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Real Estate can have a bear market rally just like the stock market. People jump in thinking this is just another normal recession and they will make a killing from the price increases coming. This IS NOT the same as before. Interest rates are going to pop up
with all the debt being taken on by the government. All of a sudden payments could double. Prices could decline another 25%......easy.
Well at least according to this article, there are plenty of neighborhoods that went down 50% in value from March 08 to March 09:eek:
Before the housing crash extended beyond foreclosure-ridden exurbs, the average homeowner used to (foolishly) believe that his neighborhood was immune. Today, even underwater homeowners merely take heart in knowing that other neighborhoods in the same city are worse off.
If you live in the leafy, mansion-filled Bel Air neighborhood of Los Angeles, where sales prices have declined 31% at the median to $1.5 million, you're probably comforted by the fact that you don't live in Glassell Park in East L.A. In that part of town, buyers counting on neighborhood improvement when they bought in the fringe area have seen median sale prices plummet 50% to $225,000 in the last year.
It's the same story to the south, in San Diego. Sales prices are down 25% in University Heights, but homeowners there can say, "Better here than Horton Plaza." In that downtown, marina neighborhood, median sale prices are off year-over-year by 56%, to $612,500.
Behind the numbers
Forbes looked at the 25 largest cities in America to determine which neighborhoods witnessed the biggest year-over-year price drops, according to data from Trulia.com, an online real-estate marketplace and data firm. A neighborhood had to be within the city limits, have at least 10 sales, and prices had to be above $150,000. Otherwise, our list would be a rundown of markets barely on life support, such as Briggs, Detroit, where prices over the last year are off 96% to a median price of $2,500.
http://realestate.msn.com/article.as...6644>1=35000
I dont know how much stock id put in zillow. i just got an email saying my house went up 23K in value. i dont see any data that supports such a dramatic increase.Quote:
Zillow has sent me an email alert for the last 2 months in a row that sales in my rentals area have gone up, so hence so has the estimated value on that duplex.
WSJ
Study Finds Underwater Borrowers Drowned Themselves with Refinancings
By Nick Timiraos
Why are so many homeowners underwater on their mortgages?
In crafting programs to prevent foreclosures, policymakers have assumed that the primary reason homeowners owe more on their home than it is worth is that they bought at the top of the market. In other words, they’ve lost equity primarily through forces beyond their control.
A new study challenges this premise and finds that excessive borrowing may have played as great a role.
Michael LaCour-Little, a finance professor at California State University at Fullerton, looked at 4,000 foreclosures in Southern California from 2006-08. He found that, at least in Southern California, borrowers who defaulted on their mortgages didn’t purchase their homes at the top of the market. Instead, the average acquisition was made in 2002 and many homes lost to foreclosure were bought in the 1990s. More than half of all borrowers who lost their homes had already refinanced at least once, and four out of five had a second mortgage.
The original loan-to-value ratio for these borrowers stood at a reasonable 84%, but second and third liens left homeowners with a combined loan-to-value ratio of about 150% by the time of the foreclosure sale date.
Borrowers, meanwhile, took out around $2 billion in equity from their homes, or nearly eight times the $262 million that they put into their homes. Lenders lost around four times as much as borrowers, seeing $1 billion in losses.
“[W]hile house price declines were important in explaining the incidence of negative equity, its magnitude was more strongly influenced by increased debt usage,” writes Mr. LaCour-Little. “Hence, borrower behavior, rather than housing market forces, is the predominant factor affecting outcomes.”
If other housing markets across the country offer similar findings, then the study argues that current “policies aimed at protecting homeowners from foreclosure are misguided” because lenders, and not borrowers, have born the lion’s share of economic losses.
Borrowers that bought homes without ever putting any or little equity in their homes could have seen huge returns on investment simply by extracting cash through refinancing. “Why such borrowers should enjoy any special government benefits such as waiver of the income taxation on debt forgiveness or subsidized loan modifications to reduce their borrowing costs is at best unclear,” the authors write.
http://blogs.wsj.com/developments/20...-refinancings/
no news there benny. Unless all of my friends were making a half mil a year, there was no other way for them to afford their toys.
in other news...
US home prices rise first time in 3 years..
http://ca.news.yahoo.com/s/reuters/0...my_homes_index
Good article Benny. One thing I always look at when purchasing homes is what the last person paid. It's amazing that on probably 90% of the short sales I see the buyers paid quite a bit less than the current asking, but are somehow underwater and asking for a short sale. Again, HELOCS to buy shit. I don't think the banks can blame the borrowers alone. Every bank here in UT had ads asking people how they wanted to spend their equity? boats, TVs, RV etc... Zions bank even had an illustration of the home dissected and those chunks paying for other things.
