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Jackson
01-01-06, 02:00
Thread Starter.

Moore
08-11-06, 22:50
Any opinions on this?

August 11, 2006 The whole housing market is catching. THE DENVER FLU

"It is just a blood bath, a path of devastation, " says a Denver Realtor. "It is just ugly. "

Home prices down 15-17% from a couple of years ago. Foreclosures up 63%. And the "flu" is spreading to Naples, Miami, Orange County, Boston. Everywhere.

Boston Blues. "It's unbelievable, " a Realtor told The Boston Globe. These are "very large drops. "

Tears in Florida. "One lady broke down in tears, " says a Florida Realtor. "Her husband bought two investment properties, and they are going to lose their life savings. "

Minneapolis/St. Paul. "15 houses per buyer. If we had buyers. "

It's here. For years, we've all heard about the housing bubble and how It could pop. Well, the wait is over. POP!

POP! POP! POP!

The worst real estate bust in American history has begun.

Don't take my word for it. Just ask the people who are in the best position to know, like the Realtors quoted above. They see a drop in prices like you wouldn't believe.

But wait until you hear the lenders - the people who made the bubble possible.

Lenders see a 10-20% tumble in home prices

Yes, you heard right: A 10-20% loss nationwide, according to a poll of American mortgage lenders. And much bigger losses in the hottest markets.

How big? In the last housing bust about 15 years ago, prices in the hot Pacific and New England markets tumbled 25-30%. And that bubble was nothing compared with this one.

Two out of every three lenders told the pollster there IS a bubble. It's real. A spokesman for the polling firm said, "In the minds of lenders, the housing bubble has moved from 'Loch Ness Monster' myth status to an economic reality. "

It gets worse. Due to changes in the mortgage lending market, the Housing bust won't be confined to a few hot markets this time. It will affect every single one of us.

In fact, you'll discover in the next few minutes that we're headed into a devastating recession.

5 out of 10 lenders say the bust is here

This is an amazing admission, coming from the heart of the real estate industry. It's as if the makers of aspartame were saying, "Forget it, you're never going to lose weight. And by the way, our product causes cancer. "

What's more, the mortgage lenders have lots of company. The activity index of the National Association of Home Builders is at a three-year low. And the National Association of REALTORS now predicts sales will drop this year.

Remember, these are paid hacks for the housing industry. The real situation is two or three times as bad as they admit.

Defaults rock the lenders

Over the last few years, a lot of people paid for their homes with interest-only or adjustable-rate mortgages, called IOMs or ARMs.

Now those mortgages are resetting at higher interest rates. Families can see their monthly payment go up 40 or 50%. The result is a huge, huge wave of defaults now hitting banks like a tsunami.

Folks are losing their homes in record numbers. It's not just a personal problem when 10 or 15 million homeowners have negative equity or can't meet their payments. It will take down the world's biggest lenders. We're staring at a financial collapse.

============================================

Hi Moore,

I'm glad I sold my house in February. Of course, I could use the situation to proclaim myself a real estate genius, but it was just luck.

Thanks,

Jackson

El Perro
08-12-06, 00:59
No surprise here. The "irrational exuberance" that fueled the Nasdaq collapse was transferred to the real estate market after 2001. Not to blow my own horn (but I will:)) I posted maybe 5-6 months ago under the stock market thread that we had not seen the worst in real estate. Alotta folks have been whistling in the graveyard about this situation, but the gravity of the collapse will soon be evident. The anecdotal evidence is overwhelming, and the numbers show a steady rise in unsold units. The condo and vacation home markets are already taking a drubbing, and IMHO this is only the start. I think "middle america" will be spared any real agony, but otherwise there will be alot of misery. Prior to relocating to BA I lived in Miami Beach and the market there was totally out of control for years before I bought / sold and got the fuck out. I still have friends and family in south Florida and they all tell me of steadily declining prices and increasing inventory. Most of that is in the over $400,000 condo market, but eventually it will work it's way down. The wash out will be ugly. Couple that with the spectre of inflation and decreasing purchase power and you have the possibility of some real nastiness. But hey, Bush has got two more years in office. He'll turn things around.;)

Moore
08-12-06, 01:11
Not to blow my own horn (but I will:) I posted maybe 5-6 months ago under the stock market thread that we had not seen the worst in real estate.Many people have been calling the real estate sector a "house of cards waiting to fall" for 2-3 years now. Will it actually happen or will prices just rise another 30% over the next year? The area I'm looking at has been one of the hottest in the country over the last 5 years but prices have only softened a little bit, maybe 5% if at all. Currently, there is much higher housing supply without a doubt but the so called "buyer's market" hasn't really affected prices. Kind of scary looking at houses that have doubled in price in 3-4 years.

Easy Go
08-12-06, 01:15
I don't think the sky is falling although, as is sometimes true in life, stupidity is going to punished. Total financial collapse because house prices are insane in Phoenix? I'm not seeing it.

Places where prices are low and speculative buying is rare (that's much of the US) are going to be OK. The market will soften, it will take an extra month or two to sell, and prices will come down a few percent but value is always in demand. I live in a nice, mid-size Midwestern town (100K) and prices remain well under $100/ sf.

BundaLover
08-12-06, 03:01
SF remains very very strong due to moronic land use policy. Bay Area reamains strong with inventory up a bit and price increases moderating. Typical sq foot in high end area in SF about 900$, in mid range about 600$ and in the hood 400$. Lots of morons overpaid last few years. Lots of morons low down, variable rate and will foreclose. These houses will be snapped up by many many young and high income buyers waiting to get into their own house. Its call the free market.

Moore
08-12-06, 04:07
600/ sq foot for the midrange area puts a modest 2000sqfoot house at $1.2M. So your average working guy needs a salary of 480k to qualify for the mortgage assuming the 40% rule. Can so many people qualify? It seems the price / income ratio is way beyond ridiculous.

Easy Go
08-12-06, 16:09
600/ sq foot for the midrange area puts a modest 2000sqfoot house at $1.2M. So your average working guy needs a salary of 480k to qualify for the mortgage assuming the 40% rule. Can so many people qualify? It seems the price / income ratio is way beyond ridiculous.Your average working guy doesn't get to buy one of these houses. But a professional couple with two good incomes does. The average working guy that's new to the area gets a 60 minute commute and a 1600 sf house in a lousy neighborhood.

StrayLight
08-12-06, 16:23
I sold a little more than a year ago when Washington DC's condo market was pretty much at its height. It was not genius on my part; like Jackson, it was pretty much luck (although I was wanting to buy in Buenos Aires and needed to sell to do that)

I feel no pity for those who are getting creamed. It was obvious to me as my finance broker kept encouraging me to re-finance and withdrawl money (1) first with a balloon mortage, and (2) one-year later with an interest-only mortgage, that something was seriously askew in the real estate market. I knew I'd be getting out, so I did it both times. But when my broker rationalized it by telling me everyone was doing it, I just thought that something no good was going to happen somewhere down the pike. People just didn't seem to think there would ever be a downside to the cycle, and were treating their "live in" real estate as a speculative investment.

Oh well. Tulips...Bubbles...Human foibles. Connect the dots.

Be nice, though, to have enough money to capitalize on this collapse -- however large or small it turns out to be -- when it bottoms out.

El Perro
08-12-06, 16:38
Be nice, though, to have enough money to capitalize on this collapse -- however large or small it turns out to be -- when it bottoms out.There's a guy in South Florida who began a company about three years ago with the specific intent of accumulating as much as capital as possible to take advantage when the real estate market bottomed out. I forget his name, but he has many investors. He unabashedly refers to himself as a "vulture".

Exon123
08-12-06, 17:12
Assets run in "Class's and Cycles" and housing is no different. We've just witnessed the biggest world wide housing doom in history and housing would be expected to cool down somewhat, but it will be back.

5 years from now what ever you buy today will be worth more money than you'd paid for it. Housing is one of the basic human commodities, "Food, Clothing & Shelter", that everyone needs. Its not going to go down much in value. With the USA population at about 300,000,000 we will need about one million new starts per year just to keep up with population growth.

Moreover, owning your own home has proven threw out time & history to be one of the best investments you can make, since they started counting! Nine out of Ten millionaire's in the USA have made their money threw some sort of real estate, a historical fact.

Owning one's own home is like paying rent to yourself with tax advantages, plus its a hedge against inflation. Frankly speaking, I'd be hard pressed to buy my own house today. If I sold it, it would be impossiable to replace and I'd end up taking a cut in my standard of living.

In time everything goes up in price. When gas was $1.50 a gallon you could buy a pretty nice house for $150,000 dollars. Today with $3.00 dollars a gallon gas it takes $300,000 to buy that same house. Housing is just like any other commodity it will vary in price, but its long term value has always been up, look at any chart. The house I was raised in was bought for $17,000 dollars, today 50 years latter, its a million & a half, not a bad investment.

We will see $4.00 and $5.00 dollar gasoline soon enough and housing prices will act accordingly. The housing thats close in, with less of a commute, will appreciate faster than housing thats an hour or more out from ones work place, Location, Location, Location.

Trust Me, I do this sort of thing for a living.

Exon

Thomaso276
08-12-06, 19:29
Housing is one of the basic human commodities, "Food, Clothing & Shelter", that everyone needs.

You forgot handjobs, the price of which are climbing in the SW part of the USA, because of a recent surge in market demand!

Hunt99
08-13-06, 14:43
People just didn't seem to think there would ever be a downside to the cycle, and were treating their "live in" real estate as a speculative investment.

Oh well. Tulips. Bubbles. Human foibles. Connect the dots.

Be nice, though, to have enough money to capitalize on this collapse -- however large or small it turns out to be -- when it bottoms out.People don't need to own tulips or tech stocks. They do need a place to live. Real estate has a real, intrinsic, bottom-line value that many (even most) other "investments" don't.

There has been absolute irrational exuberance on a lot of fronts. I was in a Florida beach community recently, an agent was bewailing the fact that her last beach condo project sold out completely on its first day of sales, but that the current one is hardly selling. I inquired as to whether they had dropped prices below the 1000 a square foot price that they had sold the last project for, and the answer came back: "We can't make a profit if we can't sell it for 1000 a foot." A neighboring project has reconfigued itself into a 'condo hotel,' which has to be about the most moronic investment a person can buy into - a sure sign that the apocalypse is upon them.

Maybe the liquidator will sell for less, however.;)

There are some real values which are in the beginning stages. For example, in many communities rental prices are sharply higher. Usually rents rise when values drop.

But for the most part, not yet. Not just yet. I do have my eyes open.

El Perro
08-13-06, 23:01
August 10 Financial Times.

The world must prepare for America's recession.

By Nouriel Roubini.

August 10 2006

The odds that the US will slide into recession have risen since last month from 50 per cent to 70 per cent by my estimates. The US Federal Reserve took its foot off the brake on the economy this week when it took a pause in tightening monetary policy for the first time after 17 successive interest rate rises in spite of rising inflation. But it is too late. The Fed might have been hoping for a soft landing for the economy but instead it faces recession. The implications will be felt globally. The rest of the world will not decouple from the US economic train, as some analysts predict. When the US sneezes, the rest of the world still gets the cold.

The US recession will be triggered by three unstoppable forces: the housing slowdown; high oil prices; and higher interest rates. The US consumer, already burdened with high debt and falling real wages, will be hard hit by these shocks.

The effects of the housing slump will be more severe than those following the technology bubble implosion in 2001. The negative wealth effect on consumption of falling housing prices - and the related sharp fall in home equity withdrawal - are also larger than the wealth effects of the collapse of tech stocks in 2000. Property, unlike the tech stocks, is a significant part of household wealth. Finally, about 30 per cent of US employment in the latest recovery has been related to housing.

The second-quarter US gross domestic product figures are an ominous signal: consumption of durable goods are already falling; residential investment is in free fall; and inventories are up as still-high production faces falling sales growth. Higher investment in equipment and software, expected to offset lower spending on housing and consumption, is instead falling.

As consumer demand is slowing, profit-rich companies are not finding good investment opportunities to increase capacity, and are thus returning such profits to shareholders in an unprecedented buy-back bonanza.

