Real Estate Crash thread

[khakis]

Seriously, though, I've been fighting the DINK syndrome (Dual Income No Kids) most of my adult life. The housing market, and many other prices, can be so skewed in areas where one has to compete with two income households. I've only have half of that.

This is ridiculous. There will always be someone with more disposable income than you. Pretending that it is a "syndrome" that somehow affects you or that you are "fighting" it is sour grapes.

[yonskion]

I got a major reduction in my mortgage monthly since appraisal values have gone down and I like that.

WTF you talk"n bout Willis? Did you get a Modification?
If not a Mod..... How did you get your servicer to reduce payments because of value?
If your on a "Option ARM" your payment could go down if you index rate decreases..... Value decrease = payment decrease WTF???

[Hutch]

WTF you talk"n bout Willis? Did you get a Modification?
If not a Mod..... How did you get your servicer to reduce payments because of value?
If your on a "Option ARM" your payment could go down if you index rate decreases..... Value decrease = payment decrease WTF???

the word "since" has more than one meaning, Arnold.

[yonskion]

Oh "since" means you sold your house and bought a new one at a lower price

[cramer]

I've heard from a few other agents that some Sellers are thinking the market "has turned" and actually starting to raise listing prices. I'm only guessing, but assume it HAS to be based on the media crap about "average/median sales prices rising 5 straight months", etc.

Actually, its the buyers driving up the prices. Its a brutal bidding war out in my area. The stock isnt what it was a year ago, so the first time buyers and the investors are fighting over houses that come on the market now. I've got a couple friends at work that have all but given up. they keep getting out bid on houses.

[mock vomit]

Actually, its the buyers driving up the prices. Its a brutal bidding war out in my area. The stock isnt what it was a year ago, so the first time buyers and the investors are fighting over houses that come on the market now. I've got a couple friends at work that have all but given up. they keep getting out bid on houses.

Haven't seen anything exactly similar here... though admittedly I'm not involved in the very low end of our market... which would be sub $100,000. And I don't doubt that especially in areas like yours, this process is normal and a true "market force"... but do worry because it was those exact same forces that drove the market up each of the times over the last decades to build the bubble that then broke spectacularly. I guess I'm saying that just because it's somehow "normal", doesn't mean that it isn't at risk to a further correction... either sooner or later.

[grrrr]

Houses ain't exactly moving here either. But you sure as hell can't get anything for $134,000, let alone $34,000.

[mock vomit]

Actually, its the buyers driving up the prices. Its a brutal bidding war out in my area. The stock isnt what it was a year ago, so the first time buyers and the investors are fighting over houses that come on the market now. I've got a couple friends at work that have all but given up. they keep getting out bid on houses.

Hey, I was doing the dishes just now and thinking about this more. (Is that too domesticated for a sometimes testosterone-filled place like this? I could change it to say "...I was just mounting my lady and thinking about this more..." or "...was just installing new exhaust headers on my Harley and thinking about this more..." instead?)

Is there any chance that almost all of these properties getting "bidding wars" are foreclosures or other REO stuff?

Because if so... I think there is a very good chance that what you are observing is LESS prices being bid up in a trend of segment wide value increases, and MORE a modified MLS auction technique to clear REO inventory quickly???

I've only seen it used a few times in my neck of the woods, but heard more in the media about it used a lot elsewhere with much higher inventory of foreclosures etc. Here's how it works;

UNLIKE the more traditional listing the property in MLS at 105% of what you think the current market value of property is, then waiting for several weeks to see if anyone steps up to write an offer that leads to counters etc. Then if not making a 5% reduction in list price and waiting again... then if no offers doing it yet again... and then again etc.

YOU INSTEAD list the property in MLS at 50% or 75% of what you think the current market value of property is, then announce you won't consider offers for X number of days (let's say 5?). What happens is everyone from rehabbers to typical buyers see this incredibly cheap deal, go take a look at it, and a hudge percent end up preparing offers on it. By the time 5 days has passed, the Bank/REO owner has a dozen offers in hand... from just full price, to 20 or 40 percent over list price. The Seller can then pick highest or otherwise best offer and proceed quickly to a closing.

This technique gets the Bank/REO a big chunk of the full value of property, with just about zero extra holding costs (interest/loss of use of money/maintenance/insurances/utilities/etc).

If there are enough distressed properties in that market, and enough of the Banks/REOs use this technique, I could also see it be MISPERCEIVED by the public as a "market frenzy" with prices being bid way up. Even though by definition in my example, the properties may only selling at 90 or 95 of current "market" value.

Again, curious if your exposure to that phenomena in your area has involved mostly foreclosure/REO properties???

[meatdrink9]

Most REO listings here require the listing agent to hold all offers for the first 72 hours. During that time quite a few offers can stack up. In the past there would always be a multiple offer addendum sent out after the 72 hours and it was up to you to bring your "highest and best" offer at that time.

Lately anything we've bid on has had a number of bids in that 72 hour window, but the banks have been accepting our offers over others on probably the 5 last deals. I write strong offers. All cash. Close in 10 days. The only contingency is the inspection. We only ask for 5 days to inspect. We haven't been bidding up prices at all. One went $100 higher. One went at asking price. The rest had slight reductions.

[cramer]

Hey, I was doing the dishes just now and thinking about this more. (Is that too domesticated for a sometimes testosterone-filled place like this? I could change it to say "...I was just mounting my lady and thinking about this more..." or "...was just installing new exhaust headers on my Harley and thinking about this more..." instead?)

Is there any chance that almost all of these properties getting "bidding wars" are foreclosures or other REO stuff?

Because if so... I think there is a very good chance that what you are observing is LESS prices being bid up in a trend of segment wide value increases, and MORE a modified MLS auction technique to clear REO inventory quickly???

