Real Estate Crash thread

[ass-to-mouth]

Should I buy a house this year? Nah, the weathers bad. I'll wait till next year.

Existing home sales drop 3.8%

Ben Rooney June 21, 2011: 12:14 PM ET

NEW YORK (CNNMoney) -- Sales of existing homes fell in May, as severe weather and high gas prices weighed on the shaky housing market.

Home sales fell 3.8% to a seasonally adjusted annual rate of 4.81 million, down from a revised rate of 5 million in April, the National Association of Realtors said Tuesday.

Sales were more than 15% lower than in May 2010.

Economists had expected a May sales rate of 4.79 million existing homes, according to consensus estimates from Briefing.com. (Read: Five years, no mortgage payment)

"Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May," said NAR chief economist Lawrence Yun.

Gas prices surged earlier this year, pinching household budgets and putting a damper on consumer spending. In addition, sales were hurt by tornados and flooding in May that devastated parts of the South and Midwest.

[Benny Profane]

Should I buy a house this year? Nah, the weathers bad. I'll wait till next year.

Ah, yeah, the weather thing.

The four worst markets (besides Detroit) are Vegas, Pheonix, SoCal, and Florida, all of which have wonderful weather this time of year. All never see snow.

[powder11]

Ah, yeah, the weather thing.

The four worst markets (besides Detroit) are Vegas, Pheonix, SoCal, and Florida, all of which have wonderful weather this time of year. All never see snow.

You just listed some of the biggest shitholes in America. Yeah, there's really nice homes in every market, but I guarantee the average house in each of those markets is a total shithole.

[Benny Profane]

Well, shit, the weather's nice.

[cramer]

^^^ Cramer, every area is different as far as what value the properties have fallen to. Some are selling at 2002 levels, others the late 1990's. You can look at Zillo.com to see what other comparable homes have been selling for. You should talk to a few agents and ask them for closed comps and their opinion on the value trend. In CA, it is down, that is why I suggested people interested in rentals may want to start doing their homework and look at areas over the next 12 months, so a rational (not spur of the moment) decision is reached.
If an area is down 60% off it's 2006 highs, and has stayed stable since 2009, your likely close to a bottom. But if it is only down 30%, I would wait to see what happens. Also look at the cost per sq ft. Once you get below replacement cost, ($100 a sq ft?) it is hard to imagine it will tank a bunch more, but you need to do your homework.

Thanks, ya i need to look in the area im looking to buy. I'm more looking at condo's going for about 70-80K in concord, ca. They were selling for 300+ during the boom. I can rent it out as income for probably 1200 a month. It also would give me something to fall back on if i were to lose my job. I could rent my primary out and keep my house and afford the 800 payment on a condo pretty much doing anything. The downfall on a condo is homeowners and i heard homeowners can come after you for big bucks if they dont have the funds. Which right now, all the foreclosures on these things, i think im going to nix that idea. I may start looking for small little fixer /upper houses that i can put enough into it to rent out and renovate over the years as a project. Mainly, like a 2nd car, i'd like something to fall back on. I have 2 cars about to be paid off in the next year. That frees up a house payment pretty much and we both had our "new" cars now. I'm going back to 10K car and low payments if not bought outright for the next 10 years.

[liv2ski]

You just listed some of the biggest shitholes in America. Yeah, there's really nice homes in every market, but I guarantee the average house in each of those markets is a total shithole.

Powder, we can find shit holes anywhere people live. It may be just me, but SoCal is a pretty nice shit hole to live in. Google 92118, as I can guarantee you the average home in my area is no shit hole. My place is a few blocks from the beach, the water is warm compared to Tofino, so you get to surf with girls in bikinis. Tell me this doesn't look great to you: http://www.tetongravity.com/forums/s...8maybe-nsfw%29 Really, where I live is pretty tough to beat if you like the city and like to surf. BTW, I will take the RE prices in the areas mentioned over Vancouver any day

[cramer]

