Real Estate Crash thread

[Platinum Pete]

The Nevada side of Tahoe is looking real sweet for BP's "retirement" home.

You got the whole self directed 401k applied to real estate thing figured out? I'm still learning about it, but would love to hear how this has gone for BP or anyone who has done it. Especially the part of getting a mortgage on your 401k.

[grrrr]

I'm in a quandary.

I rented this lakefront cabin for the past 2 1/2 years while I pay off my divorce. I've got 4 more months.

In that time, I've gotten to be close friends with the owner. He moved into town to a larger house to raise his three small children. Over time, we have gotten to be friends.

He asked me last month if I would be willing to buy the cabin from him. Money has been tight for he and his wife. I told him I needed some time to consider it.

He just died, suddenly and without warning. I learned this yesterday. While I mourn his passing and the hard times his family now faces, I also have to wonder where we go with this. I'm obviously going to wait a bit to talk to Tammy, other than to offer condolences and offer to do what I can.

Shit.

They got an interest only ARM at the peak of the bubble. She doesn't really work. The youngest is only 1 year old. I hope they had enough insurance for her to get by for a while.

I have a feeling she's going to need to get out from under both of the houses. I guess I have to decide what I'm going to do.

[Benny Profane]

You got the whole self directed 401k applied to real estate thing figured out? I'm still learning about it, but would love to hear how this has gone for BP or anyone who has done it. Especially the part of getting a mortgage on your 401k.

It's done through an IRA - much more flexibility in IRA investment choices. Cannot be used for a residence that one uses AT ALL, though - purely for investment purposes. What scares me away is the fact that you have to do this through an intermediary, a "custodian" of your money, and they actually manage this transaction. There is an obvious problem there if the "custodian" suddenly vanishes. This has happened, I am told. Also, you negate the one great moneymaker in investing in real estate - tax depreciation.

[Benny Profane]

I'm in a quandary.

I rented this lakefront cabin for the past 2 1/2 years while I pay off my divorce. I've got 4 more months.

In that time, I've gotten to be close friends with the owner. He moved into town to a larger house to raise his three small children. Over time, we have gotten to be friends.

He asked me last month if I would be willing to buy the cabin from him. Money has been tight for he and his wife. I told him I needed some time to consider it.

He just died, suddenly and without warning. I learned this yesterday. While I mourn his passing and the hard times his family now faces, I also have to wonder where we go with this. I'm obviously going to wait a bit to talk to Tammy, other than to offer condolences and offer to do what I can.

Shit.

They got an interest only ARM at the peak of the bubble. She doesn't really work. The youngest is only 1 year old. I hope they had enough insurance for her to get by for a while.

I have a feeling she's going to need to get out from under both of the houses. I guess I have to decide what I'm going to do.

A moral dilemma, for sure. Take a deep breath, and divorce your emotions from this one.
I would start thinking about a short sale offer to her bank, if you like the place.

[ass-to-mouth]

FUCK short sales. They're a scam. I made an offer on a SS last March and am still waiting for an answer.

I would wait a couple weeks and make a lowball offer & hope she has enough cash to cover the difference. I bet she takes it.

Or just wait for it to go into foreclosure. Either way it'll be quicker then a short sale.

[ass-to-mouth]

And, for all of you who think the supposed "stabilization" of the housing market is a natural rise in the price cycle, read this and avoid spitting. The right side of your paycheck is keeping dullards and deadbeats in houses they can't afford, and Barney Frank thinks it's just fucking peachy.

http://www.nytimes.com/2009/10/09/bu...09fha.html?hpw

This quote by Turd Burgular Frank is amazing.

“I don’t think it’s a bad thing that the bad loans occurred,” he said. “It was an effort to keep prices from falling too fast. That’s a policy.”

What a fucking asshole.

[Benny Profane]

Good advice for buying a condo:

WSJ



By June Fletcher

These days it's not easy owning a condo, or any house located in a community that requires homeowners to pay fees. As more owners in these communities feel financially pinched, many aren't paying dues. That means residents who keep up with the bills have to pay a bigger share of the burden—and if there aren't enough reserves to pay to replace worn-out roofs or fix a cracked sidewalk, they face the possibility of bumped-up dues or an unexpected special assessment.

