Real Estate Crash thread

[Danno]

Danno. No shit the inventory around boulder is nil. Its bumping up the prices to what i think are crazy. I have seen 3/5 houses I looked at go under contract then fall thru. I wounded if the lenders are calling BS on some of the listing prices?

I have some vague interest in moving, either renting out the current place or selling, and while it is mostly just a dream, it's certainly a dream when there is nothing available at all. And not just in Boulder, that includes the surrounding "L" towns too. I did a search in Lafayette (I think that's where I was looking) and 5 of the 6 houses that came up in my search (homes between 250 and 350, IIRC) were under contract.

And yeah, this will slowly drive up the appraisals, but I'm sure you're right, that financing is falling through because the appraisals are coming in low.

[liv2ski]

And yeah, this will slowly drive up the appraisals, but I'm sure you're right, that financing is falling through because the appraisals are coming in low.

What my customers are telling me (loan officers) is that anything half way decent, close to areas where jobs can be found, has multiple offers on it and many of the offers are either a cash deal, or the buyers are willing to pay the difference over the low appraised value, so the appraisal is not an issue to the sale. Low down payment buyers (FHA or conv) that need an appraisal contingency are in many cases missing out on the nicer properties out there.

Well played Helicopter Ben. By changing the accounting rules so that banks no longer had to show delinquent loans on their balance sheets (so they looked solvent) the banks can allow these delinquent loans to sit there for years and wait for the FEDs ZIRP and eventual lack of inventory in prime markets, to pump prices back up, so they can slowly foreclose and release these properties to the market.

Get outside of these prime RE market/employment areas and do a Zillow map search. There are tons of homes for sale, prices still going down and lots of foreclosures.

We certainly are not in a normal, healthy RE market, in my opinion, when the FED is throwing everything they have at propping it up.

[Benny Profane]

Well played Helicopter Ben.

Only time will tell whether or not history sees him as hero or fool. I suspect as a reluctant pioneer in policy, and, you have to admit, he actually blew this thing back up in some places, and, at least, stopped the inevitable slide in others. An incredible feat. But, will it work in the end? I don't know how it could, but, as you say, it's saving the Too Big To Fail and Too Big to Prosecute banking system from imploding, while the rest of the world deflates.
Just kills me how much money is still being appropriated by housing, on a personal and macro level, instead of other places in our economy, after seven years into the crash. So many on the edge of their solvency just to play this game, and, if you listen to a lot of people, they think it's good that this is happening, and, want the sector to soak up even more of our precious capital, and make homes even MORE expensive that they are today. Really is madness, and, twenty years from now, one wonders how an electorate will behave that is not only well over a trillion+ dollars in debt for their education, but tens of trillions in debt for a roof over their heads. You know that they will be beating the drum for hyperinflation. It's the only cure. Will the bankers who run our country want it? If they can figure out how to make money off it, then, of course.

[H0G]

Closing on a property Wednesday where the buyer's mom (Realtor too) had huge concerns about the appraisal. Freaked out my buyers. Gotta love those armchair quarterbacks.

Appraisal came in at asking price (thank God). There were 3 backups with one being cash. If my buyer's didn't want to pay it, someone was going to. I haven't heard appraisals being a huge issue in the metro area.

Hedge funds are also picking up properties to rent and hold until is swings up even more.

[mud]

I have some vague interest in moving, either renting out the current place or selling, and while it is mostly just a dream, it's certainly a dream when there is nothing available at all. And not just in Boulder, that includes the surrounding "L" towns too. I did a search in Lafayette (I think that's where I was looking) and 5 of the 6 houses that came up in my search (homes between 250 and 350, IIRC) were under contract.

And yeah, this will slowly drive up the appraisals, but I'm sure you're right, that financing is falling through because the appraisals are coming in low.

In the last six months I've seen about 125 loans close in the Denver/Boulder area. On average I'd say most of the appraisals for refinances have been coming in10-20% above Zillow estimates and appraisals on purchases are coming in at or above contract price.
So far, none of the lenders I work with refuse financing because of appraisals coming out of CO.