In spite of still-rising inflation, the Fed will cut interest rates in the autumn or winter in recognition of a looming recession. But its looser stance will not prevent that recession, for the same reasons the pause applied by the Fed in June 2000 failed to stave off the 2001 recession.

Once the housing and consumption slump starts, demand for durable goods becomes interest-rate insensitive. Indeed, the recent housing bubble has led to a glut of housing stock, consumer durables and lingering excess capital capacity in the rest of the economy. Thus, as we saw in 2000-01, the housing and consumption slump will dominate any monetary easing effort by the Fed.

Will the rest of the world decouple from the US recession? The market consensus now sees a divergence in patterns of global growth, between the US on the one hand and Europe and Asia on the other. But this is only wishful thinking. The world will sharply slow down once the US slumps.

Trade links are one important reason why the rest of the world will be affected. But the oil shock will have the same stagflationary effect on the eurozone and Asia as on the US. Monetary policy is being tightened in Japan, eurozone and emerging markets. Global chief executives' confidence is sharply down and rising geo-strategic shocks are hitting consumer and business confidence.

The fall of the dollar amid the US slowdown will lead to deflationary forces in Europe and Asia, and room for monetary and fiscal easing is much more limited now than in 2001, when the Group of Seven industrialized countries slashed policy rates and eased fiscal policy. There are now serious limits to monetary easing; even though global inflation is up, fiscal policy cannot be eased as almost all of the G7 countries face serious fiscal imbalances.

Implications for financial markets of this global slowdown will be serious; although we may see a rally in the wake of the Fed's pause and later easing, one can expect a subsequent slump in the US equity market. When the reality of a recession sinks in, global equity markets will fall with currencies and bonds in emerging markets, especially those with large external deficits. Finally, the dollar risks a disorderly fall as the US current account deficit becomes unsustainable. Central banks and private investors are now concerned about losses on holdings of dollar assets. Thus, US consumer "burn-out" may be followed by the flight of foreign investment amid rising trade and protectionist pressures.

The writer, chairman of Roubini Global Economics (

www.rgemonitor.com) is professor of economics at the Stern School of Business, New York University.

Copyright The Financial Times Limited 2006

Hunt99
08-14-06, 11:27
DB, it is rather amusing to see Euroweenies talking about "America's Recession." Seeing as European economic growth has been only half that of America pretty much consistently for 20+ years, they are twice as close to recession as the US. Should we watch out for their recession?:)

That said, the chances for a recession in the US in 2007 are not small. It might be a good, useful, purging thing that's necessary for continued growth. OTOH, it might just be a slowdown. It's hard for a developed economy to continue to grow 4-5% a year, year in and year out.

Flexible Horn
08-14-06, 12:51
DB, it is rather amusing to see Euroweenies talking about "America's Recession." Seeing as European economic growth has been only half that of America pretty much consistently for 20+ years, they are twice as close to recession as the US. Should we watch out for their recession?:)

That said, the chances for a recession in the US in 2007 are not small. It might be a good, useful, purging thing that's necessary for continued growth. OTOH, it might just be a slowdown. It's hard for a developed economy to continue to grow 4-5% a year, year in and year out.Never heard of the terminology Euroweenies, could someone please enlighten me.

Stowe
08-18-06, 01:08
Interesting Papa.

In Northern California the most frequently used loan is interest only. About 60% of all new home loans are interest only. This speaks to the fantastic intelligence of current homebuyers-that they are willing to risk their future rather than buy down to a smaller home / price.

Foreclosures are growing at a rapid rate as are bankruptcies which are the worst thing to have on your credit-it stays with you for 10 years!

Jesus people are stupid! Take the ARM or the Fixed on a smaller property and then once there is equity, buy up. But no, everyone wants their first home to be the 3000 sq foot mansion. In California that is not cheap!

Suerte.

Stowe

Judd
08-25-06, 06:45
Hola dudes,

I work for a bank that originates and services a substantial amount of mortgages throughout the country. I thought I would share my thoughts on the subject in the wake of this housing slowdown. What I'm noticing is a minor meltdown in this industry as companies look to slash costs to cope with the reduction in loan originations.

Chase and Wamu's mortgage division are in complete disarray with many of Chase's top level management heading for the door. I can't substantiate this, but I've heard Wamu's mortgage division is pulling out of the California market. They recently sold the servicing rights of their VA loans to Wells Fargo. Wamu also holds a portion of their loan portfolio in Option Arms which will be discussed later. Ameriquest has been battered and bruised with regulatory fines these past few years due to unfair lending practices. Recently, they severely cut the compensation for their loan officers which resulted in a mass exodus.

The company I think could be heading for some difficult times is Countrywide, the nation's largest lender. In an article out of the WSJ back on August 8th, Angelo Mozilo, CEO of Countrywide, stated his company has veered away from his growth strategy to try and cushion his company from the impending housing slowdown. He too, is looking to slash expenses as loan originations decrease.

Countrywide has a couple of problems to overcome. One, they are not a well diversified company since the banks they own primarily focus on mortgage related products. Two, they might not have enough loan-loss reserves to cover potential foreclosures with their loan portfolio. The possibility of higher foreclosures stems from Countrywide's position to sell the Option Arm Loans. In fact, they sold the shit out of this loan which accounts for 45% of their investment portfolio. Now, investors are not buying these loans from Countrywide as they are deemed too risky to hold in the wake of decreasing home values. This should result in reduced profitability for the company.

Option Arm Loans are considered the riskiest types of loans offered to borrowers which I consider the "dirty little secret" of the mortgage industry. Option Arms loans give the borrower a choice of usually 4 payments (teaser rate 1%-2% , interest only, 30yr fixed, or accelerated payment options. Most borrowers, who are increasingly leveraged with higher credit card minimums and gas prices, naturally only make the minimum payment. Since the teaser rate is not the true rate of the loan, (currently the true rate is between 6.5%-7.5% if not higher) the difference between the two rates, called deferred interest, gets added to the balance of the loan. Over time, the borrower who only makes the minimum payment will have their loan called, and will be forced to make principal and interest payments. This can potentially fuck the borrower if they don't have equity in their home or are unable to cope with the larger payment. Other problems with these loans are the true rate is variable every month, and most come with a 3 year prepayment penalty.

These loans became popular as banks, mainly Countrywide and World Savings, were paying brokers 2 to 3 times more to sell this loan as opposed to traditional principal and interest loans. Also, brokers / loan officers used these loans to qualify borrowers for higher loan amounts. The smart play, besides not qualifying the borrower period, would have been to offer the borrowers a temporary buydown of the rate on a traditional P an I loan to qualify them for the larger loan amount. Regulators have been scrutinizing this loan product for some time.

When asked about the selling and consequences of the option arm loan, Mozilo said he wasn't sure what will happen when these loans get called. He also stated Countrywide was careful to sell this loan only to strong borrowers. Not sure if I agree with his last statement as this loan was being sold to borrowers who needed 100% financing. I would not classify a borrower as "Strong" if they are unable to come up with a down payment to purchase a home.

I think banks such as B of A and Wells Fargo are positioned well for this housing slowdown. Their mortgage divisions only account for a portion of their business. They did not offer nor purchased the Option Arm in their loan portfolios. Also, investors have recognized banks such these have low foreclosure rates, and pay a substantial premium to hold their loans. Their stocks pay dividends too!

Take Care,

Judd

Hemin
08-25-06, 10:55
There are some countries in the Euro area which could / should be hurt due to overvalued real state. I think the spanish market is way to expensive and the households are over streched (leverage is sometimes 4 or 4.5 times annual gross income) with most loans based on variable interest rates. Also Portugal could have problems.

Question: is there any hard evidence yet that house prices in the US east cost have started to fall? I would be interested to know. I saw in the BsAs Herald that new home prices are unchanged compared with 05, what about second hand homes?

Thanks

Moore
08-25-06, 14:23
Great post, Judd. It's interesting to hear some of that from an independent insider.

Realtors in USA are apparently in denial.

Hunt99
08-25-06, 14:35
Sales are down 20% , but prices overall are down only 1% or so. Probably some price declines in order, as the law of supply of demand indicates.

El Perro
08-25-06, 14:51
I read an article today in the NY Times online detailing the increasing use of "inducements" to facilitate sales in the slumping market. Owners are offering free week (s) in time shares (every year for life in some cases) cash perks, no closing costs, and a host of other incentives. None of this is factored in to the price at which the home is sold. Some builders say that "the giveaways can equal 3 percent to 8 percent of a home's sale price." More food for thought. For whatever reason I can't seem to provide a direct link to the article, but for the moment you can find it at:

http://www.nytimes.com/?oref=login

Scroll down to "Most Popular' on the right hand side and look for "Home for sale, by anxious owner".

Hemin
08-25-06, 15:06
I only know some about DC, Philly, and NY market, but given the prices I have seen in a recent visit, I would think that the mkt needs at least a 25 percent correction (price fall) It is hard to find properties in middle class hoods with price tags of less than the 1m and it is not unussual to see asking prces well above that. To find something in the 750K range one needs to be prepared to do a long communute. The only way to justify this prices is if mortgage providers can give gross income multiples of 4 or more and interest rates are about 5 percent.

El Perro
09-03-06, 22:00
For you brave souls considering a real estate purchase in the states, take a look at:

http://www.nytimes.com/?oref=login

Scroll down to "The Last Stand of the 6 Percenters" under the Business column. A possible way to avoid some of the agent gouge.

Moore
09-09-06, 00:01
Though I know the US residential real estate market is soft and supposedly in crash mode, my second best performer this year (behind Matthews China) is VGSIX, the Vanguard REIT index fund, up 22% year to date. I guess the commercial weighting skews, but 22% YTD is not a slump. I wish my entire portfolio were margined there.

My Level3 Communications (LVLT) is up a mere 45% but I don't count that as a gain. It's just a penny stock that I tout.;)

Dickhead
09-09-06, 00:13
Note that the Vanguard REIT's underlying holdings have a PE of 45 so if it does turn south it could get kind of ugly. Plus it has a stealth concentration in that two of its largest holdings are closely related, Equity Office and Equity Residential. I'm more worried about the former than the latter as commercial office space is pretty volatile.

Lochdhu
10-02-06, 17:10
Here in Boise Idaho, I know a major home builder, who is now losing his ass, and pays out nearly 60k just in interest alone each month for all the loans he has taken out to build more homes, and his dumb ass is still building more homes. He is about to go bankrupt.

The housing market here has cooled off quite fast in the past few months. Every 3rd or 4th house has a for sale sign on the lawn, the previous year, we had a huge real estate boom, and the prices skyrocketed. Now prices are coming down fast. And a lot of speculators here are going to lose there ass.

Hunt99
10-02-06, 18:11
As usual, the acerbic and very funny Ben Stein, also known as the smartest man on the planet, has it right:


The usual course of events, however, would be for residential prices to fall for a couple more years, and then stagnate. It wouldn't be at all unusual for a residential slowdown to last for five years.

What does this mean for you?

First, it'll probably be a good time to buy a house in a year or so. The smart buyer buys when the bust is on, not when the boom is on. (I know this suggests that I'm not a smart buyer, but I've bought other properties at the bottom and have been very happy with those purchases.

Second, it's a reminder that you shouldn't count on your home to make you rich. Homes are for living in. They shouldn't be your main investment unless you're a builder.

And third, if you're a buyer, you can expect to be able to drive a good bargain. Conversely, if you're a seller, don't take it personally if you're hammered by buyers. That's the way markets work.

Buy at the bottom in real estate (and in everything else -- read on) or as close to the bottom as you can see, and patiently wait for the boom to come back. In the meantime, live in your house and enjoy it. A house is a machine for living, as the famed architect Le Corbusier said. It's not a machine for making money. If it does make you money that's all to the good, but it's not the main function.http://finance.yahoo.com/columnist/article/yourlife/10255

If you don't read his bi-weekly columns on Yahoo, you're missing out on a great (and usually entertaining) read.

Hunt99
10-26-06, 12:20
U. S. New-home prices plunging at fastest pace in 36 years.