On the flipside, prices are low. And for the brave home buyer, there are bargains out there. The trick is looking closely at the homeowner association's health. As I've written before, buyers need to question the association board about dues payments, and have their inspectors examine common elements before committing to a purchase. It's also important to review the financial documents that every buyer has a right to inspect before closing.

But what should you be looking for? We asked Leonard Baron, professor of finance at San Diego State University, for some tips:


* Make sure you get all the documents, and have sufficient time to look them over. Buyers are supposed to get all financial documents relating to the association during their inspection period, but often they arrive, incomplete, just a day or two before closing. That's not enough time to review documents that may be many pages long. So Prof. Baron advises that you bug your agent for them the minute your home goes into escrow, and demand at least three days to review them.
* Check the financial statement. About two-thirds of the association's budget should be operating expenses such as water, lights, elevator maintenance and landscaping; the rest should be set aside in a reserve fund for long-term maintenance and repairs. See if expenses exceed revenues due to foreclosures, unpaid dues or other reasons. If they do, ask the association what their plans are to make up the shortfall, and whether you should expect an assessment or higher dues. Ask also if there are plans to save costs by cutting pool hours, or the number of mowings or clubhouse cleanings. This could affect not only your comfort, but also the future marketability of your home.
* Review the reserve study. Not every state requires these, but they are becoming more common. For such a study, the association will hire an outside firm that will look at all long-term anticipated repairs and replacements over a period of 30 years, add up the costs, and put together a payment and maintenance schedule. The monthly dues you're charged should reflect the amount of money that needs to be put away to pay for these necessities, but you shouldn't simply assume that's happening. "Many times the boards, under pressure by the owners, will hold the line on raising fees, to the long-term detriment of the property," he says.


* See what percentage of reserve funds has been raised. In an ideal world, associations would save enough money over time to pay for every contingency. So if the roofs on 100 condo units will need to be repaired in 12 years at a cost of $240,000, for the reserve to be 100% funded after six years, half of that sum would need to have been put away for that purpose. But in the real world, associations often rob their own reserve funds to pay for operating and other expenses; Prof. Baron estimates that most are only funded 50% or less. Although the percentage of funding necessary varies by the age and size of a complex, (for instance a skyscraper with a complex mechanical system is much higher maintenance than a small townhouse community) in general, you should be wary if funding is below 40%. "You could be hit with thousands of dollars in assessments if something expensive fails," he says.

Write to June Fletcher at fletcher.june@gmail.com

[Benny Profane]

And here's some more good advice from a reply to that article:




Should you buy that Condo? That Depends. If you are satisfied to leave the upkeep of the common area (lawn, lobby, elevator, stairwells, garage and other entrance access's) then this may be for you. We think after having lived in two units now a total of 20 years that smaller (presently occupy a condo in a 17 unit building---previously a 70 unit building) that smaller is better and the more up scale, within limits, the better. Due to storm damage we had assessments at both condos so be prepared when insurance isn't enough when a storm hits.

The nice thing about condos is with proper security, you turn the key in the door and you can go off for months without the worry of lawn care or a water leak or other problem. Someone else is doing the oversight for you.

Most of our 17 units condo in our present situation are owned by people with second and third homes so there is little interaction with others. We have no problems with loud parties and the occasional pool party is tolerable as it is a daytime activity as the pool area is secured at night. In fact, it is difficult to hold a "condo" party due to absenteeism.

Having lived in a house between condo occupancies we can say that the monthly fee is not much more than that for a house. And, we have a program to increase reserves to as much as reasonable to take care of future problems. Better to pay a few dollars each month rather than a whopping assessment. At least that's the thinking of the majority of the owners.

If you are a reserved person and you move into a "party" condo you'll be unhappy. If you're a "party" person and you move into a condo like ours you'll be disappointed due to the older more conservative owners. Investigate the "personality" of the condo association before you buy so it fits your life style.

[liv2ski]

I'm obviously going to wait a bit to talk to Tammy, other than to offer condolences and offer to do what I can.

Shit.

They got an interest only ARM at the peak of the bubble. She doesn't really work. The youngest is only 1 year old. I hope they had enough insurance for her to get by for a while.

I have a feeling she's going to need to get out from under both of the houses. I guess I have to decide what I'm going to do.