[Benny Profane]

http://go.bloomberg.com/market-now/2...ll-the-people/

[meatdrink9]

We just listed one of our Denver properties for sale. We had two offers the first day and had over 20 showings lined up per day over the weekend. We're holding all offers until tomorrow and will decide which to go with then. I may finally get out of Denver 8 years after I left. In great shape BTW. If I sell both properties we'll walk with somewhere between 300-350K. I'm patient, waited out the crash, cash flowed the shit out of the properties during the crash and will now 1031 that money into more Ogden property. Glad the market is so hot out there. Happy to move my money closer to home.

[Danno]

In the last six months I've seen about 125 loans close in the Denver/Boulder area. On average I'd say most of the appraisals for refinances have been coming in10-20% above Zillow estimates and appraisals on purchases are coming in at or above contract price.
So far, none of the lenders I work with refuse financing because of appraisals coming out of CO.

Good to hear. And yeah, zillow is clearly fairly low on my property, I'm guessing to the exact tune you say, 10-20%. the big problem here is the lack of inventory.

[jimmyjames11]

Thanks for the beta Mud. Yea Danno sounds like we're looking in the same areas...I have seen a bit more come on the market so maybe we'll get something to look at..

[liv2ski]

MD9, glad to hear patience paid off for you. From one of the blogs I read:

Most people have a hard time with regular math problems, let alone complicated financial instruments like derivatives. So to think that most people are following the movements of the Fed and basing buying decision on this is somewhat unrealistic. The rush to buy homes today is driven by a different set of factors from the previous mania yet the psychology is the same. Underlying the motivation of many is a fear of missing out on higher prices and jumping in because the time is right. The comments in the last article highlighted many people that recently bought and their motivations. They run the spectrum and are truly valuable. It also discussed many that are actively seeking to buy and how they are encountering manic like behavior from current buyers. There is an insatiable demand for rentals from investors and big money is targeting prime markets. You would think that with all this rage, home sales would be solidly up. In fact, California home sales are down 3 percent on a year-over-year basis for the last month of data. When we look at US purchase loan originations we find the volume and amount being pushed out to be at levels last seen in the 1990s. What gives?

The non-existent home buyers

The housing market is largely being driven by investors. The noise that we are seeing is large money from both Wall Street and foreign money clogging up real estate across the US. Foreign money is more concentrated in targeted niche markets while big money is dominating places like the Inland Empire, Arizona, Nevada, and Florida. One interesting chart shows how distorted this current market is: http://www.doctorhousingbubble.com/w...+Love+SoCal%29

[4matic]

The non-existent home buyers

The hundreds of people at the open house next door and 20 offers the first day would suggest that home buyers do exist.

[Benny Profane]

The hundreds of people at the open house next door and 20 offers the first day would suggest that home buyers do exist.

How many could actually take it to closing?

[concretejungle]

How many could actually take it to closing?

I've got an unanswerable question too. Who looks for houses without knowing you can buy it?

[Benny Profane]

I've got an unanswerable question too. Who looks for houses without knowing you can buy it?

Oh, jezuz, plenty. Most people are pretty fucking stupid, in case you haven't noticed, and do especially stupid things with their financial life. Witness this ongoing debacle of a housing crash that so many think is over. Now they'll take their 80,000 gross salary into bank and expect to get a half million dollar loan with a minimal down payment. If they actually succeed, they'll be skating on thin ice and then defaulting after five years. They deserve to be beat with a stick.

[liv2ski]

The hundreds of people at the open house next door and 20 offers the first day would suggest that home buyers do exist.

If you look at the charts, nationally current mortgage applications for purchase transactions are very weak (but your area may be hot). Whether that is because few can actually qualify for a home loan or in fact the volume is limited due to inventory restrictions will depend on the area. But if you read all the data, the normal individual home buyers out there are pretty low. Once rates go up another .75% and all the refis go poof, it is going to be hard times for us folks in the mortgage origination businesses, as there just are not that many purchase loans being done.

[Hugh Conway]

I've got an unanswerable question too. Who looks for houses without knowing you can buy it?

Go to an open house in the neighborhood and count how many neighbors are there shooting the shit or just being a lookie-loo. The more expensive the house the more the lookie-loos. Same with cars.

the fluffing is funny as shit as the bay area's more economically rotten than it was 5 years ago, so this is an even dumber bump

[St. Jerry]

NYC real estate has really picked up this past month. We went from zero offers for the past year to four in the past two weeks. Same with other sellers in our building.