WASHINGTON (MarketWatch) - The median sales price of a new home fell 9.7% in the 12 months ending in September, the fastest price decline in nearly 36 years, the government said Thursday. The government reported that sales of new homes unexpectedly rose 5.3% in September to a seasonally adjusted annual rate of 1.075 million, the most in three months and well above the 1.05 million expected by economists. New-home sales are down 14.2% in the past year. Inventories of unsold homes fell 1.9% to 557,000, representing a 6.4-month supply at the September sales pace. It's the second consecutive decline in inventories. The inventory peaked at 7.2 months in July. Inventories are up 14.4% in the past year.As prices go down, sales go up. Sounds like the law of supply and demand still works in America. ;)

Fretta
03-26-07, 15:28
I bought a condo in DC about a decade ago and sold it three years ago and took almost a million dollars in profit. Everyone was counseling me not to sell but I knew the market had peaked and I took my show on the road. Every time I hear about the housing market tanking I get a stupid grin on my face. Every time I bang a hot Portena I thank that little condo in DuPont.

Melch
03-26-07, 23:28
Hi,

Just some on the ground information. I am a realtor in Arizona who also brokers various deals for investors. My good friend is a commercial / residential realtor in Southern California.

2005, until September, was *the* boom in residential real estate. In 2006 our deal mix heavily switched to commercial deals, though there are definitely more residential deals than in 2005. Right now our rough gross revenue break out is: 10% residential purchase, 20 to 40% commercial deals (depending on which of us you look at) and the majority of our business, by gross revenue, is from brokering deals between investors and distressed projects properties.

That is huge. Up to 70% of all our gross revenue is bringing investors to distressed projects and properties.

With the current direction of interest rates I don't expect huge changes in this picture for the next year or so.

Hope that helps,

Melch

BundaLover
03-27-07, 02:28
Sidney,

One article you post only refers to NEW home construction which essentially don't exist in northern California / Bay Area unless you drive to some shit hole outside of Sacramento where there are new homes that are, gasp, reduced in price.

Secondly year to year prices are UP a tiny bit spring of 2007 vs 2006 in SF Area. There is NO US real estate market. You can't buy a toilet here for under 600k. There are only diverse markets and sectors. Even within california there is no connection with southern california commercial and northern california commercial.

Hunt99
04-24-07, 15:26
Yet median prices of resales were up 2% between February and March. The sky is not falling.

BundaLover
07-27-07, 15:18
What BULLSHIT! The only bubble is the new builder CRAP in far away places from jobs and sometime built in flood plains. There are multiple bids and very little inventory in Santa Clara, San Mateo, San Francisco and Contra Costa counties. Much lower inventory, flat sales to slightly higher prices for the past year. Within those places some unfortunate and/or stupid and/or ignorant and/or deceived and/or greedy people are losing their homes however they are being absorbed by the hordes of buyers and potential buyers that have been saving downpayment money for a long time. There is NO bubble in Northern California. I do not know what is happening in Southern California nor do I care.

BundaLover
08-22-07, 19:06
Home prices rise in July even as sales fall to 12-year low.

Carolyn Said, Chronicle Staff Writer.

Thursday, August 16, 2007

The protracted waiting game between home buyers and sellers continued in July, as Bay Area real estate sales slowed to a 12-year low while prices edged up, according to a report released on Wednesday.

A total of 4,990 existing single-family homes changed hands in the nine-county Bay Area in July, according to DataQuick Information Systems of La Jolla (San Diego County) That was down 13 percent from 5,721 home sales in July 2006.

The median price was $738,500, up 7 percent from $688,955 a year ago.

The median rose because a greater proportion of expensive homes were sold, said Andrew LePage, an analyst at DataQuick. Tighter lending standards after the subprime loan debacle have knocked many entry-level buyers out of the market because they lack down payments, good credit or solid income proof. "If you yank out a bunch of low-cost sales, then guess what happens to the median?" he said.

"The higher you go up the price ladder, the more stable (the market) appears, with the big caveat that things could change, even if temporarily, in August because of the credit crunch," LePage said.

In the latest developments in the mortgage market, "jumbo" loans above $417,000 have become more expensive and harder to get, and more lenders are falling by the wayside. All of that could hurt the high-end sales that have been strong up until now. Because sales typically take a month to close, the fallout will not be reflected until data are collected for this month and next.

"We anticipate it will be an especially weak August because of all of this," LePage said. "A lot of people are waiting."

Including both new homes and condominiums as well as existing homes, overall sales in the Bay Area were down 12 percent to 7,423 compared with 8,476 last year. The median price for all types of sales was $665,000, up 4 percent from $639,000 in July 2006.

Despite the sales slump, the Bay Area remains one of the stronger real estate regions in the state, particularly in the innermost counties near job centers.

That shows in the breakdowns for counties such as San Francisco, where the number of transactions was stable at 313 compared with 324 in July 2006. The median price inched up to $846,500 from $833,000 a year ago.

Real estate agents say that the region still has numerous micromarkets in affluent areas where sales remain robust.

Vince Malta, a broker with Malta and Co. In San Francisco, said he was working with buyers in the West Portal district who bid on 10 different properties in the past 10 weeks, offering significantly above the asking price, but still facing intense competition. They finally had an offer accepted last week.

"There are pockets of the market that are still that way," he said.

The mantra among agents dealing with more-affordable areas is that cream-of-the-crop properties in top-notch condition and priced well still attract interest, albeit not at the frenzied level of several years ago.

For instance, Kate Phillips, a Realtor with Wells and Bennett Realtors in Oakland, who specializes in the Maxwell Park area, said she recently sold a home that listed at $539,000 for $550,000 after receiving three offers.

"The same house a year ago would have sold for a greater amount over the asking price, but in this market we did pretty well getting three offers," Phillips said.

But homes that have various challenges tend to linger on the market much longer.

For instance, Phillips is selling another Maxwell Park home, a fixer-upper that has been on the market for four weeks. While its $399,900 price is low for the area, she said potential buyers who might want to rehab and resell the house are deterred by not being able to predict where prices will be several months from now.

"They're more cautious because it's an adjusting market," she said.

That's not much consolation to the home's owner, Jillian Wilkowski, an artist who wants to sell so she can move to a less expensive area, such as Winters or Woodland in Yolo County.

Interest in her sale "has been really quiet; it makes me a little anxious," she said. "From my house, I can see six other houses for sale, and all except one have been on the market a longer time."

In fact, inventory of for-sale homes is up significantly in many counties compared with a year ago, according to an analysis of MLS data prepared by Zip Realty.

In Alameda County, there were 7,415 homes for sale in July, 32 percent more than the 5,603 in July 2006, Zip's report said. The number of for-sale homes also rose in Contra Costa County (up 20 percent, to 8,559 homes) Napa (up 21 percent to 1,051) San Mateo (up 35 percent to 2,489) Santa Clara (up 24 percent to 5,638) Solano (up 21 percent to 3,572) and Sonoma (up 5 percent to 3,045) The only Bay Area counties with inventory declines were Marin, where 906 homes are for sale, 10 percent fewer than a year ago; and San Francisco, with 1,146 homes for sale, a 17 percent decline.

In eight of the nine counties, inventory was higher in July than in June as well. In San Francisco, it inched down 1 percent from the previous month.

DataQuick's report showed that sales of new homes in the Bay Area were down 10 percent, to 1,017, compared with 1,132 in July 2006. The median price was essentially flat at $599,000, compared with $595,500 last year.

Sales of existing condos were down 13 percent, with 1,416 changing hands compared with 1,623 last year. The median price was up 5.5 percent to $519,500, compared to $492,250 a year ago.

End of article.

Pete Puma
10-23-07, 16:26
The time to buy is when there is blood in the streets. That time is coming.

Redondo
10-23-07, 17:13
Is this thread for the worldwide real estate market or specific for Argentina?

El Perro
10-23-07, 20:13
Is this thread for the worldwide real estate market or specific for Argentina?The thread title reads "Real Estate Market". You might notice that a significant number of posts here address the real estate market in the United States. I would imagine nobody would be very upset if you posted something about the real estate market in ther Netherlands, though it might generate little interest. Discussion of the real estate market in China on the other hand might draw a bit more interest. Do the board a favor and see if you can't exercise a bit more control over your passive aggressive tendencies as they are currently being expressed through your dogging of El Sid like a ***** in heat.

Redondo
10-23-07, 22:16
The thread title reads "Real Estate Market". You might notice that a significant number of posts here address the real estate market in the United States. I would imagine nobody would be very upset if you posted something about the real estate market in ther Netherlands, though it might generate little interest. Discussion of the real estate market in China on the other hand might draw a bit more interest. Do the board a favor and see if you can't exercise a bit more control over your passive aggressive tendencies as they are currently being expressed through your dogging of El Sid like a ***** in heat.He dodges me and feels the it's necessary to become personal after he totally lost a debate.

The subforum is called Argentine Real Estate market and I thought that some people think that if prices crash elsewhere, they will in Argentina as well. But if there is still plenty of liquity in Argentina due to high international prices, the real estate market will continue to grow in my opinion

Hunt99
10-24-07, 12:46
The best time to buy almost any asset is when "nobody" wants it, and "everybody" agrees that it is a terrible investment. Along this line, I am starting to warm up to the idea of buying some US investment real estate again, after many years of sitting on the sidelines. Prices are down, rents are up, and the numbers are beginning to make sense again.

Moreover, real estate is one of the investment classes that does best in an inflationary environment, which I fear the US may be approaching.

El Perro
10-24-07, 13:43
The best time to buy almost any asset is when "nobody" wants it, and "everybody" agrees that it is a terrible investment. Along this line, I am starting to warm up to the idea of buying some US investment real estate again, after many years of sitting on the sidelines. Prices are down, rents are up, and the numbers are beginning to make sense again.

Moreover, real estate is one of the investment classes that does best in an inflationary environment, which I fear the US may be approaching.Noooooo! Wait Hunt! I agree, there will be a time to do some major scavenger work, but it is still in the future. My two cents. It's certainly hard to call a bottom in this area, but I would hold off.

DrakeCapital
10-25-07, 13:38
I will only speak of the current conditions around me. We are not even close, not even the 3rd inning of what is to come. I live in Florida, and I know this market is worse than most parts of the country. In any case, there is ZERO indication of a breather and investors are so soured on real estate prospects they are non- existent. When prices stop sliding, it dosen't imply they start going up. Prices could languish for many years to come.

This is what I see around here.

Rob Brazil
10-26-07, 07:54
Hunt,

I agree with Doggboy. Why on earth would you buy now in the USA? There is still a lot of room to fall as more adjustable rate mortgages are going to reset in 2008. This is the tip of the iceberg. The house I sold in California 2 years ago is 30% less now and I think prices can fall another 25% throughout 2008. I agree with you that there will be a time to buy again but I don't think its now.

El Perro
10-26-07, 08:55
Here we go-correct thread. Before moving to BA nearly two years ago, I sold my condo in the South Beach section of Miami Beach for about an 80% mark up from when I had purchased it two years before. A good buddy of mine in Miami who has been in the business of buying, renovating and selling homes and condos for 20 years, constantly comments on my having got out at the very peak. Whenever I have talked with him over the past two years, he gives me an update on the current situation in South Florida, and of course, particularly Miami. During a conversation last night, he indicated that at this time, I would be fortunate to sell that place FOR WHAT I PAID FOR IT. It was a semi fixer upper that I sank about $20,000 into. At present in Miami Beach, there are so many condos on the market that are in good shape and not selling, that god knows where the value for a place like mine will end up. This illustrates the point about current value, at least in the overblown South Florida area. While it may be the epicenter of the meltdown, I am sure there are many other areas that aren't in much better shape. My guess is that there is still a long way to go before the bottom becomes visible.

Phu Bai
10-30-07, 16:39
Watched a guest on c span Monday talking about the mortgage meltdown. He said as many as 700 thousand loans (in or nearing foreclosure) were made by illegal aliens using stolen identities and or documentation, in collusion with loan companies and realtors. Two realtors and a gov official in Denver are under indictment for 1700 such loans with many more expected, as the rolling over on your buddy begins. Yes thats 700 thousand. Mind boggling.

Hunt99
10-31-07, 12:17
Hunt,

I agree with Doggboy. Why on earth would you buy now in the USA? There is still a lot of room to fall as more adjustable rate mortgages are going to reset in 2008. This is the tip of the iceberg. The house I sold in California 2 years ago is 30% less now and I think prices can fall another 25% throughout 2008. I agree with you that there will be a time to buy again but I don't think its now.One can never catch the exact bottom, but as Sir John Templeton says, the best time to buy is when there's blood on the streets. There are red rivers of blood flowing down many a street - rents are going up and prices are going down. Time to buy? For the right price (a ridiculously low one) and from the right seller (a desperate one): yes.

