Real Estate Crash thread

[Benny Profane]

Not 100% true. If it was a purchase loan, think 80/20, the lender has no recourse. It is the equity Heloc/2nd that the lender has recourse on. And yes, a shit load of those were done 2004-2007.

More like 1986-2007. I look at that as the dividing line between my parent's (depression kids) and the boomer's attitude towards debt. My parents and their contemporaries would've considered a second mortgage an insult to their life's financial goals, one of which was to pay off the house as soon as possible. But, when Raygun made credit card debt non tax deductible, banks started marketing equity loans as the path to more stuff and happier times. I know a few people who basically have no equity in their homes at all and are approaching 60. But, they have a lot of stuff and memories of nice vacations.

I made a call about six months ago that Florida real estate was a good investment and would rebound, but that isn't happening. I blame boomers stuck in their MacMansions up north with mortgages until they die and no market to sell. They'll be working 'til the end. I'm hoping that this also happens to Colorado ski mountain condos, but the rental income skews that market.

[Tips^Up]

I'm looking at the typical first-time homebuyer money and this is what my realtor just sent to me. Interesting, in my price range, it is a SELLERS market.

1) Denver home values increased for the 4th consecutive month in June (we are still compiling data for July and August but the numbers look good)!

2) Two million first-time home buyers will have taken advantage of the $8000 tax credit by the end of 2009. ARE YOU A FIRST-TIME BUYER STILL THINKING ABOUT PURCHASING A HOME? IF SO, NOW IS THE TIME TO ACT. AS OF 11/30/09 THIS CREDIT GOES AWAY WHICH MEANS YOU SHOULD BE SHOPPING NOW!

3) The national inventory of homes on the market has decreased almost 11% from the same time last year. Denver inventories are down 20-30% depending on the neighborhoods where you may be looking to purchase a home! Less inventory, more buyers and still historically low interest rates equates to a seller’s market in many areas (believe it or not)!

[Benny Profane]

Let me guess - that new job you got in Denver is selling real estate or mortgages, right?

[Hutch]

I'm looking at the typical first-time homebuyer money and this is what my realtor just sent to me. Interesting, in my price range, it is a SELLERS market.

1) Denver home values increased for the 4th consecutive month in June (we are still compiling data for July and August but the numbers look good)!

2) Two million first-time home buyers will have taken advantage of the $8000 tax credit by the end of 2009. ARE YOU A FIRST-TIME BUYER STILL THINKING ABOUT PURCHASING A HOME? IF SO, NOW IS THE TIME TO ACT. AS OF 11/30/09 THIS CREDIT GOES AWAY WHICH MEANS YOU SHOULD BE SHOPPING NOW!

3) The national inventory of homes on the market has decreased almost 11% from the same time last year. Denver inventories are down 20-30% depending on the neighborhoods where you may be looking to purchase a home! Less inventory, more buyers and still historically low interest rates equates to a seller’s market in many areas (believe it or not)!

Typical objective analysis from an agent. "BUY NOW OR YOU ARE AN IDIOT!"

Sellers' market my ass.

[Eldo]

...this is what my realtor just sent to me. Interesting, in my price range, it is a SELLERS market.

...
3) The national inventory of homes on the market has decreased almost 11% from the same time last year. Denver inventories are down 20-30% depending on the neighborhoods where you may be looking to purchase a home! Less inventory, more buyers and still historically low interest rates equates to a seller’s market in many areas (believe it or not)!

Except that listings a year ago were probably at record levels and about double the historic norm. So a drop of even 30 per cent is still a massive buyers market.

Realtors, obviously, tend to put a positive spin on things.

[Toadman]

I'm looking at the typical first-time homebuyer money and this is what my realtor just sent to me. Interesting, in my price range, it is a SELLERS market.

1) Denver home values increased for the 4th consecutive month in June (we are still compiling data for July and August but the numbers look good)!

2) Two million first-time home buyers will have taken advantage of the $8000 tax credit by the end of 2009. ARE YOU A FIRST-TIME BUYER STILL THINKING ABOUT PURCHASING A HOME? IF SO, NOW IS THE TIME TO ACT. AS OF 11/30/09 THIS CREDIT GOES AWAY WHICH MEANS YOU SHOULD BE SHOPPING NOW!