Powder, we can find shit holes anywhere people live. It may be just me, but SoCal is a pretty nice shit hole to live in. Google 92118, as I can guarantee you the average home in my area is no shit hole. My place is a few blocks from the beach, the water is warm compared to Tofino, so you get to surf with girls in bikinis. Tell me this doesn't look great to you: http://www.tetongravity.com/forums/s...8maybe-nsfw%29 Really, where I live is pretty tough to beat if you like the city and like to surf. BTW, I will take the RE prices in the areas mentioned over Vancouver any day

yeah, ive never heard of anyone calling so cal a shithole. I was dating a girl down there for a couple years and i'm leaning on the side that so cal is fucking great. Especially san diego...Granted i was only down there once a month, but fucking loved it. Every single person i know thats moved up to the bay area from there is looking to move back down. As for the average house in the market, you'll have a house with a pool cheaper than you are paying in rent in all those markets. It seems some people have some wool pulled over there eyes on this forum. Houses are dirt cheap now, cheaper than rent. Give me your zip code and show me the house you are going to rent thats less than a house payment. I'm all ears. Rent is going up, mortgages arent.

[Pow4Brains]

All never see snow.

Well, shit, the weather's nice.

And there inlays the flaw.

[liv2ski]

Should I buy a house this year? Nah, the weathers bad. I'll wait till next year.

According to this guy, you should wait a few years:

So far, the Fed's actions have done more good for asset prices like stocks (see: S&P 500 chart since 2009) while doing less to help the economy (see: June jobs report). U.S. gross domestic product grew just 1.9% in the first quarter of the year. For 2011 as a whole, the Fed forecasts U.S. GDP growing at 2.7% to 2.9%, which is lower than the plus 3% forecast they made in April.

Today's guest, Gary Shilling, President of A. Gary Shilling & Co. and author of the Age of Deleveraging says another recession is brewing -- no matter what action the Fed takes. "Economic growth here and abroad is slipping, making a 2012 recession a distinct possibility," he writes in his July newsletter. And, "when you have slow growth it doesn't take much of a shock to throw you in negative territory."

Shilling says the shock to trigger the next recess is "another big leg-down in housing." (An asset class the Fed has not been able to reflate.) As those familiar with Shilling know, his forecasts are generally bearish. However, in his defense, Shilling was one of the few economists who correctly predicted the dangers of the subprime mortgage market and its impact on the broader economy.

The problem with the real estate market remains excess inventory. Based on Shilling's research, there are 2 million to 2.5 million excess homes in the country -- a supply that will take 4-5 years to work-off. The result: Housing prices will fall another 20% and underwater mortgages will balloon from 23% to 40%, he says.

With housing slumping again, Shilling says recession is coming to a town near you in 2012.
http://finance.yahoo.com/blogs/daily...161445494.html

[iceman]

Hey Benny, see the NYTimes today? front page, top left? You know you did. How come all is silence when something contrary to your and L2S' doomsday daydreams is in the news?

[retirwntm]

going to miami? i think that market is unique with cash rich foreigners that are coming in to clear the markets now that prices have fallen.

[iceman]

I agree that there are unique aspects to that market but think that the Miami market will be known down the road as a bellwether not an outlier. The forces of population expansion, more expensive and scarcer raw materials and greed will not be denied for much longer. Benny's going to miss the expansion though. He specializes in downsides.

[Benny Profane]

Yeah, I saw that. They were a few weeks behind Bloomberg on that one.


Ice, the key quote in that article http://www.nytimes.com/2011/07/27/bu...q=miami&st=cse was "Two-thirds of the sales were all cash." Brazilian cash, that is. If I was a Brazilian with cash, a deal like that would be a no brainer, with the exchange rate as it is. I'd buy two or three condos.
Have you ever been to modern Miami? It isn't really America, you know. More of an exotic border town to all of South America with a ton of Euro trash money mixing in too. Go over to Tampa or up to West Palm and tell me that Florida is reviving in any way.

[liv2ski]

Hey Benny, see the NYTimes today? front page, top left? You know you did. How come all is silence when something contrary to your and L2S' doomsday daydreams is in the news?

Hey Ice, I said this to you about 6 months ago and I will say it again. In 12 months, I send you a bottle of 18 year old Highland Park if the 20 city composite index is better than it is today at 140.95. If not, mail me one.