Member #3314
10-31-07, 20:33
This has an odd perk to buy.

http://www.cnn.com/video/#/video/living/2007/10/30/pa.house.for.sale.with.guarantee.cnn

I like at the end how they add in the caveat of we must die of natural causes.

Also whats to say these guys won't spend all of there money 2 weeks before they croak on coke and hookers?

Redondo
11-05-07, 12:37
What's the risk for banks if they lower interest rates by let's say 0.5% and extent the payment-time for the people who are at risk losing there home?

It seems to me it will be more rewarding in the long run then risking more forched sellings.

Hunt99
11-05-07, 13:05
What's the risk for banks if they lower interest rates by let's say 0.5% and extent the payment-time for the people who are at risk losing there home?

It seems to me it will be more rewarding in the long run then risking more forched sellingsThe problem is not .5% in interest rates, the problem is people who bought too much house by using creative financing loans. 100% financing and 1% option ARM, for example.

Let's say that a person making $50,000 wanted to buy a house. Typically, the ratio for payments will allow at maximum a 40% payment on a mortgage (assuming no other debts - which is a big assumption) This means that the 50K income fellow could qualify for a mortgage with payments of up to 20K a year, or $1666 a month. Even for a 100% mortgage, a regular 6.5% 30 year loan with a $1666 payment will allow purchase of a house for $263,000.

But if he found a mortgage company stupid enough to lend to him (or if he was willing to put down false numbers on a mortgage application) he could have gotten a bigger house than one for $263,000, by using that option ARM, which allowed buyers to pay an interest rate of just 1% , interest only, with any non-paid interest added to the mortgage total. That would have allowed our liar loan guy to get a loan as big as $500,000, more than double, by paying $1603 a month, 1% interest only. But that only works for a while, before the mortgage company will no longer add unpaid interest to the mortgage total, the payment skyrockets, and Harry Homeowner is in a jam.

What's worse, if he bought at the top with a price of $500,000, and the market corrects by 20% (which is has, in many areas) he is saddled after a couple of years with a house worth $400,000 and $550,000 in debt on it, with payments that are no longer $1600 but $3700. Unless the borrower's $50K income has doubled, that's a recipe for bankruptcy.

Here's a mortgage calculator, where you can run the numbers yourself:

http://www.harborviewca.com/modules/loancalc/oacalc.php

There were tremendous opportunities in the real estate market over the past few years. Money was cheap (and still is cheap for real borrowers), and prices were rising. From a personal perspective, I locked in a big 30 year mortgage two years ago for a fixed rate of 4. 875%. And unlike that borrower whose example we examined above, every year my payment stays the same, and in fact gets easier and easier to pay. While people can't quite get deals this good now, assuming one doesn't overborrow (and has a real job and good credit), it can be close.

The "real estate crisis" consists of stupid borrowers who bought too much house, and stupid lenders who loaned them the money without any prospect of ever getting all their money back. A pox on both their houses (pun intended). Let them all lose their asses for making such bad financial decisions.

DrakeCapital
11-05-07, 14:03
Hunt hit the on the head!

Redondo
11-05-07, 14:07
The problem is not.5% in interest rates, the problem is people who bought too much house by using creative financing loans. 100% financing and 1% option ARM, for example.

Let's say that a person making $50,000 wanted to buy a house. Typically, the ratio for payments will allow at maximum a 40% payment on a mortgage (assuming no other debts - which is a big assumption) This means that the 50K income fellow could qualify for a mortgage with payments of up to 20K a year, or $1666 a month. Even for a 100% mortgage, a regular 6.5% 30 year loan with a $1666 payment will allow purchase of a house for $263,000.

But if he found a mortgage company stupid enough to lend to him (or if he was willing to put down false numbers on a mortgage application) he could have gotten a bigger house than one for $263,000, by using that option ARM, which allowed buyers to pay an interest rate of just 1% , interest only, with any non-paid interest added to the mortgage total. That would have allowed our liar loan guy to get a loan as big as $500,000, more than double, by paying $1603 a month, 1% interest only. But that only works for a while, before the mortgage company will no longer add unpaid interest to the mortgage total, the payment skyrockets, and Harry Homeowner is in a jam.

What's worse, if he bought at the top with a price of $500,000, and the market corrects by 20% (which is has, in many areas) he is saddled after a couple of years with a house worth $400,000 and $550,000 in debt on it, with payments that are no longer $1600 but $3700. Unless the borrower's $50K income has doubled, that's a recipe for bankruptcy.

Here's a mortgage calculator, where you can run the numbers yourself:

http://www.harborviewca.com/modules/loancalc/oacalc.php

There were tremendous opportunities in the real estate market over the past few years. Money was cheap (and still is cheap for real borrowers) and prices were rising. From a personal perspective, I locked in a big 30 year mortgage two years ago for a fixed rate of 4.875%. And unlike that borrower whose example we examined above, every year my payment stays the same, and in fact gets easier and easier to pay. While people can't quite get deals this good now, assuming one doesn't overborrow (and has a real job and good credit) it can be close.

The "real estate crisis" consists of stupid borrowers who bought too much house, and stupid lenders who loaned them the money without any prospect of ever getting all their money back. A pox on both their houses (pun intended) Let them all lose their asses for making such bad financial decisions.But let's say they fix the interest rate at 6,5% for 30 years. That would result in around 2700 dollar a month. That would be sustainable especially if you get rid of credits, get another job or get a raise.

That would be a lot less then your 3700 dollar and would stop many foreclosures in my opinion.

In the long run this would be better for the banks.

Hunt99
11-05-07, 14:37
But let's say they fix the interest rate at 6,5% for 30 years. That would result in around 2700 dollar a month. That would be sustainable especially if you get rid of credits, get another job or get a raise.

That would be a lot less then your 3700 dollar and would stop many foreclosures in my opinion.

In the long run this would be better for the banksYes, but no bank will re-finance a loan for $500,000 (or $550,000 in our example of the 1% option ARM loan) when the house is valued only at $400,000. Even if the house did not lose any value, refinancing into a fixed rate loan is not a good risk - it's throwing good money after bad.

Unless the borrower is really working hard, and is close to breaking even, there is no reason for a bank to write a new loan when the old one is so far under water. Foreclosure is really the only option. The money is gone, and can only be made up with the passage of much time. This is the "real estate crisis" in a nutshell.

How to avoid this problem next time? Follow all the old rules of buying houses that are so unfashionable - buy only what you can afford, get a fixed rate loan, and make borrowers put 20% downpayment. This last one is a stretch. The most I've ever put down on a piece of real estate was 10% , and my first one, 1%. But I have always been extremely old fashioned in the sense that I have never gotten an ARM, I have always had fixed-rate loans. I like the certainty that it brings - my payment never changes.

Edited to add: Using our first example, the fellow who made the 1% minimum payments on his 500,000 house and now finds himself with a 550,000 mortgage and a house worth 400,000. If a bank was foolish enough to write a new loan for 550,000 at 6. 5% for 30 years fixed, the loan payment would be $3,476 a month. A borrower needs a yearly income of $104,000 to service this mortgage (and no other debts). Again, unless the borrower was able to double his income in the space of a couple of years, the numbers won't work. Bankruptcy and foreclosure are the only answer.

And this crisis creates tremendous opportunities for long-term investors, which is where I am looking to start putting some money myself.

Charbuck
11-05-07, 14:44
The "real estate crisis" consists of stupid borrowers who bought too much house, and stupid lenders who loaned them the money without any prospect of ever getting all their money back. A pox on both their houses (pun intended) Let them all lose their asses for making such bad financial decisions.Don't forget all of the idiots who were buying up places as "investments," hoping to hold onto them for a year or two, maybe make a few improvements, and pocket a tidy sum. Remember a few years ago when there were all those stories of people who would buy houses and make like $100,000 or something? When you start seeing these kinds of things on the local news, you know it's way too late to get into the game.

I made a killing on my place and sold about two years ago making a huge profit, but I knew it wasn't sustainable. I've been here ever since just renting, using my ill-gotten gains to molest the locals, and waiting to have happen exactly what happened. Any idiot with half a brain knew there was too much speculation and that when interest rates rose, which was inevitable given the Federal Government's deficits, everything would grind to a halt. Now I'm looking to buy back in, but I still think prices are too high. People think "by God, I a paid $X, XXX, XXX and I'm not going to take a penny less!" Morons. The market bears what the market bears so come talk to me after you make another year's worth of payments and the value of your place has declined even more.

I have little sympathy for the idiots losing their shirts. If I had projected how tall I would be now by my rate of growth between ages 13 and 18, I would be twenty feet tall. Yes, a pox on them and their dumbass fiscal decisions.

Redondo
11-05-07, 14:51
Yes, but no bank will re-finance a loan for $500,000 (or $550,000 in our example of the 1% option ARM loan) when the house is valued only at $400,000. Even if the house did not lose any value, refinancing into a fixed rate loan is not a good risk - it's throwing good money after bad.

Unless the borrower is really working hard, and is close to breaking even, there is no reason for a bank to write a new loan when the old one is so far under water. Foreclosure is really the only option. The money is gone, and can only be made up with the passage of much time. This is the "real estate crisis" in a nutshell.

How to avoid this problem next time? Follow all the old rules of buying houses that are so unfashionable - buy only what you can afford, get a fixed rate loan, and make borrowers put 20% downpayment. This last one is a stretch. The most I've ever put down on a piece of real estate was 10% , and my first one, 1%. But I have always been extremely old fashioned in the sense that I have never gotten an ARM, I have always had fixed-rate loans. I like the certainty that it brings - my payment never changes.

Edited to add: Using our first example, the fellow who made the 1% minimum payments on his 500,000 house and now finds himself with a 550,000 mortgage and a house worth 400,000. If a bank was foolish enough to write a new loan for 550,000 at 6.5% for 30 years fixed, the loan payment would be $3,476 a month. A borrower needs a yearly income of $104,000 to service this mortgage (and no other debts) Again, unless the borrower was able to double his income in the space of a couple of years, the numbers won't work. Bankruptcy and foreclosure are the only answer.

And this crisis creates tremendous opportunities for long-term investors, which is where I am looking to start putting some money myself.Why does the mortage go up with 10% to 550.000 dollar?

Hunt99
11-05-07, 16:14
Why does the mortage go up with 10% to 550.000 dollar?That's the way that these 1% option ARMS worked - while the payment on our hypothetical $500,000 loan was $1,600 a month, there was still unpaid interest which was added to the loan amount. Over a period of about 48 months, that comes to $50,000. There are limits to the amount allowed to be added to these loans by the lenders, usually around 10-20% above the amount of the original loan. One you reach the limit, the lender forces you into a loan payment amount which fully amoritizes over the length of the loan.

These kinds of loans are really good - when they are used responsibly, by people who know what they are doing, such as by self-employed or by people whose income goes up and down in irregular amounts. Unfortunately, the usual idiots who don't read the fine print, and don't understand that they can't just make the minimum payment every month, month-after-month, especially in a real estate market where prices are going down.

Hunt99
11-05-07, 16:17
Any idiot with half a brain knew there was too much speculation and that when interest rates rose, which was inevitable given the Federal Government's deficits, everything would grind to a halt. Now I'm looking to buy back in, but I still think prices are too high. People think "by God, I a paid $X, XXX, XXX and I'm not going to take a penny less!" Morons. The market bears what the market bears so come talk to me after you make another year's worth of payments and the value of your place has declined even more. Long term interest rates really haven't risen much - the 10 year treasury bond, which mortgages play off of, is now 4.31%. Two years ago it was 4.00%. In the meantime, it went to 5.3% before dropping back to its current level.

http://finance.yahoo.com/q?s=%5ETNX

What has risen is the Fed Funds rate, which was 1% in 2004 but 4-something now. It was this drop in the Fed Funds rate which gave birth to the boom in option ARMs.