Just keep an eye out for the Notice of Default to be filed. It typically needs to be posted in news papers in the area. Once that happens, quit paying your rent, as she hasn't paid the mortgage and what is she going to do, evict you? Once the NOD is filed, ask Tammy to call the Bank and see if you can work out a deal to buy it now that she is in default.
Faster than fucking around with a short sale, as the NOD has the banks attention.

Edit: Hutch is correct below. It was the Notices of Trustee Sale I see in the paper.

[Hutch]

Just keep an eye out for the Notice of Default to be filed. It typically needs to be posted in news papers in the area. Once that happens, quit paying your rent, as she hasn't paid the mortgage and what is she going to do, evict you? Once the NOD is filed, ask Tammy to call the Bank and see if you can work out a deal to buy it now that she is in default.
Faster than fucking around with a short sale, as the NOD has the banks attention.

I am only familiar with Utah, but Notices of Default are not published in the newspaper, they are recorded at the County Recorder and then mailed to the owner and other parties having an interest in the property (liens, other mortgages, etc.)

Notices of Trustee Sale are published in the newspaper 90 days or more after the Notice of Default is recorded, usually about a month prior to the sale.

Many banks these days are not filing Notices of Default until the borrower has missed 2 or 3 payments, so 6 months might pass between the date of the first missed payment and the scheduled sale.

It is hard to predict particular lender reactions to short-sale offers. A lot depends on whether they believe the borrower has assets other than the collateral to go after if they get a deficiency judgment (assuming you are not in a state like California that has outlawed deficiency judgments). It is usually required that the borrower submit detailed verifiable financials prior to a short-sale being considered. Some lenders have massive portfolios of property now and are more interested in keeping borrowers paying something than they are in taking back the property.

As a2m notes, it can be very hard to get lenders to pay attention to your file. This is because loan modifications and short sales are not a profit center for the banks, so those departments are understaffed. Squeaky wheels get grease, in my experience. Also, get e-mail addresses for people at the bank, they seem more likely to return e-mails than calls.

[Shredhead]

The nice thing about condos is with proper security, you turn the key in the door and you can go off for months without the worry of lawn care or a water leak or other problem. Someone else is doing the oversight for you.



Having lived in a house between condo occupancies we can say that the monthly fee is not much more than that for a house.

The first statement is true, but you pay for the oversight.

I don't believe the second one. I have both and if I don't want to paint my house, I don't. But if you belong to association and they want to paint the condo complex, you pay. Plus putting up with other owners at the annual meeting is a joy.

[Benny Profane]

Oversight is freedom.

It's all about waking up to 2-3 ft of fresh, knowing that you'll be plowed to your remote garage door, ready to just rip to the mountain without even putting a coat on if the garage is attached. Or playing 18 or doing 20 -30 miles on the bike in the summer without worrying about the "landscaping". And, when you take off to see the world, no problemo.

Get loaded before the annual meeting and schmooze. People are funny.

[khakis]

different strokes. I hated sharing my front yard and a wall.

[mock vomit]

Crystal balls are all cracked and cloudy and been smeared with dog shit these days... but here is what one says;

Homes: About to get much cheaper

National home prices are forecast to shrink another 11%. Miami, Las Vegas and Phoenix will record steep declines, but a few cities will actually post gains.

By Les Christie, CNNMoney.com staff writer
Last Updated: October 20, 2009: 11:07 AM ET

NEW YORK (CNNMoney.com) -- If you thought home prices were bottoming out, you may be wrong. They're expected to head a lot lower.

Home values are predicted to drop in 342 out of 381 markets during the next year, according to a new forecast of real estate prices.

Overall, the national median home price is predicted to drop 11.3% by June 30, 2010, according to Fiserv, a financial information and analysis firm. For the following year, the firm anticipates some stabilization with prices rising 3.6%.

In the past, Fiserv anticipated the rapid decline in home-sale prices over the past few years -- though it underestimated the scope.

Mark Zandi, chief economist with Moody's Economy.com, agreed with Fiserv's current assessments. "I think more price declines are coming because the foreclosure crisis is not over," he said.

In fact, those areas with high concentrations of foreclosure sales will experience the steepest drops, according to Fiserv. Miami, for example, is expected to be the biggest loser. Prices are forecast to plunge 29.9% by next June -- after having already fallen a whopping 48% during the past three years.

If Fiserv's forecast holds, Miami real median home price will tumble to $142,000 by June 2011.