"Cash Out". A phrase I probably heard a thousand times on TV and the radio for a long time, but, no more.
Read an article in Kiplingers that said the same thing. They profiled a couple fm Lynwood, WA that took out a $75K HELOC, turned around and made a $26K down payment on a vacation home and another $25k for home improvements etc. Now they can't make the payments on the vacation home, Countrywide (BofA) pulled the remainder of the HELOC, which they were using to make the payments on the vacation home, because the rent they are getting on the vacation home doesn't cover the mortgage. So what do they do? They refi the vacation home to an interest only mortgage for the first 3 years. Unbelievable.Quote:
Originally Posted by Benny Profane
wow...I'm not sure if i am in awe that they went interest only or that you can still get an interest only loan.Quote:
Originally Posted by Toadman
Yup, sometimes I think, where the fuck did I go wrong. I heard about a simple Manhattan deal recently. Bought for a million, tapped out another million somehow, and just walked away with the cash, essentially. Where did it go? There's hundreds of billions of dollars that just, essentially, got made up and printed, and carted away somewhere. The smart and lucky ones have it productively invested.
Second time in a decade. All those startups in the late 90's of fake companies made a lot of people very very rich, and we have no trace of it anymore. It may have been a crash for us, and, it was a crash for many participants, but, I'm guessing, a LOT of people made obscene riches off the thing, and are sitting on a beach or perfecting their short game today.
This is why it hasn't happened yet, and, who knows, may never. This may very well be the most expensive place to live in America, soon.Quote:
Originally Posted by Stu Gotz
July 31, 2009
Big Banks Paid Billions in Bonuses Amid Wall St. Crisis
By ERIC DASH
Wall Street's million dollar club had nearly 5,000 members in 2008.
At least 4,793 bankers and traders were paid more than $1 million in bonuses last year even as profits at the biggest banks dwindled and they accepted tens of billions of dollars of taxpayer money, according to a report released on Thursday by the New York attorney general’s office.
Wall Street bonuses have come under intense scrutiny from lawmakers and regulators who say they believe that freewheeling pay practices contributed to the financial crisis. Banks have long paid their executives bonuses to supplement smaller salaries, but governance experts say that the nine-figure payouts during Wall Street’s worst year in decades shows the link between pay and performance has been frayed.
The House of Representatives is scheduled to vote on Friday, ahead of its August recess, on a compensation reform bill. The new rules call for a “say-on-pay” vote for all public companies and additional requirements that compensation committees be made up of independent directors, and would order regulators to restrict "inappropriate or imprudently risky" pay packages at larger banks.
Ever since public furor erupted last spring over bonuses at the troubled insurance giant American International Group, lawmakers have paid close attention to Wall Street pay. Both Congress and the Obama administration introduced tough pay guidelines for financial executives, and the Treasury Department created a position of a federal compensation czar to review pay packages at companies that received multiple bailouts.
Kenneth Feinberg, who reviewed the payouts to victims of the terrorist attacks on Sept. 11, 2001, has recently been meeting with several Wall Street firms. The pay for the top 100 highest-compensated employees at the General Motors, Chrysler and five of the most deeply troubled financial companies must win his approval.
The figures released on Thursday by the New York attorney general, Andrew M. Cuomo, provided the most detailed accounting yet of Wall Street’s millionaire ranks. In the report, Mr. Cuomo said that 738 bankers and traders at Citigroup took home bonuses of $1 million or more in 2008 even as the bank posted a $27.7 billion loss. In all, Citigroup paid $5.33 billion in bonuses; it received $45 billion in bailout funds.
Bank of America and Merrill Lynch, whose merger brought the combined company to the brink of collapse, paid 868 employees bonuses worth at least $1 million. Both banks, whose compensation packages are being reviewed by a federal pay czar, turned to the government twice for bailouts, receiving a total of $45 billion.
Merrill’s bonuses totaled $3.6 billion in a year that it lost $27.6 billion, the report said, while Bank of America paid $3.3 billion in bonuses on $4 billion in earnings.
Wall Street’s more profitable firms were more generous, even though they also received government support. At Goldman Sachs, 953 bankers and traders took home bonuses worth at least $1 million last year, including 212 employees who received more than $3 million. The investment bank paid a total of $4.8 billion in bonuses last year, the report said, more than twice its earnings of $2.3 billion. The bank got $10 billion in bailout funds.
Morgan Stanley paid nearly 428 employees bonuses of at least $1 million, including 290 who received more than $2 million. Morgan Stanley, which earned $1.7 billion last year and received $10 billion in federal aid, paid $4.5 billion in bonuses.
JPMorgan Chase paid 1,626 employees bonuses of more than $1 million in 2008 and received $25 billion in federal assistance. The bank earned $5.6 billion, while its bonuses totaled $8.69 billion.