The people who "won't take less than what their homes are worth" don't realize that the home is worth what somebody will pay for it, today. Not what some real estate appraisal from two years ago said. But even so, people who take that attitude are going to be forced to take the proper step, which is to sit tight and let the markets come back over time. Either that, or they won't be able to sell, and will get increasingly desperate.

DrakeCapital
11-05-07, 16:39
Long term interest rates really haven't risen much - the 10 year treasury bond, which mortgages play off of, is now 4.31%. Two years ago it was 4.00%. In the meantime, it went to 5.3% before dropping back to its current level.

http://finance.yahoo.com/q?s=%5ETNX

What has risen is the Fed Funds rate, which was 1% in 2004 but 4-something now. It was this drop in the Fed Funds rate which gave birth to the boom in option ARMs.

The people who "won't take less than what their homes are worth" don't realize that the home is worth what somebody will pay for it, today. Not what some real estate appraisal from two years ago said. But even so, people who take that attitude are going to be forced to take the proper step, which is to sit tight and let the markets come back over time. Either that, or they won't be able to sell, and will get increasingly desperate.And it's gonna be a REALLY long time, so I hope they can afford those rising mortgage payments. In addition, at least in Florida, there are many people with 2 or 3 "investment" properties besides their home to live in. I see brand new, never lived in homes and condos everywhere! Some are almost 3 years old and not one renter has even come by!

Phu Bai
11-05-07, 18:16
Yall seem to be knowledgable about this whole thing. During a recent get together (many financial types present) I asked somebody about this economic stuff. Houses dollar and all) He laughed and said its all just another 70s Cds speculative john conally cornhowling the japanese gambit. What the hell is this supposed to mean? Didnt want to appear any less informed than usual) or as I appear now. Looked up john conally but just found a bunch of gobledegook about devalueing the dollar in the 70s. How or why would this be relevant to the present situation. Only curious as my finances are easily contained in a matchbox.

Thanks in advance for any comment on a probably moot or wacky post.

Charbuck
11-05-07, 18:22
But even so, people who take that attitude are going to be forced to take the proper step, which is to sit tight and let the markets come back over time. Either that, or they won't be able to sell, and will get increasingly desperate.Sitting tight isn't necessarily a wise or proper move because of opportunity costs, among other things. There were people in the 1970s who paid $800 an ounce for gold, and if they all stood tight they'd be breaking even just about now--if they are still alive.

Hunt99
11-05-07, 18:34
And it's gonna be a REALLY long time, so I hope they can afford those rising mortgage payments. In addition, at least in Florida, there are many people with 2 or 3 "investment" properties besides their home to live in. I see brand new, never lived in homes and condos everywhere! Some are almost 3 years old and not one renter has even come by!I own a home in Florida, a condo, which was purchased by a family member in 1988 for $81,000. I bought it in 2006 for $168,000 from that family member in order to keep it from being foreclosed on them (they were not the wisest person with money). Pricewise for them, over 18 years, that amounted to a 4% yearly rate of return. They probably lost money on the deal, once you figure in condo fees (but perhaps made some of the loss back by deducting interest on their tax return). It sits empty for me right now, but I might get a renter in there before long. A RE agent down there told me it could rent for $1,300 a month. I haven't done the math on it, but I'd probably make some good return on it by renting it out. But it's not killing me to pay the condo fee and have it available for me whenever I want it.

My most recent tax bill shows the assessment dropping from 168K to 159K in the course of a year, a drop of 5%. Probably the real value (in a middle class residential area) dropped by 10%. I figure this experience with Florida RE is not atypical.

So if a total amount of loss is 20% , and your yearly rate of return thereafter is 4% , it'll take a holding period of about 6 years to break even. Which is what I figure the current swoon is going to amount to.

Hunt99
11-05-07, 18:37
Sitting tight isn't necessarily a wise or proper move because of opportunity costs, among other things. There were people in the 1970s who paid $800 an ounce for gold, and if they all stood tight they'd be breaking even just about now--if they are still alive.Good point. But real estate is somewhat different because people have to live somewhere, but they don't have to own gold, or stocks, etc.

The people who will really suffer through no fault of their own in this current situation are people who are forced to move because of their work. People who just want to move to a different home in their hometown are going to be doing a lot of just hanging on - which isn't a killer.

And for the speculators who bought at the top of the market - add my voice to the chorus saying "fuck 'em."

DrakeCapital
11-05-07, 19:26
Good point. But real estate is somewhat different because people have to live somewhere, but they don't have to own gold, or stocks, etc.

The people who will really suffer through no fault of their own in this current situation are people who are forced to move because of their work. People who just want to move to a different home in their hometown are going to be doing a lot of just hanging on - which isn't a killer.

And for the speculators who bought at the top of the market - add my voice to the chorus saying "fuck 'em."I agree with you on most every point. It sounds like you've got a realistic outlook and thus won't be disappointed. It's the speculators that are getting thrashed, and they deserve it. Greed is great when you're on the right side of the trend, but deadly when you "get caught". The point about 6 years, give or take, it a decent guess it seems. I say this because every "flipper" in Florida has been chirpin' how we're "just ready to turn" for the last 2 1/2 years!

Real Estate does have it's strengths (shelter, food etc. But it isn't liquid in times like these. As long as you can afford to sit tight, then you're fine. Gold is decent, but necessary commodities like corn, wheat, soybeans, etc. Are not only staples, but also very liquid. Real Estate will come back, no doubt, but I'm not buying today.

Good luck

Pete Puma
11-11-07, 02:16
Sounds like good news. I hope the Real Estate market and the stock market keep going down.

BundaLover
11-11-07, 07:23
Gold is decent, but necessary commodities like corn,.

Good luckDepends what you call decent. Some people think TacoBell has decent Mexican food. You say you are a professional investment person?

DrakeCapital
11-12-07, 02:41
Depends what you call decent. Some people think TacoBell has decent Mexican food. You say you are a professional investment person?I don't sell commission products, but it is how I've my living since 1990 or so. I am not paid for advice in any.

There is no disputing gold has come near all time highs, oil is at all time highs. Corn recently made all time highs, and on and on.

Pete Puma
11-12-07, 04:22
You got to love those nachos bell grande. Taco bell rules.

DrakeCapital
11-12-07, 12:31
Depends what you call decent. Some people think TacoBell has decent Mexican food. You say you are a professional investment person?And if I'm all wet, step and SHORT gold, corn, etc. If you think the opposite is true, put your $$$ where you mouth is and make some candy.

Redondo
11-12-07, 18:03
Just a basic question.

If American companies are still hiring, how can there be a recession?

DrakeCapital
11-12-07, 18:39
Just a basic question.

If American companies are still hiring how can there be a recession?McDonalds is hiring. Motorola / GM / Countrywide / Lehman, etc. Are all laying people off. High paying jobs eliminated, burger flipping jobs increasing!

Redondo
11-12-07, 19:47
McDonalds is hiring. Motorola / GM / Countrywide / Lehman, etc. Are all laying people off. High paying jobs eliminated, burger flipping jobs increasing!Cheap talk.

If there no massive lay-offs and unemployement will be low there probally won't be a deep recession.

The subprime crisis will hurt, the financial sector will take a hit, the IT business as well, but the healthy companies will rebound.

As far as I can see now, there won't be a deep recession

DrakeCapital
11-12-07, 19:55
Cheap talk.

If there no massive lay-offs and unemployement will be low there probally won't be a deep recession.

The subprime crisis will hurt, the financial sector will take a hit, the IT business as well, but the healthy companies will rebound.

As far as I can see now, there won't be a deep recessionWhat is cheap talk? YOU asked a question. Of course, if there are not layoffs, there is no recession. It's a forward looking statement! If you believe government numbers (low inflation, great economy, etc. Then things will always be great.

Answer a question before any other response. If things are fine, why are CEO's losing jobs every week at big financial firms. You do know that financial firms LEAD the general markets, correct? Why are they at multi year lows? Must be be / c things are so great.

I've seen Redondo's comments before on these boards, and I must add that I've never been impressed (or even enlightened) I won't even respond to any of his senseless observations after this. I'll still say what I think, read, etc. To other board members if they find use in my musings.

Redondo
11-12-07, 22:40
What is cheap talk? YOU asked a question. Of course, if there are not layoffs, there is no recession. It's a forward looking statement! If you believe government numbers (low inflation, great economy, etc. Then things will always be great.

Answer a question before any other response. If things are fine, why are CEO's losing jobs every week at big financial firms. You do know that financial firms LEAD the general markets, correct? Why are they at multi year lows? Must be be / c things are so great.

I've seen Redondo's comments before on these boards, and I must add that I've never been impressed (or even enlightened) I won't even respond to any of his senseless observations after this. I'll still say what I think, read, etc. To other board members if they find use in my musings.I didn't say things are great, there it's must been gone wrong for you.

El Perro
11-13-07, 12:12
Miami Condo At Ground Zero In Mortgage Fraud.

By REUTERS.

Published: November 13, 2007

Filed at 8:34 a. M. ET.

MIAMI (Reuters) - At first glance, the 43-story building in Miami's international banking district seems little different from other high-rise condominiums overlooking the turquoise waters of Biscayne Bay.

But the 643-unit condo known as the Club at Brickell is a leader in mortgage foreclosures and it appears also to stand at ground zero in a blizzard of fraud that may lie behind many of the failed loans threatening to bury the U. S. Property market.

America's subprime mortgage crisis is partly due to predatory, or aggressive, lenders, hard-sell tactics by mortgage brokers and an easing of underwriting standards in the $10 trillion home-loan industry.

But fraud accounts for a sizable share of the bad bets on mortgages, according to many industry experts, and lenders may have been victimized as much as anyone else.

"The lenders are holding the bag now, that's what we're finding out," said Glenn Theobald, head of a mortgage fraud task force formed in south Florida's Miami-Dade County in September.

Mortgage scams involve a cartel of inside players -- colluding property appraisers, real-estate brokers and accountants willing to draw up fake income statements and tax returns -- who recruit people with good credit histories to serve as a decoy or "straw buyer" in a real-estate deal.

The conspirators inflate the price of the property, to get the biggest loan possible, pay the sellers the original price and then pocket the excess loan money as "cash back" at the closing of the deal.

The decoy buyer is paid off -- often with just $5,000 -- and the property is quickly abandoned to foreclosure, said Theobald, a senior official with the Miami-Dade Police Department.

'EPIDEMIC'

"It's an epidemic," said Nancy Hogan, a veteran realtor and former head of the Florida Real Estate Commission.

"The cash back, the fraud for profit, is what has been so rampant," she said.

The Club at Brickell has the highest current number of foreclosure proceedings involving any single south Florida property.

There may be other properties in the United States that hold the distinction of being riddled with more cases of apparent mortgage fraud than the Club.

But Doug Dewitt, a real estate broker contracted to work with several lenders on the valuation and disposal of foreclosed properties, said nearly 70 percent of the sales or closings at the Club over the last 18 months were questionable.

That works out to more than 200 possibly shady deals in a single building, he said.

The dubious transactions all fit a pattern that Theobald said should trigger "bells and whistles" for law enforcement anywhere -- time and time again properties that failed to sell for months when listed at around $450,000 were pulled from the market and then suddenly sold for more than $800,000.

Florida leads the nation when it comes to mortgage fraud, according to the Virginia-based Mortgage Asset Research Institute, a group that works closely with the U. S. Mortgage Bankers Association.

Many apartments could wind up being sold at auctions like one held last month for bank-owned properties in Fort Lauderdale, further depressing prices in a market suffering its biggest condo glut in decades.

"You've seen some of it already. They are actually having auctions to try and sell units," said Theobald, when asked about discount sales involving recently foreclosed properties.

"I don't know where it's going to end up," Theobald said. "I don't know when the bottom is going to be."

Ken Thomas, a Miami-based banking expert and lecturer at the Wharton School at the University of Pennsylvania in Philadelphia, said there was little surprise Florida led the country in mortgage fraud.

It stems, at least in part, in the way lenders plowed "easy money" into the local condo market before Florida's recent housing boom turned to bust, Thomas told Reuters.

"We're going to see a lot more of this fraud being exposed, especially as these units go into foreclosure," Thomas said.

"We were the poster child of the housing bubble. Maybe we should have expected more of this."