Looks like Iceman was correct: June 2012 Composite-20 142.21
So pm me what address to mail you a bottle to.

[iceman]

So let me get this straight: you want to bet that things get worse? Seems kinda grim but it's not altogether surprising from you.

I already placed a lot bigger bet than that back in January but it doesn't have a 12-month window. But sure I'll take that bet. Just remind me of it in a year.

Benny, c'mon. When things were tanking in Miami you were quick to use it as an example over and over. Now you say it doesn't count. You can't have it both ways. I say it counts and it's rising first and fast for a number of reasons, one of which is the amount of foreign money available. But it's hardly the only reason. Foreigners are investing because they see a chance to make money. Just because they're foreign doesn't mean they are stupid.

[Benny Profane]

I didn't say Miami, I said Florida. Miami is to Florida as Manhattan is to the Tri State. It's an international city, catering to import export, illegal, and trash money. I used to visit friends in a condo building on Key Biscayne, and they were the only people living in the building. The mailboxes were all spanish names. Nice investment if you live in a banana republic and have to escape to somewhere in a hurry.

I'll take that bet, too. Easy money.

[iceman]

Spanish names in Miami? Shocker. No matter how many foreigners are blasting around Biscayne Bay in Fountains wearing tee shirts and pastel sports jackets it's still an American city and subject, with some limitations, to the same economy the rest of us are living in. The bottom line is that there's still a ton of money around and it has to find a place to live. Big Money sold all these homes to people, took 'em back and now wants to sell them to them again. It'll happen. Just wait.

[AdironRider]

To be honest, despite being all smarmy, Benny has a point in that downtown Miami is not he best overall indicator for the nations housing market. I spent two months down there on assignment last year and the main drags of Miami, Ft. Lauderdale, and Palm Beach still looked banging. Ferraris everywhere. You would drive one block and it all went to shit, for sale sign after for sale sign. Rent was sky high. Jobs sucked. It was pretty depressing and I got out of there as fast as possible. Regardless of Benny's cynical view on life, Im not taking Miami high rises selling as a good sign for America.

[Hugh Conway]

Spanish names in Miami? Shocker.

The bottom line is that there's still a ton of money around and it has to find a place to live.

The bottom line regarding Miami (and New York) is that there's a ton of foreign money finding a place to live there that hasn't found many other places to its liking. Half of fucking South America dumps their illegal cash in Florida.

[liv2ski]

LOS ANGELES (AP) — "Most of the nation's largest metropolitan areas are seeing a sharp drop in foreclosure activity as banks take longer to move against homeowners who are behind on their mortgage payments.

In the first half of this year, 84 percent of metropolitan areas with a population of at least 200,000 saw their foreclosure rate drop versus the same period last year, foreclosure listing firm RealtyTrac Inc. said Thursday.

The firm tracks notices for defaults, scheduled home auctions and home repossessions — warnings that can lead up to a home eventually being lost to foreclosure.

All told, foreclosure activity declined in 178 of the country's 211 largest metropolitan areas during the first six months of the year.

The decline is due to delays in the foreclosure process as lenders work through foreclosure documentation problems that first surfaced last fall. Those problems prompted them to resubmit paperwork on many properties that had been slated for foreclosure and led to a slew of government investigations of the mortgage industry.

Mortgage banks also have put off taking action against newly delinquent borrowers in order to try loan modifications or other tactics aimed at avoiding foreclosure. Lackluster home sales this year also have provided little incentive for lenders to evict homeowners and chance having the property sit empty and unsold for months.

Some 1.7 million potential foreclosures are being held up, according real estate firm CoreLogic.

The slowdown in foreclosure activity has been most pronounced in states where courts play a role in the foreclosure process and now have to wade through a logjam of cases".

Ice, not that I want things to get worse, I just don't mislead people when I know the truth. It is to bad you think I am such a rotten bastard. You don't get me.

[skiballs]

I just don't mislead people when I know the truth.

Beware the man, that claims the truth, as his own.

[iceman]

Beware the man, that claims the truth, as his own.