House (dump) next to mine is for sale a/c 94580 for $329K. Went on the market Saturday and has had upwards of 100 visitors. It's already bid at $350k in the first hour and the realtors phone is "ringing off the hook".
http://www.bloomberg.com/apps/news?p...d=ac9y1xr7yNhQ
‘Underwater’ Mortgages to Hit 48%, Deutsche Bank Says (Update1)
By Jody Shenn
Aug. 5 (Bloomberg) -- Almost half of U.S. homeowners with a mortgage are likely to owe more than their properties are worth before the housing recession ends, Deutsche Bank AG said.
The percentage of “underwater” loans may rise to 48 percent, or 25 million homes, as prices drop through the first quarter of 2011, Karen Weaver and Ying Shen, analysts in New York at Deutsche Bank, wrote in a report today.
As of March 31, the share of homes mortgaged for more than their value was 26 percent, or about 14 million properties, according to Deutsche Bank. Further deterioration will depress consumer spending and boost defaults by borrowers who face unemployment, divorce, disability or other financial challenges, the securitization analysts said.
“Borrowers may also ‘ruthlessly’ or strategically default even without such life events,” they wrote.
Seven markets in states with the fastest appreciation during the five-year housing boom -- including Fort Lauderdale and Miami, Florida; Merced and Modesto, California; and Las Vegas -- may find 90 percent of borrowers underwater, according to the report.
The share of borrowers owing more than 125 percent of their property’s value will increase to 28 percent from 13 percent, according to Weaver and Shen.
Home prices will decline another 14 percent on average, the analysts wrote.
To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net
54 days on the market and my 2bd/2ba SF condo is still for sale. Averaging around 20 groups every Sunday for the Open House, and still the most popular of our agent's listings but no offers as of yet.
From Socketsite.com:
http://www.socketsite.com/SF%20Liste...y%209-3-09.jpg
Quote:
Inventory of Active listed single-family homes, condos, and TICs in San Francisco declined 6.4% over the past two weeks (versus an average drop of 1.3% for the same two week period over the previous three years) and is now running just 1.3% higher on a year-over-year basis (down 12.6% for single-family homes, up 11.7% for condos/TICs) and 5.3% higher than at the same point in 2006.
Roughly 37% of active listings in San Francisco having undergone at least once price reduction with the percentage of active listings that are currently either already bank owned or seeking a short sale hovering around 12%. Expect listed inventory to continue to decline through the rest of summer and then spike in late September.
Just bought a new place today. 2 bed, 1 bath 1200 sq ft. for $34,000. I'm stoked. First purchase in 4 months or so. Already rented at $500 to the guy doing the remodel. Rent goes up to $650 once it's complete (roughly 1-2 months).
Holy crap. Where do you live, Detroit?Quote:
Originally Posted by meatdrink9
Just a quick comment on the view from my position...
-See number of seller price reductions on homes/condos for sale in areas I'm watching (as a potential buyer for next year) increasing.
-My main loan officer contact is telling me he's already feeling a slow down in pre-approvals/loan applications.
-Market Value Analysis updates for my existing listings showing decent number of closings in the last month compared to recent activity, but almost no pendings or actives with offers in the pipeline now.
So, who knows how broad this is out in the rest of the country... but this is what I think the above means??? I peg the rash of price drops as seller's realizing they've missed the main sales period so far this year, and dropping price fearful of having to hold property thru next spring. Loan officer also said every single pre-approval he's done in the last couple weeks were buyers who had to sell their current home first. So I wonder if many of those who were going to use the first time buyer credit have already pulled that trigger by now? And with things not selling and buyers not bridging... more things just not selling. MVA in a few specific sub parts of market show hard data backing up my "gut feelings" on this...
Any other real estate-ish connected Mags seeing/feeling the same thing? As a individual Dirt Pimp always unsure if it's just MY stuff/area doing this. If true could be the start of a ride back downward for this fall and winter market (more than just a typical seasonal drop)... would hate to deal with a double dip market. Ugh.
Quote:
Just bought a new place today. 2 bed, 1 bath 1200 sq ft. for $34,000
That's way overpriced for Detroit.Quote:
Originally Posted by grrrr
House next door to me sold for $350k on the first day listed. $30k over ask.
I was being a bit facetious...but in my neighborhood $34,000 buys you 1/10 of an acre that's too steep to build on, doesn't perc and has a swamp view.Quote:
Originally Posted by Toadman
And I'm not kidding.