Redondo
11-13-07, 13:44
The last time there was a decline in q3 1990. That does not say there won't be a deep recession, I just don't think it's really likely.

Exon123
11-13-07, 14:38
Miami Condo At Ground Zero In Mortgage Fraud.

By REUTERS.

Published: November 13, 2007

Filed at 8:34 a. M. ET.

MIAMI (Reuters) - At first glance, the 43-story building in Miami's international banking district seems little different from other high-rise condominiums overlooking the turquoise waters of Biscayne Bay.

But the 643-unit condo known as the Club at Brickell is a leader in mortgage foreclosures and it appears also to stand at ground zero in a blizzard of fraud that may lie behind many of the failed loans threatening to bury the U. S. Property market.

America's subprime mortgage crisis is partly due to predatory, or aggressive, lenders, hard-sell tactics by mortgage brokers and an easing of underwriting standards in the $10 trillion home-loan industry.

But fraud accounts for a sizable share of the bad bets on mortgages, according to many industry experts, and lenders may have been victimized as much as anyone else.

"The lenders are holding the bag now, that's what we're finding out," said Glenn Theobald, head of a mortgage fraud task force formed in south Florida's Miami-Dade County in September.

Mortgage scams involve a cartel of inside players -- colluding property appraisers, real-estate brokers and accountants willing to draw up fake income statements and tax returns -- who recruit people with good credit histories to serve as a decoy or "straw buyer" in a real-estate deal.

The conspirators inflate the price of the property, to get the biggest loan possible, pay the sellers the original price and then pocket the excess loan money as "cash back" at the closing of the deal.

The decoy buyer is paid off -- often with just $5,000 -- and the property is quickly abandoned to foreclosure, said Theobald, a senior official with the Miami-Dade Police Department.

'EPIDEMIC'

"It's an epidemic," said Nancy Hogan, a veteran realtor and former head of the Florida Real Estate Commission.

"The cash back, the fraud for profit, is what has been so rampant," she said.

The Club at Brickell has the highest current number of foreclosure proceedings involving any single south Florida property.

There may be other properties in the United States that hold the distinction of being riddled with more cases of apparent mortgage fraud than the Club.

But Doug Dewitt, a real estate broker contracted to work with several lenders on the valuation and disposal of foreclosed properties, said nearly 70 percent of the sales or closings at the Club over the last 18 months were questionable.

That works out to more than 200 possibly shady deals in a single building, he said.

The dubious transactions all fit a pattern that Theobald said should trigger "bells and whistles" for law enforcement anywhere -- time and time again properties that failed to sell for months when listed at around $450,000 were pulled from the market and then suddenly sold for more than $800,000.

Florida leads the nation when it comes to mortgage fraud, according to the Virginia-based Mortgage Asset Research Institute, a group that works closely with the U. S. Mortgage Bankers Association.

Many apartments could wind up being sold at auctions like one held last month for bank-owned properties in Fort Lauderdale, further depressing prices in a market suffering its biggest condo glut in decades.

"You've seen some of it already. They are actually having auctions to try and sell units," said Theobald, when asked about discount sales involving recently foreclosed properties.

"I don't know where it's going to end up," Theobald said. "I don't know when the bottom is going to be."

Ken Thomas, a Miami-based banking expert and lecturer at the Wharton School at the University of Pennsylvania in Philadelphia, said there was little surprise Florida led the country in mortgage fraud.

It stems, at least in part, in the way lenders plowed "easy money" into the local condo market before Florida's recent housing boom turned to bust, Thomas told Reuters.

"We're going to see a lot more of this fraud being exposed, especially as these units go into foreclosure," Thomas said.

"We were the poster child of the housing bubble. Maybe we should have expected more of this."Dogg,

A buddy of mine's brother has just pled guilty to this exact thing in Georgia. The Fed's made him roll over and testify against all his buddies in the deal. And he's now awaiting sentanceing in US District Court in Atlanta. He's looking at 3 years at "Club Fed", plus all the fines and such.

To save anything, he had to put as much as he could in his wifes name and divorce her, the Fed's took the rest. Only thing good about this thing was the victom in the deal was a "Mormon Bank", the CockSuckers.

Exon

BundaLover
11-14-07, 05:35
And if I'm all wet, step and SHORT gold, corn, etc. If you think the opposite is true, put your $$$ where you mouth is and make some candy.I don't play with commodities I don't bet on black jack either. It is without logic that corn in 2007 is more valuable than corn in 2006 and likewise for the other nonsense. However as the market determines the price and not me I do observe and respect that there are large swings in commodity pricing. I don't give a shit what the so called professionals on Wall St have to say. They are all biased. They are all corrupt just look at their coverage ratings of so called independant companies (that happen to issue debt and stock via the investment bank cousins of the brokerage) Commision on turnover is the name of the game.

Its all a waste of intelligence to think about trading. It creates nothing. It produces nothing. Its a zero lump sum game. Some other idiot buys a contract and you sell one. Crack addicts, commodity traders, same thing.

Jackson
11-14-07, 13:59
Its all a waste of intelligence to think about trading. It creates nothing. It produces nothing. Its a zero lump sum game. Some other idiot buys a contract and you sell one. Crack addicts, commodity traders, same thing.Hi BundaLover,

Actually, that's not true. The consumers of these commodities (and I'm referring to manufacturers, not retail consumers) benefit greatly in their ability to use futures to lock in the price of the commodities they know they will need to use in the future.

For example, if you have a contract with the US Army to supply bread to their bases for the next year at a specific unit price, presumably at a relatively thin margin that would result from the competitive bidding process to which such a large contract would be subjected, you can reduce the risk of your profit margin being eroded by using futures to lock in the price of wheat at the time you submit your proposal.

Thanks,

Jackson

Pete Puma
11-27-07, 16:13
Great news Sid. Great news!

DrakeCapital
12-02-07, 22:48
I don't play with commodities I don't bet on black jack either. It is without logic that corn in 2007 is more valuable than corn in 2006 and likewise for the other nonsense. However as the market determines the price and not me I do observe and respect that there are large swings in commodity pricing. I don't give a shit what the so called professionals on Wall St have to say. They are all biased. They are all corrupt just look at their coverage ratings of so called independant companies (that happen to issue debt and stock via the investment bank cousins of the brokerage) Commision on turnover is the name of the game.

Its all a waste of intelligence to think about trading. It creates nothing. It produces nothing. Its a zero lump sum game. Some other idiot buys a contract and you sell one. Crack addicts, commodity traders, same thing.They provide LIQUIDITY! The whole purpose of all financial "market". A market brings buyers and sellers together, and holders that NEED to exit are able. That is how you get your mortgage, food, anything you use. Further, a "trader" can be many things. For example, I'll be long gold for years until everybody on earth realizes it's the only "safe" store of value. Holding sugar, wheat, oil, and everything you will have to buy at higher prices. That is how the world works. A "trader" is no different than a guy who sold his cows to buy corn / wheat from another farmer. It's trading. You trade work hours ($) for pussy. Get it?

DrakeCapital
12-02-07, 22:57
How do you explain gold being higher in 1980 than 1990?

You sound as though you've gotten spanked before by a broker, but don't let that stop you. Since you see corn being higher in '08 than 07. Buy and enjoy the ride. Prices of goods and services are not necessarily higher year after year. My point is that we ARE returning to that type fo market, with inflation driving prices significantly higher over the next few years.

If you don't like commodities or financials, buy land and make money. However, you are just "trading" again, because you didn't "create" anything. You just swithced the real estate into your possesion. Sounds the same to me!

Charbuck
12-03-07, 10:56
The housing market in the US really sucks right now. Sucky markets represent opportunity if you are patient and judicious. I've been looking at properties and developers are falling all over themselves cutting prices. If you are considering anything, just bring up the Conference of Mayors report that says housing prices are likely to fall 10% in the next year (actually it says 7.9% but who's counting) and say that you were thinking of buying, but you think waiting might be better. Wait then and see the reaction. It's winter in the US, which is traditionally slower anyway. Add to this fact that everyone is running scared and it's a good time to make a strategic low-ball offer. For example, in a city that I'm looking, places that were being offered by developers for $400,000 the summer before last have asking prices around $350,000 now, and that's just where negotiations START. You can make an absolutely silly offer with lots of demands if you have the money. If they turn up their nose there are a zillion other places to look right now.

Developers are taking losses now just to get out of projects because they understand economics. "Flippers," on the other hand are often just stupid. By God they aren't going to take a loss!" as the value of the place they can't afford to hold onto drops another $20,000.

Thomaso276
12-03-07, 17:17
One problem with these developments (especially condos) is the whole association can get screwed if units are unsold and the developer bails out.

Nothing like a half finished pool / clubhouse to enhance your ambiance.

And you are right about those "flippers" they are screwed one way or another.

I could not believe the prices in N. Florida last year 3-400 G for nothing condos.

El Perro
12-03-07, 17:27
If you want to see the mess as presented with the cold, hard facts check out:

http://www.foreclosure.com/

I haven't done an a-z look through the site. I check Florida from time to time. My brother, who owns property in the Keys, looks at it a few times a week. The figures in Florida are frightening enough, but at times not as bad as you would think they would be. For an explanation as to why, check out the "tax lien" section. A graphic graphic as to the trouble ahead (at least in alot of Florida)

Pete Puma
12-04-07, 01:43
It does give a person with lots of money plenty of options. At least now when I look at some properties I don't have to hear that dumb line about how this house won't last long. It will last and last. Those people who flip are just asking for trouble, most can't hang on and need to sell. There are plenty of shows on TV with people flipping and a lot of them go in way to deep.

DrakeCapital
12-05-07, 23:31
One problem with these developments (especially condos) is the whole association can get screwed if units are unsold and the developer bails out.

Nothing like a half finished pool / clubhouse to enhance your ambiance.

And you are right about those "flippers" they are screwed one way or another.

I could not believe the prices in N. Florida last year 3-400 G for nothing condos.Well said! I'm living in a brand new condo (finished 2 years ago) and they still haven't put up the front gate they promised. The place sold out the first 2 hours of bidding, but only about 20% actually came up with the money at closing. Another 'complex' down the street, same thing. All done.

Redondo
12-06-07, 05:25
It seems there will be some kind of bail-out plan by the state, just like I stated earlier in this topic.

It seems to me it's the only way but it looks like someday there have to be a big crash anyhow

BundaLover
12-10-07, 15:43
Still can't buy a house in San Francisco for under 700k that has running water and roof. Still multiple offers. Crap accross the bay is discounted and inventory is increasing. People who "owned" houses and put down essentially NOTHING are in the news "losing THEIR" house, the one they never owned, the one they paid below rent for, the one they could never afford. They will lose NOTHING because the had NOTHING invested. This is a major part of the problem. I could give a shit about idiot "investors" that "purchased" condos in Florida and other shit holes. Is the US Government going to refund the losses I had in the stock market? The solution is worse than the illness.

MadDrJoe
12-29-07, 03:02
"WASHINGTON (MarketWatch) -- Sales of new U. S. Homes fell by a more-than-expected 9% in November to a seasonally adjusted annual rate of 647,000, the Commerce Department reported Friday. Economists surveyed by MarketWatch were expecting new home sales to drop to a seasonally adjusted annual rate of 710,000 in November. Meanwhile, October's sales rate was revised downward, to rise by 711,000, or 1.7%. They were previously estimated to have risen to a seasonally adjusted annual rate of 728,000. In the past year, sales of new U. S. Homes are down 34.4% nationwide."

"Over the past decade, Wall Street built a market for more than $2 trillion in securities sold globally and backed by loans to U. S. Homeowners on two long-accepted beliefs and one newer one. The prevailing logic: The value of the American home would never fall nationwide, and people would almost always make their mortgage payments. The more recent twist: Packaging mortgage loans and turning them into securities would make the global economy more resilient if anything went wrong."

"House prices are down by 0.5% to 10% now, depending on the measure used. If they fell 30% -- what it would take to restore their historic relationship to inflation, rents and incomes --"

What they fail to mention the one belief that really mattered: the value of the US dollar. Investors were willing to go for packaged mortgages as securities because the belief was that the current situation with the US dollar would be temporary, so as the US dollar rose to its then perceived "normal" value, their investment would appreciate in real terms no matter what happened with everything else. This created a bubble of people willing to risk their money as lenders, dropping interest rates to ridiculous levels.