3) The national inventory of homes on the market has decreased almost 11% from the same time last year. Denver inventories are down 20-30% depending on the neighborhoods where you may be looking to purchase a home! Less inventory, more buyers and still historically low interest rates equates to a seller’s market in many areas (believe it or not)!

Did your realtor send you this too?

Any optimists touting a housing recovery might want to pause and think about this: Amherst Securities Group analysts believe the market faces another major hurdle because about 7 million properties that are likely to be seized by lenders have yet to hit the market.


The "huge shadow inventory" reflects mortgages already being foreclosed upon or now delinquent and likely to be and, assuming no other properties are on the market, it would take 1.35 years to sell this inventory based on the current pace of existing-home sales, analyst Laurie Goodman wrote in a note to clients.


In 2005, there were 1.27 million properties in the same situation.

[DictatorShooter]

....My parents and their contemporaries would've considered a second mortgage an insult to their life's financial goals, one of which was to pay off the house as soon as possible. .....

...seems like this is the new "life's financial goals" also. At least for me, that's the number 1 financial priority going forward. Not really looking to buy cheap real estate and try to flip it, not trying to make money in the stock market...just pay off the freaking house(s). So, the banks are gonna get fucked either way. Either people walk on their loans, or people pay them off and don't look for any more home loans....ever.

[Benny Profane]

Did your realtor send you this too?

And then, you also have to consider the "shadow inventory" of millions of homes kept off the market just waiting for the prices to come back to, oh, '06, '02, or even '99 levels. They'll have to sell sooner or later. Or the estate sale will take care of that.

[khakis]

...seems like this is the new "life's financial goals" also. At least for me, that's the number 1 financial priority going forward. Not really looking to buy cheap real estate and try to flip it, not trying to make money in the stock market...just pay off the freaking house(s). So, the banks are gonna get fucked either way. Either people walk on their loans, or people pay them off and don't look for any more home loans....ever.

I disagree. Leveraging is one of the oldest tricks in the book for building wealth, and as long as the tax benefits remain, having a home mortgage is one of the easiest and smartest ways to do it.

[Platinum Pete]

...seems like this is the new "life's financial goals" also. At least for me, that's the number 1 financial priority going forward. Not really looking to buy cheap real estate and try to flip it, not trying to make money in the stock market...just pay off the freaking house(s). So, the banks are gonna get fucked either way. Either people walk on their loans, or people pay them off and don't look for any more home loans....ever.

Just paying off the house won't do much for your retirement plan. The days of pensions are about over, social security is fucked - unless you've got some other assets paying you cash then having your house paid off is just one less bill and you've gotta keep working. I don't even want to wade in to the murky waters of 401ks and the future of the stock market with the baby boomers pulling their money out - that's dark territory. Seems to me, real estate is still going to be a good bet moving forward (though it has changed as an investment) and banks are still going to be a big part of the financing of real estate.

[Benny Profane]

Leveraging is one of the oldest tricks in the book for building wealth, and as long as the tax benefits remain

Well, there you go. Bernancke loves you, and needs you.

Obviously, your parents are much younger than mine. Boomers?

[Tips^Up]

Let me guess - that new job you got in Denver is selling real estate or mortgages, right?

close, pizza delivery

[khakis]

Well, there you go. Bernancke loves you, and needs you.

Obviously, your parents are much younger than mine. Boomers?

Yes, but they are very conservative financially, and about all they ever taught me about finances was to not get into credit card debt.

[skier666]

Typical objective analysis from an agent. "BUY NOW OR YOU ARE AN IDIOT!"

Sellers' market my ass.

Even the strongest markets have taken a hit. Its not even close to becoming a sellers market. In the cities, too many hi-rise condos were built. In the suburbs, too many of those new 'cram as many as you can' subdivisions. Rates are low, but its going to be a while until prices appreciate if it all. Of course, they may be a few exceptions. Remember when your friends were getting 0% down interest only mortgages just a few years back? Well, I wonder if they are upside down in their homes?

[ass-to-mouth]

close, pizza delivery

I can't tell if he's serious or just taking a shot at Benny.