[Toadman]

Go to an open house in the neighborhood and count how many neighbors are there shooting the shit or just being a lookie-loo. The more expensive the house the more the lookie-loos. Same with cars.

I have a relative that loves to go to open houses in their area. Heck, just driving around, and seeing an open house sign is enough to get them wanting to stop and check it out.

Lots of new construction going up in Eastside Seattle. Doesn't take long for the new stuff to sell. Every nook and cranny is getting schralped and built on these days. Nutz.

[cramer]

Right. Even in the short term, it still adds up to quite a substantial amount, as in I'd much rather put those many thousands of dollars toward my next car, remodeling, etc. I don't mind principal and interest payments. I don't mind insurance and property taxes. What I do mind is paying a large fee for what amounts to be one of the biggest rackets ever. If the banks are supposedly hurt by all the foreclosures, then where did the PMI money and coverage go? Isn't that what it was for? I'm still confused as to where the heck that money truly goes. Giant institutionalized scam? It would appear so.

Well, ive been paying pmi for 4+ years now. I wouldnt call 100 a month a substantial amount. I would call me putting down 46k on a house a substantial amount for an uncertain housing market. If i had to pay the 100 a month over the life of my loan I still would not touch that original figure on down payment. I wouldnt call it a scam, id call it them taking a risk on someone like myself who has had a risky past but has low debt and makes some low to middle money for my area. 4 years later, it seems they took a good risk. My house is worth more money now. I had to wait 4 years, but got to put some improvement in my house to make it the prettiest on the block inside and out. FHA's were designed for people like me. Get your foot in the door and take advantage of it. I'm in the sf bay area. I have zero family down here. I've probably spent well over a quarter million dollars in rent over the last decade. At some point, its nice to get an opportunity. It was designed for the lower class folks like myself. At around 100K a year income combined at the time(wife was part time due to health issues), i was lower class where i live. Thus FHA was the only option.

Either way, some solid advice here. If you are at 7%, get it to 10% and get a conventional. The reality is, unless i wanted to live in a dump, 10%-20% wasnt happening. I had a kid to think about, schools, etc. Everyones situation is different. If you can save the money, save it and put down a bigger down payment. Especially if you arent in an area like ive lived the last 15 years.

in this area, if you can get your hands on some real estate, you do it. Other area's i'd had done it completely different. I'd probably be looking now, not back in 2008

[MontuckyFried]

It was designed for the lower class folks like myself. At around 100K a year income combined at the time(wife was part time due to health issues), i was lower class where i live.

100k/yr is lower class?! Quarter mil in rent over a decade?! Yikes! You Californians certainly are in your own little bubble of a world. And now your real estate market is booming again, bound to bubble and crash again, and again, and again. Something is certainly different about the real estate mentality out there, that's for sure.

Paraphrased dialogue I've actually heard on several occasions in more than one state I've lived in:
New guy fresh from California: "I sold my dump in CA for a cool mil. The seller only wants $125k for this nice house? What a deal! I'll give them 200k to make sure I get it. And while I'm at it, I'll take 4 of them, live in one, and rent the other 3 out at super high prices! I'm driving the market up too high? Screw the locals. That's how we do it in Cali! Hey, everybody can put no money down, do 50-year loans, interest-only loans, etc., right? What, they can't? Oh well."

As opposed to the local residents where the dialogue's more like: "Eeash. The seller wants $125k for this house? Not worth it. I'll give them $120k. Crud, some dude from California offered them 200k? Dammit. Now I can't afford to buy in my own neighborhood anymore!"

And thus the cycle of real estate idiocy continues...

[Benny Profane]

Yeah, but, nobody is going to get the rents they expect. Especially if they flood the market with more rentals.

[13]

Just signed purchase agreement on a 3bdr/2bath before things get too out of hand.

Our first offer was $4k over appraisal and we got beat by an offer $12k over appraisal. Unbelievable.

[liv2ski]

^^^^Wait, in Michigan???? GTFO What city?

[Mazderati]

Only big bids and suitcases full cash need apply in Boston proper. People offering $80k over asking on $550k property.

Article

On the other end, a Saudi Sheikh paid $14.5m for what is now Boston's most expensive single family home.

[13]

^^^^Wait, in Michigan???? GTFO What city?

1100 ft^2 in Livonia. Listed/appraised at 160, sold for 172.

House was listed on a Thursday, showings on Sunday w/ 15 bids.