As the situation clarified, and investors became aware that the US dollar would NEVER rise to former levels against other world currencies, the interest rates were hiked to a level were they could at least match both inflation and currency risk.

This is simple arithmetic, you needed around 65 cents american to buy a canadian dollar in 2001, you now need 1.02 dollars to buy that same canadian dollar. That means that your dollar denominated assets are now worth 40% less than they were worth in 2001 (everything else being held equal) If you lent US dollars at.95 cents to the canadian dollar, or 90 cents to the euro or 58 cents to the pound and were expecting the exchange rate to readjust back to historical prices, what happened with the real estate market in the US would be irrelevant since no matter what happened this would not make a dent in those real gains from the currency appreciating. Hence, lots of money available at very convenient prices (interest rate is just the price of money)

Those expectations were proven erroneous, as investors realised that the US currency continues to drop in value consistently even with heavy central bank intervention.

What happens with a speculator when he smells losses? He panics and starts raising interest rates on those loans to try and minimise those losses. No more money is thrown into the pot, the price for the money already lent increases, people can't pay back their loans, everybody's loss. Really? No, not really. Just a speculator's loss. People at both ends behaved like speculators, and that's exactly what they were. The lenders gambling on the US dollar to recoup its value and the market to keep booming, and the borrowers speculating that the status quo at the time they borrowed would stand forever.

People that were smart enough to realise what was going on (like Soros) could see this coming from a million miles away. They'll hold off until the market finishes readjusting and are then going to pick up real bargains, not just perceived ones.

Housing prices won't fall by 30% , simply because the relationship to inflation, rents and income is only relevant when you're talking about real prices. That is, the purchasing power of your assets in relation to everybody else. The american currency drops its value, so prices in real assets must adjust to the new situation. Otherwise, it'd mean that the US economy is getting poorer, and that is most certainly not the case. If China starts selling all those US bonds they've been hoarding for the last few decades, things might become quite different, but that is not going to happen (yet)

America isn't getting poorer, some Americans are. It'll be interesting to see how the american economy deals with currency uncertainty and an increasing foreign debt they can no longer handle as easily as in the past. I can't imagine an economic crisis of catastrophic proportions happening, americans ain't argies after all, but some painful readjustments will have to be made, and very very soon. This is just the beginning.

Welcome to the 21st century, boys and girls.

Sinistra
01-29-08, 18:55
• Darker consumer mood.

• Home prices fall at a record rate. • Shiller says housing's getting worse. • Foreclosures surge to record high. • Buyers waiting for bigger bargains.• Irwin Kellner on why stimulus won't helpIf we assume the future is already discounted and if we're anywhere near the nadir, there's opportunity. Even if prices do fall a bit, you'd have to weigh that against the probability that interest rates may go up a point or so when the economy improves. Every point of interest would be about $65 per $100,000 financed, which also roughly translates into another $10,000 of buying power. If you wanted to buy a $500,000 place, even if the value dropped $50,000 but interest rates went up a point, you'd only be about even.

In other words: BUY! BUY! BUY!

El Perro
04-14-08, 09:48
There is an informative article on the front page of the NYTimes online this morning about declining real estate value in Europe, particularly in England, Ireland and Spain. As bad as the US and in some ways worse.

Redondo
04-14-08, 11:48
You didn't have to be Warren Buffet to predict that, but there are still plenty of countries in Europe where the real-estate market is still pretty sound.

Europe's economy is still pretty good and the value in Spain, GB and Ireland will go down but that's just a correction, in the US you will see a wave of foreclosures, that's not only a economic disaster but also a socially one.

Argento
04-15-08, 02:06
You didn't have to be Warren Buffet to predict that, but there are still plenty of countries in Europe where the real-estate market is still pretty sound.

Europe's economy is still pretty good and the value in Spain, GB and Ireland will go down but that's just a correction, in the US you will see a wave of foreclosures, that's not only a economic disaster but also a socially one.I guess I am really stupid. I assume everbody on this forum, if they care to, can read and not only that, read a daily paper. Redondo assumes differently. Obviously he feels that we all need a synopsis of the daily economic news that he gleans from the daily papers, re-interprets as he sees fit and then regurgitates it on this forum.

This is a polite request to Redondo. Give us your predictions and tell us where the 'pretty sound' real estate markets in Europe are. According to last week's 'Economist', all are over-priced and under great pressure to maintain their current values, some much more severe than others. The best are in Scandinavia but even they are slowing. So here is your big opportunity Redondo. Be the first in the queue with your predictions and stop dishing up the daily news as if it is your first ejaculation; great to you but of no interest to us at all. We have already read it!

Argento

CarneValistico
04-15-08, 04:45
Dear Argento.

You asked for some infos about sound real estate markets?

Ok, here are some infos:

First the general ones: please have a look at www.bluehomes.com

You may find there european wide offers, most of them with pics. The prices there are more than modest / so by far not overprised.

Now in detail:

10,8 hectar Land in Germany (in the city of Sellin / Island Rügen - click google)

This is a fresh project at the moment not on the market:

There you can have building land for abou 70-80 Holidayhouses 120m2 each.

The complete land will have a price about 2,8-3,5 Million Euros / 33.000m2

Buildingland, situated 150m away from the beach.

If you put that project into realisation you can have a professional holidayhome provider for free!

TrabenTrabach / Germany (click google for the former poststation)

Directly situated at the river Mosel, great and famouse wine area, 2000m2

Space, incl.580m2 roof - very very beautyful old " Tudorstyle " building,

Incl. 1500m2 yard. Ideal for pensioner home, and Hotel / Spa building PLUS.

10 years lasting of 10% taxreduction because its a historical monument.

Cost about 750.000 euros, Argento believe me, after 8 years of heavy losses on the german real estate market its just starting to recover.

Even prices in " Westgermany " are rather modest. Cologne, Düsseldorf, Aachen, Hannover, Hamburg (esp. Citycenter) are rather cheap in comparrison what it used to be.

To answer your question why I am not doing the mentioned projects:

I am in the middle to finish a big contract out of Germany, so I simply can not do it right now, but I def. Would.

So, hpe that helps a bit. In my point of view all newspapers regarding economy can't be that specific as the several markets in europe are. They can only asume in general.

Last thing: I builded 4 1Family houses in 2004, and wasn't able to charge more than 215.000 Euros each, in a very nice area / gardenland, close to cologne - just because the market didn't allowe higher prices. The houses had 4 rooms, 120m2 livingspace, 250m2 garden plus carparking.

Would you say that you get that in the US, lets say in Boston?

Just my point of you. All the best! Yours, C.

CarneValistico
04-15-08, 05:14
Dear Argento,

Forgive me - its me again.

Reagrding Skandinavia (Noraway, Denmark, Sweden, Finnland) there are about 35Million people living there all together.

Real estate market is depending on a so called ownersn quote. That means People who own real estate like houses and apartments.

A real estate market needs buyers, but exactly in Skandinavia more than 65% of the people have allready own estates. In Germany the quote is lower than 45 % , and (realy not a joke!) in 10 years each 2. German will be close to / over 50 years old. So you can imagine that only in the field of pensionere homes right now 1,5 Million apartments connected with pensionere treadment need to be build. At the same time in eastgermany tons of euros are invested to crack down the old socialistic panelhouses which do not attract any buyer.

That in all will be a reason to establish a new kind of housing. Apartments - 75m2 3 rooms - close to the centers, with an available medical service in combination. Believe me, that alone is a big big market.

Still my opinion, Yours, C.

Argento
04-15-08, 11:06
Dear Argento.

You asked for some infos about sound real estate markets?

Ok, here are some infos:

First the general ones: please have a look at www.bluehomes.com

You may find there european wide offers, most of them with pics. The prices there are more than modest / so by far not overprised., C.An ordinary enough pun on Bill Clinton's wall slogan. I know jack shit about the European and USA real estate markets first hand and really my post was to get Redondo to pony up some real, incisive information and predictions so we can shoot him down. He's slow but even he has grasped eventually, that the predictions he posted when he first came on the board, were 100% wrong. And there is no indication judging by his current attitude, that much will change soon. But I can read and 'The Economist' tracks these markets in some depth. I guess I would prefer their analysis of the reality of the situation, based on a combination of official government and industry information, rather than subjective opinions and prices asked by posters on web sites.

Argento

El Perro
04-15-08, 11:47
I can't speak to all of Europe, but if one does the required research it is not hard to see that there is going to be a huge problem in Ireland, England and Spain. And, yes Redondo, there will be alot of foreclosures in those countries. This was going to happen eventually with, or without, the USA subprime / credit mess. The process has just been speeded up. And, in the long run it is a good thing, just as it is a good thing in the states.

Redondo
04-15-08, 12:14
I can't speak to all of Europe, but if one does the required research it is not hard to see that there is going to be a huge problem in Ireland, England and Spain. And, yes Redondo, there will be alot of foreclosures in those countries. This was going to happen eventually with, or without, the USA subprime / credit mess. The process has just been speeded up. And, in the long run it is a good thing, just as it is a good thing in the states.No there won't, at least not even close to the mess the USA is in.

Spain: Foreign ownership (2nd homes) is huge and some people might leave, want to sell there property but they are mainly paid largely in cash (like in Argentina) The younger generation mainly rents, they won't suffer.

Ireland: The ones that have property in Ireland have mainly had those properties for years. Many people rent due to the relative new industries (google, etc) Rents will go down, but that does not mean there will be many forclosures. Ireland's mortages are mainly in the prime segment and the economy is still pretty good.

Engeland: It's more or less the same situation as in Ireland and also in the UK is still sound. London is overvalued like hell and construction will probally dry up but most people will stick to there homes and mortages.

Unless Europe goes through a major recession (which seems highly unlikely) Europe in general will be fine

Isola2000
04-15-08, 15:09
On real estate in Europe it is very different depending.

On country. The 4 largest in EU.

Germany, it is a rental market. Home ownership is probably the.

Lowest among the G10. Here no problem. German banks though.

Are very good at losing money outside Germany.

France, no problem. You have stamp duty on transactions.

Of close to 10 % for.

Properties older than 4 years which take out the specs.

You cannot get a mortgage without amortizing it over max 20

To 25 years. Have to put in min 20% on purchase.

Spain, potentially could be a problem but small in a European context.

Italy, to complicated and beaurocratic to attract any specs.

England had the crash summer 1989 to 92. Prices in top London.

Locations fell 25 to 30 % from summer 89 to bottom end 92.

Prices did not start to pick up until 1996-97.

Still, a long way to go for the former US hotspots before any recovery.

Redondo
04-15-08, 16:11
On real estate in Europe it is very different depending.

On country. The 4 largest in EU.

Germany, it is a rental market. Home ownership is probably the.

Lowest among the G10. Here no problem. German banks though.

Are very good at losing money outside Germany.

France, no problem. You have stamp duty on transactions.

Of close to 10 % for.

Properties older than 4 years which take out the specs.

You cannot get a mortgage without amortizing it over max 20

To 25 years. Have to put in min 20% on purchase.

Spain, potentially could be a problem but small in a European context.

Italy, to complicated and beaurocratic to attract any specs.

England had the crash summer 1989 to 92. Prices in top London.

Locations fell 25 to 30 % from summer 89 to bottom end 92.

Prices did not start to pick up until 1996-97.

Still, a long way to go for the former US hotspots before any recovery.Good post.

Germany has one of the lowest houseprices in the whole of the first world and life is extremly cheap. For someone who doesn't really care where to live, is not tied to one place and can get his money from other sources it's one of the best places in the world to live.

Isola2000
04-15-08, 17:58
Did see some comments on the Scandinavian real estate markets.

In that part of the developed world you will find the most.

Sophisticated part of the real estate market.

No stupidos, like the US banks, lending to whoever!

Redondo
04-15-08, 18:01
Did see some comments on the Scandinavian real estate markets.

In that part of the developed world you will find the most.

Sophisticated part of the real estate market.

No stupidos, like.

The US banks, lending to whoever!The subprime segment is only big in Europe in the UK, that's also were the bigest blows will be.

Isola2000
04-15-08, 18:53
Subprime can hit in the UK (not likely) and in Spain.