In Orlando, Fla., the second-worst performing market, Fiserv anticipates a 27% price collapse by June 2010, followed by a less severe drop the following year. In Hanford, Calif., prices are estimated to drop 26.9% and continue falling 9.5% in 2011; in Naples, Fla., they're expected to fall 26.8% and then flatten out.

Other notable losers include Las Vegas, where prices have already fallen 54.6% and are expected to lose another 23.9% by June 2010. In Phoenix values have already collapsed by 54% and could fall another 23.4%. In both cities, Fiserv anticipates the losses to continue into 2011, but they will be less than 5%.
Prices had stabilized

The latest forecast is at odds with the past few months of the S&P/Case-Shiller Home Price index. That report has given hope that most housing markets may have already stabilized because the composite index of 20 cities rose in May, June and July. Nationally, it found that home prices have gained 3.6%.

Brad Hunter, chief economist for Metrostudy, which provides housing market information to the industry, however, expects a change in fortunes, however.

"I'm afraid Case-Shiller may be just a temporary reprieve," he said.

He pointed out that the tax credit for first-time home buyers helped support prices during the three months of Case-Shiller gains. By the end of November, the credit will have been used by 1.8 million homebuyers, at least 355,000 of whom would not have bought a house without the tax break, according to estimates by the National Association of Realtors. But the market assistance ends when the credit expires on Dec. 1.

Hunter also sees a new wave of foreclosure problems coming from higher priced loans and prime mortgages. He expects a high failure rate for option ARM loans that were issued to prime customers so they could buy homes in bubble markets, such as California and Florida. In those areas, prices for even modest homes had skyrocketed.
Winners

A handful of metro areas will buck the trend, according to Fiserv. Six markets will remain flat, and 33 will actually post gains. The biggest winner will be the Kennewick, Wash., metro area, where home prices have ramped up 8.9% over the past three years and are expected to increase another 3.4% by June 2010.

Fairbanks, Alaska, prices are anticipated to rise 2.5%, while Anchorage will climb 2.1%. Elmira, N.Y., prices may inch up 1.8%.

The nation's biggest metro area, New York City, will underperform the nation as a whole over the next two years, according to Fiserv. Prices, which have already fallen 21.7% to a median of $375,000, are expected to fall 17.4% by June 2011.

Home values in the nation's second largest city, Los Angeles, have fallen 43.3% since June 2006 to a median of $313,000. They are expected to dive another 20.2% over by June 2010, and then start to climb in 2011. Chicago prices, which have fallen 25.2% to $227,000, will drop only 4.1% over the next 12 months and then starting to climb.

The Detroit metro area now has the dubious distinction of having the lowest home prices in the country. Prices have dropped 51.7% to a median of $50,000. They're expected to fall another 9.1% and then stabilize.

[Benny Profane]

Wow, that's pretty sick. To say that Miami and Vegas still have that much to fall after the distance they've already fallen says a lot about momentum in the markets, I guess. Jeez. Elmira is an example of, well, when you ain't got nuthin', you got nuthin' to lose.

This is why there's any life at all in the markets. The housing market thanks the right side of your paycheck:

WSJ

Just how big a backstop is Uncle Sam providing to the housing market right now? Here’s one indication: The number of home buyers relying on low down-payment mortgages obtained via the Federal Housing Administration and other federal agencies.

Some 59% of new home buyers are using government-backed loans from the FHA and other agencies, according to a survey of home builders by John Burns Real Estate Consulting, an Irvine, Calif.-based consultancy. The FHA accounts for nearly half of all mortgages, while loans from the Department of Agriculture and the Department of Veterans’ Affairs account for another 10% of all loans for new homes.

The government’s share of the market rises even higher in certain areas. In Northern California, for example, builders said that the government accounted for 76% of all mortgages, while the government share stood at 65% in the Midwest and 62% in South Florida.

South Florida also has the highest share of all-cash new home purchases, at 22%, largely the result of investor purchases of condos and other attached homes. Southern California and the U.S. Northwest had the highest share of purchases with jumbo loans, at 15% and 13%, respectively.

[Shredhead]

Oversight is freedom.

No doubt. But you can hire people to do the oversight and then choose what you spend. Most utilities are on autopay and I talk with my manager once a month. I have everything online and post a couple of more checks a month.