Exactly. L2S, you think you know the truth. I think you are actively rooting for an outcome that, while possible, is hardly certain and which I believe is unlikely. Why you would want things to end up in destruction I don't know, and I'm not gonna bother worrying about it. But like a member of the god squad or a reformed drunk, you think you have seen the light. You are convinced of it beyond the point of rational discussion, so there's no point in discussing it any further.

Benny I understand. All the shit he had got taken away by bad shit happening in his career, bad investment decisions and a bad divorce and he wants to see the ex (and pretty much everyone else) go down the tubes too. I get that. But you I don't get. If you ever come up for air let me know.

Why the fuck Benny doesn't move back to Summit, where he was actually happy for a while, is also beyond me.

[retirwntm]

i am about to practice psychiatry without a license, so avada kedavra, or carpe diem or whatever.

i think L2S worked for one of the mortgage originators - in cali - maybe even actively participated in some of those liar loans (not calling you out, L2S) ninja loans, I/O's etc. maybe he was a loan broker or originator - is that accurate? maybe for wamu for one of the now defunct lenders out west. my point is, he's been in the belly of the beast and seen the bile (maybe). if so, its pretty hard to get that shit off of you. it can infect you and effect the very way you view life.

i spent some time with an ugly bitch (professionally). it definitely changes you, especially when you are through the looking glass. everything was put in to perspective for me when i walked away unharmed almost 10 yrs. ago and i watched others that didn't. after that, i learned it became much easier to disconnect and over the next 6 months, i made a plan, and in a year, i walked away and didn't look back. it was a soul saving decision for me.

L2S, you seem to be SOOO hell bent on the outcome. maybe you need to walk away? who cares if everyone defaults anyway? if the mortgage market is left in a miasma for 5 yrs? the big banks hold most of the paper, along with many, many international investors that knew, or should have known what they held. its called an investment. it carries risk. the risk is spread throughout the world. if you were dumb enough to make mortgage risk a huge portion of your book, and not diversify your risks, that is why darwin did the research. if you were greedy, you learned your lesson. its not like the old days when you'd walk out of the cave and be eaten by a tiger.

in summation, buck up butter cup let all this shit go, and start a new hobby (in the off-season).

[Eldo]

I think people are taking L2S a bit too seriously with his internet hobby of doomsday titillation.

Sure, it seems like the guy is a five-piece band stuck on one note, but come on, there is no indication he really believes any of the stuff he posts. He didn't sell his own real estate 50 pages ago in this thread, and he wouldn't sell it now even though prices are sure to go lower.

I don't think he has quit his profession for something else, or started stockpiling food, or picked up and moved to Canada, or even reined in the financial tastes of his family.

It's all just a bit of train-wreck watching, and hoping to see a bit more carnage before it's done.

Or, L2S truly believes the end of America is near, but is too scared to do anything about it because of his wife.

[Benny Profane]

Exactly. L2S, you think you know the truth. I think you are actively rooting for an outcome that, while possible, is hardly certain and which I believe is unlikely. Why you would want things to end up in destruction I don't know, and I'm not gonna bother worrying about it. But like a member of the god squad or a reformed drunk, you think you have seen the light. You are convinced of it beyond the point of rational discussion, so there's no point in discussing it any further.

Benny I understand. All the shit he had got taken away by bad shit happening in his career, bad investment decisions and a bad divorce and he wants to see the ex (and pretty much everyone else) go down the tubes too. I get that. But you I don't get. If you ever come up for air let me know.

Why the fuck Benny doesn't move back to Summit, where he was actually happy for a while, is also beyond me.

Hey, WTF? Now you're resorting to personal attacks based on some imagined facts about my life? Screw you. What the fuck do you know about my career and investments? Both aren't doing too bad right now, not that it's any of your fucking business. And my divorce was quick and clean, hardly as bitter as most I've watched. Barely lost shit in the deal over the long run. But, again, what's it to you?
Bring some facts to the table next time or STFU. Making shit up about the dude on the other side of the argument is major weak.

And, I don't live in Summit because I have to work for a living. Ain't that a fucking bitch. You know, work.