(more likely)

Germany, France and Italy never a problem.

The Russians now keeps buying everything, from.

Kensington in London to Marbella.

Hope this is what Reagan wanted?

Redondo
04-15-08, 20:09
Subprime can hit in the UK (not likely) and in Spain.

(more likely)

Germany, France and Italy never a problem.

The Russians now keeps buying everything, from.

Kensington in London to Marbella.

Hope this is what Reagan wanted?Foreign influx of capital, is helping limiting the blow.

I don't think the problems in Spain are really that big, there will be a big correction in the cities but prices at the countryside are still cheap (even for Spanish standards) and many properties in Spain are foreign owned with a small or no mortage.

Young Spanish people (and immigrants) mainly rent as they can not buy, they won't be hit neither

Argento
04-15-08, 21:46
Good post.

Germany has one of the lowest houseprices in the whole of the first world and life is extremly cheap. For someone who doesn't really care where to live, is not tied to one place and can get his money from other sources it's one of the best places in the world to live.Redondo, I am sure we could pony up the air fare if you undertake to move there permanently and cease posting. A good way out for all of us!

Argento

CarneValistico
04-16-08, 08:35
Dear Argento,

I am a provessional project developer for municipal needs.

In my post I tried to point out that first of all the european real estate markets are historicaly different. I tried to explain that owners quote is a key question about future real estate deveolpments.

I do agree with you that the economist is a good source (one of a few)

But however, a newspaper needs " deep roots " inside of a market to be precise. I honestly doupt that any general newspaper is able to be that specific in a certain market - without becoming as big as the bible, and I think its not nesseccary at all.

Quite often I am cooperating with IMF, IFC, and EBRD, and believe me these three institutions are the only ones, who have - as a result of their spreaded organisation - the real infos. They have it all fresh and firsthanded, like political, economical infos regarding a market - regardless where on this earth it might be.

Shooting down someone here might be your target, but we should avoid to go for a "skalp" of someone here, just because interaction would be poor.

Do you agree?

C.

Argento
04-16-08, 10:54
Dear Argento,

I am a provessional projectdeveloper for municipal needs.

In my post I tried to point out that first of all the european real estate markets are historicaly different. I tried to explain that owners quote is a key question about future real estate deveolpments.

I do agree with you that the economist is a good source (one of a few)

But however, a newspaper needs " deep roots " inside of a market to be precise. I honestly doupt that any general newspaper is able to be that specific in a certain market - without becoming as big as the bible, and I think its not nesseccary at all.

Quite often I am cooperating with IMF, IFC, and EBRD, and believe me these three institutions are the only ones, who have - as a result of their spreaded organisation - the real infos. They have it all fresh and firsthanded, like political, economical infos regarding a market - regardless where on this earth it might be.

Shooting down someone here might be your target, but we should avoid to go for a "skalp" of someone here, just because interaction would be poor.

Do you agree? Your stupid, C.I am sure "THE ECONOMIST" is a respected reporting magazine. As I said, I trust their reporting over and above Redondo and it has to be said, over and above a 'professional project developer for municipal needs', commenting on world property markets. 'The Economist's' contacts inside of the IMF, IFC & EBRD, would be better than most, consistent and reported in an unbiased form. Don't shoot me, I am only the objective messenger.

Argento

CarneValistico
04-16-08, 11:00
Man I love your humor, its sweet like battery accid, but I like it.

Stay that way.

Still smiling, yours, C.

And no, I don't shoot you, I'm gona burn you. Slowly!

Argento
04-16-08, 13:09
Man I love your humor, its sweet like battery accid, but I like it.

Stay that way:-)

Still smiling, yours, C.

And no, I don't shoot you, I'm gona burn you. Slowly!I am not trying to pick a fight or anything other than get objective comment. This forum is a non-contact game. Let's keep our eye on the ball and play to get it through posts and score goals. Roughing up opposing players by attacking them other than by objective discussion and objective criticism is a little boy's game. Redondo is the king of the kids. Most of his comments are his subjective interpretation of half understood articles or else some unsubstanciated statement. For example, today he posted a reply to Sidney's specific question of the cost of living in Chile, noting specific categories. Redondo posts with the bald statement of "20-30%". No proof, no examples, no nothing. Just pure bullshit. I was in Chile over the New Year. My comment, based on that experience, is that fruit and vegetables are twice as good and half the price. Meat 20% dearer. Accomodation a fraction cheaper for travellers. Booze the same. Fuel more expensive and the same for road tolls. Pussy I didn't check out as I took my own. Now the questions are. When was the last time Redondo was in Chile? What was his own experience? Why didn't he post that information if he had experienced it personally.

That's the point.

And CV, if you want to spar, I am always up for a challenge with these provisos: no hitting below the belt, protect yourself at all times, no punching in the clinches and when the referee demands, go to the neutral corner. And play the ball, not the man.

CarneValistico
04-16-08, 13:33
And CV, if you want to spar, I am always up for a challenge with these provisos: no hitting below the belt, protect yourself at all times, no punching in the clinches and when the referee demands, go to the neutral corner. And play the ball, not the man.

Thats my way too!

Argento,

I read all your posts here, realy all. A lot of them are quite " challenging " in direction of Redondo, I do not agree that it need to be that drastic - even if you think that he does not stick to the subject, or what ever disattracts you, but would it be a problem to reduce the bombardment, at least for the sake of the amunition? Some of your former posts are realy close to brilliant (no sarcastic joke) but could it be that there is also a difference in your two way of transporting your infos?

I mean, its up to you. But personaly I think you need not do that, regarding " hitting under the belt etc ", it somehow doesn't fit you.

Peace, C.

Argento
04-16-08, 22:22
I read all your posts here, realy all. A lot of them are quite " challenging " in direction of Redondo, I do not agree that it need to be that drastic - even if you think that he does not stick to the subject, or what ever disattracts you, but would it be a problem to reduce the bombardment, at least for the sake of the amunition? Some of your former posts are realy close to brilliant (no sarcastic joke) but could it be that there is also a difference in your two way of transporting your infos?

I mean, its up to you. But personaly I think you need not do that, regarding " hitting under the belt etc ", it somehow doesn't fit you.

Peace, C.There are no rules in knife fights. It's either kill or be killed. With Redondo, I am like a jilted lover. And as we know, hell has no fury like...

So let me explain. About a year ago, Redondo posted a response regarding the economics of internal inflation and exporting. To a working exporter, which I am, it indicated an economic ignorance of the realities of doing business in Argentina. I said as such, quite civilly, and suggested that it indicated he had no practical economic business training and / or experience. And further more, that we could meet up and after a discussion, whoever was right, they could buy the other a beer. Arrangements were made over the PM system, I attended the venue of Redondo's choice, waited an hour and had 2 beers and he didn't make himself known. A few days later, he PM'ed me saying he had been there but couldn't find me. He had a detailed description of me but I had such a vague one of him, (28 and fairish hair) that it was obvious he had no intention of meeting. Also in the later PM, he suggested another venue where we could meet. Once bitten, I am twice shy, so I begged off. As he has since admitted, he doesn't work, spends an inordinate amount of time plugged into the forum, comments on just about any and everything, wasted my time and he owes me a beer. More than enough grounds to put me off-side. So when Jackson allows, I challenge his unsubstantiated posts and pick him up on his inane and nonsensical opinions. He is like a scab on my skin. Uncomfortable but I get a perverse pleasure picking at it and occasionally drawing blood.

Suerte.

Argento

CarneValistico
04-17-08, 05:21
Ok Argento, go ahead.

When I come to BA, I try to bring 2 bottles of o good local brewed beer with me. You may accept one, the other is for Redondo.

You may have it together.

Yours, C.;-)

CarneValistico
04-24-08, 12:21
I totaly agree with you. For several reasons, at the moment, no one can realy say what are the right numbers of losses, nor that someone would like to show of in public, and anounce it.

In europe, you can ask every banker, in his lunchbreak, " are you worried "?

And of course they are, at the moment we see how allmost all institutions work together. Houseprices go down in the US, european banks are anouncing that the losses are " not so drastic " - which is not true.

All you can hear is, yes - its seriouse, but we can handle it.

Imagine, UBS / Switzerland, cuts 3000-4000 labour places, Royal Scotland Bank anounces heavy losses, now again in Germany are allready 35 Billions burned.

And the best is, these banks which anounce their losses are comitted to fair play. What about the Greek banks, Turkish banks, Italian banks as well, from so many banks you hear nearly nothing regarding losses. But at the otherside Bloomberg comunicates that all in all about 1000 Billions are lost so far.

I think it would be a good investment to buy a nice penthouse also in the US maybe Boston, or New York, something at the eastcoast because I have the felling that there the priceslide is heavier than at the westcoast.

. Or waiting a money earning argument?

Thanks for your post Sidney.

Yours, C.

Stan Da Man
05-23-08, 18:09
It's been an interesting time to own property, but the decline has been pretty predictable and logical, at least in my view. In accounting parlance, it might be described as LIFO -- last in first out. Those areas farthest from the center of metropolitan areas were the last to see sustained price inflation and are the first to get crushed in this downturn.

By contrast, houses nearer the center of major metropolitan areas are not declining, and many are even increasing. From the WSJ, which is consistent with my experience, as well:

Where Home Prices Are Holding Up.

By JEFF D. OPDYKE.

May 20, 2008; Page D1

Downtown: It's been among the safest places to hide from the housing downturn.

Much has been made of the way the nation's real-estate bust is affecting some American cities far more than others. But even within a single metro area, changes in housing prices can show wild variations.

And in big cities, prices in the central cores often fare the best. Far-flung suburbs -- where home building exploded in recent years -- have more typically gotten hammered. In between is a patchwork of established suburbs and city neighborhoods peripheral to downtown that can be all over the map in terms of price declines -- or even increases.

Consider the San Francisco Bay area. Overall, prices there slid 17% in the 12 months through February, the most-recent data available, and were down 8% over the first two months of 2008 alone, making it one of the worst-performing metro areas in the country, according to the S & P / Case Shiller Home Price Indices. Yet prices within the city of San Francisco are up 0.3% over the first quarter of 2008, according to DataQuick Information Systems, a San Diego-based real-estate-data firm.

For today's buyers, all this means that shopping for housing bargains is increasingly complicated. The best deals may be where prices have slid the most, but such areas could easily fall a good bit more before hitting bottom. Meanwhile, you'll get few bargains if you buy a home in San Francisco or Manhattan or downtown Boston. Of course, if the housing crisis broadens, the central core areas also could see price drops.

The article goes on to discuss about six different cities where the affluent urban car has been, thus far, largely oblivious to any downturn. Given the price of oil, there would seem to be some additional incentive to value a location closer to where most of the jobs are.

Dickhead
05-23-08, 18:59
However, the new housing market, in place of resembling LIFO, appears to be operating on a "FISH" system: First In, Still Here.

El Perro
08-07-08, 17:06
No there won't, at least not even close to the mess the USA is in.

Spain: Foreign ownership (2nd homes) is huge and some people might leave, want to sell there property but they are mainly paid largely in cash (like in Argentina) The younger generation mainly rents, they won't suffer.

Ireland: The ones that have property in Ireland have mainly had those properties for years. Many people rent due to the relative new industries (google, etc) Rents will go down, but that does not mean there will be many forclosures. Ireland's mortages are mainly in the prime segment and the economy is still pretty good.

Engeland: It's more or less the same situation as in Ireland and also in the UK is still sound. London is overvalued like hell and construction will probally dry up but most people will stick to there homes and mortages.

Unless Europe goes through a major recession (which seems highly unlikely) Europe in general will be fineIn England-a 40% increase in home repossessions in the first quarter of 2008.

Donkey Punch
03-05-09, 04:58
According to the National Assn of Realtors.I've been reading about wage deflation in some articles. With that in mind and lenders being more conservative, would homes still be affordable? NYC is still priced out of reach for many folks. IMHO I think prices in certain locales have more to fall.

Roicre
03-05-09, 20:38
Unfortunately the working girls have not gotten the memo about the economy.


I've been reading about wage deflation in some articles. With that in mind and lenders being more conservative, would homes still be affordable? NYC is still priced out of reach for many folks. IMHO I think prices in certain locales have more to fall.