[Benny Profane]

Just saw this map of the concentration of foreclosures. It's one of the reasons I'm looking at Tahoe for a move - man, it's right in the center out there. But, checkout a little hot spot in the midwest, in northwest Arkansas. That's the county where Bentonville, the home of Wal Mart is. What goes around........

[ass-to-mouth]

NAR bloodsuckers win again.

House votes to expand homebuyer tax credit
By Stephen Ohlemacher
Associated Press Writer / November 5, 2009

WASHINGTON—Buying a home is about to get cheaper for a whole new crop of homebuyers -- $6,500 cheaper.

First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package enacted earlier this year. But with the program scheduled to expire at the end of November, the House voted 403-12 Thursday to extend and expand the tax credit to include many buyers who already own homes. The Senate approved the measure Wednesday, and the White House said President Barack Obama would sign it Friday.

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers -- or anyone who hasn't owned a home in the last three years -- would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.

"This is probably the last extension," said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.

The homebuyers tax credit is one of two tax breaks totaling more than $21 billion that was included in a bill extending unemployment benefits for those without a job for more than a year. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years.

"We are still in a world of economic hurt, and Congress must continue to act boldly and creatively," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. "With the right mix of tax breaks and investments we will get through this recession and get folks working again."

The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes. While the measure passed the Senate by a 98-0 vote, Sen. Kit Bond, R-Mo., questioned its efficiency in stimulating home sales.

"For the vast majority of cases, the homebuyer tax credit amounted to a free gift since it did not affect their decision to purchase a home," Bond said. "And for the small minority of buyers whose decision was directly caused by the credit, this raises the question of whether we are subsidizing buyers who may not have been able to afford buying a home in the first place."

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.

[Benny Profane]

NAR bloodsuckers win again.

It isn't just the industry people. Every time I see a blog in major media outlets inviting responses from the public about this, the large majority of people are asking "hey, how can I get a piece of this?", instead of, "jezuz fuck, leave the market alone and let it settle to a natural level".

[mock vomit]

NAR bloodsuckers win again.

As Benny hints... this $10 Billion is being paid out to actual Americans not the Real Estate Agents... and thank god not Wall Street firms to pay it out as hudge bonuses to the already wealthy. I suppose you could argue that Real Estate Agents get a commission on the non-FSBO home sales... but remember they would have gotten commissions on all the sales they would have normally done even without this program, so the only way Real Estate agents actually are benefited is in EXTRA transactions encouraged and created by this program. And since those extra deals are the whole point of this program in the first place... isn't critique of Real Estate agents getting extra transactions essentially admitting this program is working how it was intended?!?!? (<<< See what I did there... ) [/perhaps biased opinion]

[4matic]

Just saw this map of the concentration of foreclosures. It's one of the reasons I'm looking at Tahoe for a move - man, it's right in the center out there.

This "lovely" North Shore condo is only $485K


http://sfbay.craigslist.org/sby/reb/1448441100.html

[rideit]

Yay!
We are a red county!

[Benny Profane]

This "lovely" North Shore condo is only $485K


http://sfbay.craigslist.org/sby/reb/1448441100.html

I'll bet you 50 bucks that thing is below 300 in a few years. In affect, it may be now, although I don't have enough data. Craigs isn't the best place to establish price.
Two words about the present market - "cascade down". The bottom has been established with the trash, but all the high end stuff, especially second homes, still have a long way to go. The market is frozen.
That's a neat little place, though. If the garage is attached, that's what I'm looking for.

[4matic]

I'll bet you 50 bucks that thing is below 300 in a few years. In affect, it may be now, although I don't have enough data. Craigs isn't the best place to establish price.
Two words about the present market - "cascade down". The bottom has been established with the trash, but all the high end stuff, especially second homes, still have a long way to go. The market is frozen.
That's a neat little place, though. If the garage is attached, that's what I'm looking for.

Doomed!!!!

[cramer]

The bottom has been established with the trash

you are right about the bottom. I bought in dec of 08 and all the comparables around me are selling at what i bought at right now. I dont know that id call it trash though. I bought a 2003 house that wasnt lived in from 06-08 for low 200's. Essentially a brand new house with granite, all stainless appliances, all wood blinds and a washer and dryer to boot.

I agree the high end will continue to fall. Low end can only fall so much, especially new houses. Over a 1 year period, in my area, prices are the same or slightly higher (recent ones are 10K or so higher than what i paid).