Real Estate Crash thread

[CUBUCK]

http://www.nytimes.com/2007/10/16/business/16lend.html

"Borrowers who took out loans in the first six months of 2007 are falling behind on payments faster than homeowners who took out loans last year, according to a report by Friedman, Billings, Ramsey, an investment bank based in Arlington, Va. The data suggested that more Americans could lose their homes and that the housing market’s troubles might persist longer than many analysts have been predicting.

The report’s author, Michael D. Youngblood, a portfolio manager and analyst at Friedman, Billings, Ramsey, said that most mortgage companies and banks had not tightened lending standards for borrowers with weak, or subprime, credit until July or August, even though early this year regulators, analysts and mortgage investors knew that the easy lending policies of 2005 and 2006 were producing high default rates."

I was at CDO conference last week and heard the same kind of stuff. The '07vintage is as bad if not worse than the '06 stuff. One of the interesting things at the conference was to see where the blame was being placed and how to fix the problem going forward. For whatever its worth the consensus was blame generally belonged to the mortgage brokers and lenders....

[Stu Gotz]

The reason this charade was able to continue as long as it did was that all of the investment funds kept eating this up with beans and rice on the side.

Everyone keeps talking about the credit freeze, but the reality is that people finally got smart and refused to buy this shit. So to blame the lenders and brokers for the problem is like blaming the drug dealer for your crack habit.

Wall Street's core ability is putting lipstick on a pig and telling you its the head of the USC cheerleading squad.

[CUBUCK]

The reason this charade was able to continue as long as it did was that all of the investment funds kept eating this up with beans and rice on the side.

Everyone keeps talking about the credit freeze, but the reality is that people finally got smart and refused to buy this shit. So to blame the lenders and brokers for the problem is like blaming the drug dealer for your crack habit.

Wall Street's core ability is putting lipstick on a pig and telling you its the head of the USC cheerleading squad.

I guess I should have mentioned that this conference was widely attended and basically put on for those investment firms buying this shit, so yea those opinions had a bit of bias to them. Watching them rip into the panel of ratings agencies was a sight to see.

[mitch buchannon]

The reason this charade was able to continue as long as it did was that all of the investment funds kept eating this up with beans and rice on the side.

Everyone keeps talking about the credit freeze, but the reality is that people finally got smart and refused to buy this shit. So to blame the lenders and brokers for the problem is like blaming the drug dealer for your crack habit.

Wall Street's core ability is putting lipstick on a pig and telling you its the head of the USC cheerleading squad.

Amen. That 06 vintage is complete shit. The 07 is complete shit. This is not surprising and from what I'm hearing from friends who wholesale this stuff for ML/DB/etc. there's absolutely nothing going on for originations right now.


And the ratings agencies... I mean, did you really not think that geographically specific modeling might be useful? Maybe a house in Detroit doesn't have quite the price support of that house in Santa Monica??

[Chris Knight]

Amen. That 06 vintage is complete shit. The 07 is complete shit. This is not surprising and from what I'm hearing from friends who wholesale this stuff for ML/DB/etc. there's absolutely nothing going on for originations right now.


And the ratings agencies... I mean, did you really not think that geographically specific modeling might be useful? Maybe a house in Detroit doesn't have quite the price support of that house in Santa Monica??

So, you're buying a house in Denver sometime next year then?

I'm thinking of buying a second and running it as a rental if the market drops far enough to get in on some formerly overvalued oversold property in a "trendy" hood like Highlands or DU...

[mitch buchannon]

So, you're buying a house in Denver sometime next year then?

I'm thinking of buying a second and running it as a rental if the market drops far enough to get in on some formerly overvalued oversold property in a "trendy" hood like Highlands or DU...

I think where you guys bought is likely to be a home run (close to gates redevelopment) and I think there's softness even in the southern parts of Bonnie Brae (by colorado and I-25) as well as DU/Wellshire/U Hills...