[mcsquared]

Everything goes in cycles. The generation who struggled during the great depression scratched and clawed to make a buck, their children vowed that they would live better than their parents did, and busted their ass to build this nation in the post war era. The next generation followed their example and tried to create a better quality of life for their children, but had to take on more risk to do it. The cycle of wanting to "live" better than your parents did had to blow up at some point. And here we are. It will all happen again.

As far as it being a sellers market in Denver. Well, there is a lot of activity below a certain price point, but sellers aren't exactly making a killing. A buddy of mine is shopping for a house and since he is out of town for work a lot I have been helping by scouting out houses. He has been outbid on 3 houses so far and today is putting an offer on a nice place sight-unseen because it won't last the weekend. The seller who bought 3 years ago will just about break even not counting any improvements he made.

[grrrr]

I don't have anything to add. But this thread was just sitting there at 1499 replies. So here I am.

[cramer]

Also, on your PMI dropping off comment. I thought you got a FHA loan and I am pretty sure the monthly MI charge does not drop off on that product ever. On a conventional loan, it will drop of when your current loan balance is 80% of the original value (you paid the loan down) or if you have the home reappraised due to appreciation, the lender may waive it at 75% of the value.

I checked the hud's website, it drops off. But its based on the value i bought it at, i cant have it appraised. So i was wrong about the appraisal it looks like, dammit. Ill have to wait until i hit 78% or 5 years it looks like?

Their site might be outdated or wrong, so if you have info on that, greatly appreciated. That sucks if ill have to pay it the full term. Im sure i could refi at some point, but still...

From their website:


Why does FHA Mortgage Insurance exist?

Unlike conventional loans that adhere to strict underwriting guidelines, FHA-insured loans require very little cash investment to close a loan. There is more flexibility in calculating household income and payment ratios. The cost of the mortgage insurance is passed along to the homeowner and typically is included in the monthly payment. In most cases, the insurance cost to the homeowner will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property -whichever is longer.

[montanaskier]

after 2 1/2 years of waiting. After finally dropping the price and taking a HUGE bath on the price. After having one seller buy then their loan fail. After all of that, I was SUPPOSE to close on our MT house today at 4pm. At 2pm my agent calls, their lender was trying to verify employment one final time, apparantly they had verified twice already but were going to do it once more before close, found out that the buyer was FIRED today! No close and as of now...no deal.

I AM BEYOND STUNNED.

[liv2ski]

From their website:

Why does FHA Mortgage Insurance exist?
In most cases, the insurance cost to the homeowner will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property -whichever is longer.

Cramer, it will take a lot longer than 5 years to pay it down to 78% of the original balance making a normal payment. But, you can always refi with a conventional loan once at 80% to have it go away.

[liv2ski]

after 2 1/2 years of waiting. After finally dropping the price and taking a HUGE bath on the price. After having one seller buy then their loan fail. After all of that, I was SUPPOSE to close on our MT house today at 4pm. At 2pm my agent calls, their lender was trying to verify employment one final time, apparantly they had verified twice already but were going to do it once more before close, found out that the buyer was FIRED today! No close and as of now...no deal.

I AM BEYOND STUNNED.

Damn dude, I am really sorry to hear that. It has been a while, so I don't remember your details, but can you rent it out and not be to far underwater on covering the PITI? I mean if your taking a bath on the price, maybe keep it 5-10 years?

[Egon]

No close and as of now...no deal.
I AM BEYOND STUNNED.

At least your football team is kick ass, that is all that really matters.

[iceman]

They didn't want to approve a loan to a guy who didn't have a job? Shocking.

Good job by the bank is how it looks from here.

[ass-to-mouth]

At least your football team is kick ass, that is all that really matters.

LOLZZZZ

Have you tried calling Coach Saban? I'm sure he could help you out.

[mock vomit]

after 2 1/2 years of waiting. After finally dropping the price and taking a HUGE bath on the price. After having one seller buy then their loan fail. After all of that, I was SUPPOSE to close on our MT house today at 4pm. At 2pm my agent calls, their lender was trying to verify employment one final time, apparantly they had verified twice already but were going to do it once more before close, found out that the buyer was FIRED today! No close and as of now...no deal.

I AM BEYOND STUNNED.

FACK!!!!

++++++VIBES++++++

(...not that it probably matters anyway, something about that story sounds a bit off? I'd wonder if something was a bit "fishy" for a while, and they just didn't clue you in? [/wild guess])