And like San Diego, $350k is likely the low side for a SFD in a decent area. The low priced stuff has been bought up. Now it is trying to sell the next tier up that is more challenging and in my neighborhood of million dollar homes, it is "Price Reduction" city. Homes will sell, but it takes forever and likely some significant lowering of price to get er done. I hear/read that the real estate market is firming up and just laugh. Prices never go straight up or down. The low end bounce we are seeing now, is likely the calm before the next shit storm down. With the way our guberment is drowning us in debt, I am very bearish on all US assets. Anyone remember what happened in Argentina from 1990-2002?Quote:
Originally Posted by 4matic
http://online.wsj.com/article_email/...TgyMTExWj.html
"A survey conducted in June of 1,500 real-estate agents sponsored by the trade publication Inside Mortgage Finance found that 36% of all sales involve "nondistressed" properties.
Of the nondistressed sales, only 31% were what the survey described as "unforced or optional." The rest were sales by homeowners in some kind of financial or personal crisis.
"Think about that for a minute," John Mauldin of Millennium Wave Advisors wrote this week. "Two-thirds of home sales are either foreclosures or banks taking a loss on the mortgage." And only a third of the remaining one-third -- roughly 10% of overall sales -- comes from "something we could call a normal selling process.""
Happy to be buying now that my shit finally sold
There two houses for sale on my street. The people died. They would fall in this category of "some kind of...crisis". So fucking what?Quote:
Originally Posted by Benny Profane
Congrats!!!Quote:
Originally Posted by P_McPoser
contract on my place now as well...2 years later. Taking a bath but will at least be done. The buyer is from Canada and is currently renting waiting for here credit score to show up which will reduce her points quite a bit. Fingers crossed.
having sold RE for awhile, I can honestly say pretty much every seller is in some sort of "crisis" mode to sell.Quote:
Originally Posted by iceman
Also Congrats!!!Quote:
Originally Posted by montanaskier
Friend of mine has 10 or so listings in Denver from $150k - $850k. The lower priced homes had multiple showings. One in Aurora had 20 showings in two weeks. He said everything has dried up in the last few weeks as far a showings go.
Here is the graph I like to show people on the upcoming resets on Option and Alt A ARMs. 2010 and 2011 will be a shit show of those loans going under and pricing going down.
http://blogs.moneycentral.msn.com/ph.../original.aspx
Read the article here: http://blogs.moneycentral.msn.com/to...new-stage.aspx
Annnnnnnnnnnnnnnd the Buyer got laid off today. So I get terminate my contract to buy as well! So much for the bottom! :biggrin:Quote:
Originally Posted by P_McPoser
Shit, that sucks. But for the buyer, I am glad he lost the job before he closed escrow or he would have been the next short sale/foreclosure in your area.:nonono2:Quote:
Originally Posted by P_McPoser
Yeah, although I don't see how someone could be so out of touch with their job security that they get laid off 4 days after putting an offer on a house...
And now... FACK! +++Vibes+++Quote:
Originally Posted by P_McPoser
Anyone ever do a deal where the buyer in a condo building purchases the next door unit, to blow out a common wall to create one big unit? My next door neighbor put their place up for sale and they need to move quickly, so we may be able to get a great deal on the place. We love the building, but I'm already stressing about 1) the HOA, 2) Financing, 3) City of SF, 4) etc, 5) etc......
Just throwing it out there...
My main concern would be if the building has a normal type/size range, and the new unit you would create would be larger than most every other unit in the building. Hard to sell a more expensive unit in a lesser expensive building from my past experience.Quote:
Originally Posted by skier666
Also could kinda fall under the category of diminishing returns I suppose? A significant portion of the value of land or structures is in the intrinsic value of each buildable lot or divisible unit. Said another way, two @ 1 acre lots will almost always sell for more than one @ 2 acre lot. Think it might be true in the case of a condo like this too???
Also, all the condo fees will likely double.
On the permits/construction... never done it, but if I were the unit owners above and below I'd expect the city and condo assn to make you plate every change you make in gold so my unit isn't harmed.
That's pretty much the norm in NYC, so I can't believe SF is any different. Best way to get a two bedroom is buy the apartment next door. As Tim says, there may be issues with selling, (big apartment, HOA fees will be high), but the only issue that I think you would face would be to keep wet over wet when you make your architectural changes.Quote:
Originally Posted by skier666
Just found out the house I grew up in is in foreclosure. Mom sold it in 2003 for $1.35 million. Buyer financed 100%. Re-financed in 2004 for an additional $225K. They had been trying to short sell since last summer. No takers. Family moved out last month, and the home is set to be auctioned off 9/14. This is in Marin County.
We have two small 2br/2bath, ski in/out units on Aspen Mountain. People tell me we should do this all the time. But one guy did and his large unit isn't worthQuote:
Originally Posted by skier666
what our two are? Plus for us, two is much more flexible.
In Co-ops, but I'm not too sure in Condos. One would need a very friendly board to approve of this, and the condo thing isn't as, um, corporate.Quote:
Originally Posted by Stu Gotz