I've been making some progress on getting a better gig, but that's the wildcard. If we can work it out money-wise, we're definitely looking in all those areas.

[Benny Profane]

The reason this charade was able to continue as long as it did was that all of the investment funds kept eating this up with beans and rice on the side.

Everyone keeps talking about the credit freeze, but the reality is that people finally got smart and refused to buy this shit. So to blame the lenders and brokers for the problem is like blaming the drug dealer for your crack habit.

well, ya, but you guys are talking from the inside, right? How about the consumer out there, who takes out a loan and gets into trouble within a few months? I mean, double duh. What were they thinking? It was going to go up, when prices levelled about a year ago?
A paraphrase for republicans and modern bankers: "Nobody ever went broke underestimating the stupidity of the American public."

[Stu Gotz]

well, ya, but you guys are talking from the inside, right? How about the consumer out there, who takes out a loan and gets into trouble within a few months? I mean, double duh. What were they thinking? It was going to go up, when prices levelled about a year ago?
A paraphrase for republicans and modern bankers: "Nobody ever went broke underestimating the stupidity of the American public."

The credit shitshow in the US derives from the fact that creditors are chasing borrowers for business. And that is stupid^2.

[Chris Knight]

I think where you guys bought is likely to be a home run (close to gates redevelopment) and I think there's softness even in the southern parts of Bonnie Brae (by colorado and I-25) as well as DU/Wellshire/U Hills...

Yeah, we'll see. Right now, I think we'd be underwater if we had to sell. But we don't. I think our area is still 10 years out honestly. Which is just fine.

However, I think you're VERY right on about Gates. It's going to make a mark. And it's right on the light rail, and people are underestimating the impact that's going to have 5 years from now. Since we're across I-25 and across Alameda, the impact won't be quite as dramatic on us, but right in that neighborhood though, between Gates and Old South Pearl, and a little ways south...that could be a 5 year out big winner.

[cj001f]

http://www.reuters.com/article/newsO...20424620071016

SAN FRANCISCO (Reuters) - Sales of houses and condominiums in the most populous Southern California counties fell 29.9 percent from the previous month and 48.5 percent from a year earlier, DataQuick Information Systems said on Tuesday.

The report covers the counties of Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura and showed a total of 12,455 new and existing homes and condos sold in September, the lowest since the company began recording the data in 1988

[meatdrink9]

I've been a fly on the wall a few times at various Realtor meetings or title companies and have heard numerous agents woes. Stats in Utah have been weird. Most areas claim to still be up in terms of price, but volume has fallen WAY off. Hunstville (near Powder and Snowbasin) has lost 25% of it's value in one year. OUCH!!!

Fortunately the current woes have been perfect for me. I'm grabbing rentals for dirt cheap (just scored two houses on one lot for $54,500). The only problem is there are tons of people buying the same category right now. The property I got for $54,500 had 19 bids in 24 hours. The area I'm buying went up in volume last year and was up over 26% in value. Anything that stands out as a good deal becomes a total shoot out. I almost got a 5,000 sq. ft historic mansion on a huge lot with unbelievable wood work (coolest I've ever seen) for 165K. I got beat by investors who offered less, but offered cash and a 10 day close. Hopefully they walk on inspections, if so, it's mine.

The number of homes on the market seems really high right now as well. It feels like investors are just trading homes back and forth and no "real" buyers are out there.

[RootSkier]

Did your projects sell yet, meatdrink?

[DrGonzo]

I've been a fly on the wall a few times at various Realtor meetings or title companies and have heard numerous agents woes. Stats in Utah have been weird. Most areas claim to still be up in terms of price, but volume has fallen WAY off. Hunstville (near Powder and Snowbasin) has lost 25% of it's value in one year. OUCH!!!

The number of homes on the market seems really high right now as well. It feels like investors are just trading homes back and forth and no "real" buyers are out there.

