ABC News Internet Ventures
I just drove by Teton Springs (which is operational, amazingly) and Phil Major, the local fencing scion, was UNINSTALLING thousands of board feet of buck rail fence, out on the highway. (near Victor)
Maybe something 'else' was going on, but it appeared to me to be a little odd. I will try and scoop details tomorrow, but damn, the gated golf course thing is DONE here, for now! (and that is not a bad thing, IMO, it was getting out of hand.)
Well, last month I sold a flip house that was REO bank owned and made 60% return on my money in 4 months.
You can make money in this market.
Just choose wisely.
I cant wait till the Olympics are over & the interest rates start rising so the housing bubble in BC will finally explode big time!
The only thing keeping the housing market going are the low interest rates. If the rates were not so ridiculously low, nobody would be talking about any kind of comeback. 2.75% rate = crack. Dont get suckered into buying by the present rates cause youll regret it a few years unless you can really afford, even with 10% rates, the place your looking at. The real good deals(at least in BC & most of Canada) are yet to come....
Former co-worker sold his house last month after 8 months on the market for $182,500.
He paid $260,000 in June 05 & then dumped another $30,000 into it.
Thank god for rich in-laws.
Can I get an AMEN.Quote:
Originally Posted by Core Shot
We just sold our NYC apartment for a very nice profit last week. We bought the place 3 yrs ago. It's a nice apartment that needed alot of cosmetic work. With a little elbow grease and sweat, we turned the place over.
Our place was on the market for less than 3 months and we had two folks bidding on it before we settled.
Be smart and don't be afraid to get your finger nails dirty.
Very nice, congrats....
I get SF condo sales activity emailed to me every week with listing price, sales price, and days on the market. A couple places in our selling range went for more than list....fingers crossed.
According to a recent study, population increase due to new immigration and immigrant groups having larger families are putting pressure on the housing market in Canada. The low rates are just the icing on the cake.Quote:
Originally Posted by skiwithcharlie
http://www.ctv.ca/servlet/ArticleNew...709?hub=Canada
Another NYC selling data point - we will finalize the sale of our apartment on Monday for 10% more than we bought it in 2004. 11% below what the apartment directly below ours sold for last summer. 5% below ask.
FWIW.
FWIW, my folks just sold an 1100 sqft house in Madison, WI for sale by owner for $180k in a week and a half. Nothing fancy but a nice starter home. Maybe that 8k tax credit is doing something?
Quote:
Originally Posted by powder11
Of course, immigration is the only thing keeping the Canadian population growing. Without it, we would be shrinking and so would house prices. Were still not growing by very much and most immigrants cant afford anything except when the whole family lives in the house and pays their share. The low rates are keeping the real estate going but once they are gone, watch out. Once they go up, immigration wont help a thing.
Also, never trust any info about real estate that comes from a bank or estate agents/ associations, they are just trying to get things going again by manipulating info and making it say whatever seems the most optimistic. In reality, house prices in BC have 2X in the past 10 years, yet the average salary has not even increase by 40%. Peps in BC spend on average 60% of their income on their house nowadays. Thats just ridiculous and its gonna come down soon enough.
I have no crystal ball as to where interest rates are headed, but most folks in the market are taking advantage of low rates and not relying on it. I can easily afford double the rate I'm paying now so its going to have to sky rocket to really make a difference.Quote:
Originally Posted by skiwithcharlie
I won't even comment on your bong talk conspiracy theories.
When home prices go up, people sell and use the equity to buy a bigger more expensive home. The equity they gained from the sale of their home allows them to afford a home that doesn't necessarily correlate with their salary. They sell the home to someone who either has done the same with a lesser value home or someone who has the $ to afford that particular home. The people who are typically shut out of the market are the ones who never got off the sidelines and will forever rent because they're always waiting for prices to come down. When prices do drop (like they did last year), those same people are too chicken to make a move because they think prices will continue to drop.
I believe the Canadian market is fairly sound and most Canadians are fairly conservative when it comes to mortgages so you just don't see people going upside down. Canadian Banks don't offer risky mortgage products and usually require a min 10% down payment. In the finance world, Canada used to be boring. Now it is the envy of the world.
RE investing rule #1:
Buy when people are selling and sell when people are buying.