I spoke to an agent friend of mine today that said that Salt Lake proper is a total crapshoot and looks comletely different than it did even three months ago. I work with a lot of the production and custom builders as well as their subs on a daily basis, and everyone is scared. Almost every one of them has laid off personnel in the last six months. New inventory is double what it was last year at this time. Relative to other markets, though, it's still not that bad but no one is building anything not pre-sold.

My home has probably lost some value, which I expected to happen. She also mentioned that the rental market is out of control. Houses like mine (3 bed, 2 bath, 1600 sf) are renting for $1500+ with 2 month leases! It has definitely given me something to think about.

[Benny Profane]

My home has probably lost some value, which I expected to happen. She also mentioned that the rental market is out of control. Houses like mine (3 bed, 2 bath, 1600 sf) are renting for $1500+ with 2 month leases! It has definitely given me something to think about.

Is that high? Seriously. I'm looking in the NY area. That would be sweet in Westchester.

[rideit]

My god, there are still dozens upon dozens of spec builds going on here in Teton Valley, (with potentially hundreds-thousands of lots going on line soon) where the amount of available inventory is HUGE. Gonna be interesting, to say the least!

[DrGonzo]

Is that high? Seriously. I'm looking in the NY area. That would be sweet in Westchester.

Relatively speaking, yes. Utah was very undervalued for a long time, and while I haven't paid attention to the rental market for the last several years (most people probably haven't because they were too busy buying), that is significantly higher than the last time I rented here. If I got $1700-1800 on a two-year lease, I would probably rent it tomorrow and look around for a beat up condo near BCC/LCC to work on and live in.

I lived in Chicago for a while so I know what you mean, although that is still not as high as where you're at. I went from there to Boise where I leased a 2 bed duplex for $550. I thought it was free.

[Benny Profane]

What the hell is going in in your avatar? Is he eating a puppy?

[meatdrink9]

Did your projects sell yet, meatdrink?

One sold this spring for a very nice profit (100+K) the other we kept and rented it (duplex). I sold another one of my houses in the Bountiful area for another 100+K profit right in the middle of the lending fallout and the buyer got his loan through Countrywide.

Dr Gonzo, yeah the builder scene out here is weird. Last summer Richmond American sold out a hug subdivision of 300-500K homes in no time (probably 40 homes) this summer they built another big subdivision across the street. If they've sold two homes all summer I'd be amazed.

[corn dog]

Any realtors/mortgage brokers/otherwise real estate folks in PDX checking in? I'm thinking about a place here.

[Tourette Dude]

Dude save yourself some pain and wait for the market to bottom, The PNW market is just starting to level off in the Seattle region anyway. We are in the beginning of what will probabely become a historic downturn in housing prices and not just in the US.
FYI. It make take YEARS to bottom.

RENT!

[CUBUCK]

Dude save yourself some pain and wait for the market to bottom, The PNW market is just starting to level off in the Seattle region anyway. We are in the beginning of what will probabely become a historic downturn in housing prices and not just in the US.
FYI. It make take YEARS to bottom.

RENT!

Its impossible to time the bottom. By trying you might get lucky or you might miss a great opportunnity, things can turn either direction on a dime. Find something you like and make an offer you're happy with and move on.

[Nobody Famous]

> things can turn either direction on a dime.
I don't know that I buy into this for the next 3-6 months for RE. It's not like it's at a delicate tipping point right now and any small item of news can set off a jump up in prices. All news and analyses of the market are pointing to more downward action.

[Danno]

> things can turn either direction on a dime.
I don't know that I buy into this for the next 3-6 months for RE. It's not like it's at a delicate tipping point right now and any small item of news can set off a jump up in prices. All news and analyses of the market are pointing to more downward action.

generalized statements like this are not worth much; RE markets are localized. For the most part I agree with CUBUCK.

[Nobody Famous]

So can I borrow some of your money to invest in a few properties right now?

[corn dog]

afaik rents in the portland area have gone up, and the rental market is pretty strong, so there are people with income who need a place to live. PDX isn't quite as high as Seattle I don't think. But anyways, interesting times