I've only seen it used a few times in my neck of the woods, but heard more in the media about it used a lot elsewhere with much higher inventory of foreclosures etc. Here's how it works;

UNLIKE the more traditional listing the property in MLS at 105% of what you think the current market value of property is, then waiting for several weeks to see if anyone steps up to write an offer that leads to counters etc. Then if not making a 5% reduction in list price and waiting again... then if no offers doing it yet again... and then again etc.

YOU INSTEAD list the property in MLS at 50% or 75% of what you think the current market value of property is, then announce you won't consider offers for X number of days (let's say 5?). What happens is everyone from rehabbers to typical buyers see this incredibly cheap deal, go take a look at it, and a hudge percent end up preparing offers on it. By the time 5 days has passed, the Bank/REO owner has a dozen offers in hand... from just full price, to 20 or 40 percent over list price. The Seller can then pick highest or otherwise best offer and proceed quickly to a closing.

This technique gets the Bank/REO a big chunk of the full value of property, with just about zero extra holding costs (interest/loss of use of money/maintenance/insurances/utilities/etc).

If there are enough distressed properties in that market, and enough of the Banks/REOs use this technique, I could also see it be MISPERCEIVED by the public as a "market frenzy" with prices being bid way up. Even though by definition in my example, the properties may only selling at 90 or 95 of current "market" value.

Again, curious if your exposure to that phenomena in your area has involved mostly foreclosure/REO properties???

ya they are all reo's out here or short sales. but the reo's are the ones going for 30K+ over listing. no idea on your theory. When i bought my house, it appraised for exactly what i bought it at. The comparables out here are selling for 10-15K more and its only been a year since i bought. So i would think the price of my would have dropped 10K not went up. But who knows.

[meatdrink9]

OK, here are some pics (post remodel) of that 34K house. I got 1K back as my commission check and sank probably 10K on the remodel. I think I'll list around $88,500. Ogden is really undervalued IMHO. Normally I buy and hold, but given the 4 mortgage rule I'm going to flip a few houses this year to generate funds for more rentals. 25 minutes from awesome skiing.

[Tips^Up]

damn md9. put that thing in denver at double the price and we got a deal!

[Joe Gardner]

Really? $44k invested? What's the hood like?

[Benny Profane]

You have great taste. That would rent for 1800 in my neighborhood.

[Benny Profane]

This is ridiculous. There will always be someone with more disposable income than you. Pretending that it is a "syndrome" that somehow affects you or that you are "fighting" it is sour grapes.

What's your point? How old are you? Have you ever lived with a woman who split your costs? Or, a man? It's real fucking simple. Your expenses are halved in a situation like that, if we assume both are working and making similar incomes. Of course there are single income households around here that double my gross, but, statistically, they are few. Most of the upper tier of the middle class are DINKS, I'm pretty sure.

Did your parents explain this to you? Go upstairs and ask them.

[grapedrink]

OK, here are some pics (post remodel) of that 34K house. I got 1K back as my commission check and sank probably 10K on the remodel. I think I'll list around $88,500. Ogden is really undervalued IMHO. Normally I buy and hold, but given the 4 mortgage rule I'm going to flip a few houses this year to generate funds for more rentals. 25 minutes from awesome skiing.

as always, looks nice. can we see the before pictures?

[meatdrink9]

Tips^up, that's exactly why I've been holding everything. My zipcode is undervalued. The skiing is way better too.

Joe, yep, but this deal is a little atypical. I really scored on the purchase and being able to refinish the flooring/molding that was already there. The hood isn't that bad. The area I'm buying in is the largest historic district in the country (old railroad boom money, some insane mansions). The bones in these homes are generally pretty awesome unless they had a bad remodel along the way. There are plenty of crazies in the area, but I've seen the city improve a ton in the 3 years I've been investing here. I'd say 10-20K more is probably more realistic. This is cheapest home I've bought. I did score a 5 bed, 2 bath, 2 kitchen, 2 car garage place for 44K once, but remodeling it took me up to 70K. It was beat.

Benny, thanks. Remember I come from a design background. All of my places are pretty pimp. No carpet, linoleum or formica in any of them. Stone counters, hardwood and stainless appliances are minimums.

Grapedrink, I don't shoot before photos (just go right to work, could also be incriminating as sometimes people want you to pull a permit for something as trivial as trading out a light fixture), but here's the old MLS photo:

[khakis]

J you should learn how to do glass reinforced concrete. Probably cost the same as those granite tiles and way mo pimp.

Benny I'm 30 and a year and a half into my first house. My wife has a job too, and another house (that's 2 mortgages and two incomes, since I know you're counting). We don't have kids yet but we do have 2 little dogs. I work with people who have much more expensive houses/cars/bikes for various reasons including previous investments, generous parents, spouses with higher-paying jobs, more debt, etc and that's cool. I spend within my comfort zone and they do the same. It really doesn't affect me that they are living in houses I can't afford.

[liv2ski]

[B]Is there any chance that almost all of these properties getting "bidding wars" are foreclosures or other REO stuff?[

You are 100% correct sir.

[jamiefaust]

Wow, got scared for a second and then realized that it was an old message **phew**

[mock vomit]

Not residential... but still real estate;

Further Slide Seen in Commercial Real Estate

By CHRISTINE HAUGHNEY
Published: January 7, 2010

There are 920 football fields of available office space in Manhattan. More than 180 major buildings totaling $12.5 billion in value — from Columbus Tower at 1775 Broadway to the office tower 400 Madison Avenue — are in trouble, meaning in many cases they face foreclosure or bankruptcy, or have had problems making mortgage payments. Rents for commercial office space fell faster over the past two years than in any such period in the last half century.

“I have been in the business for 12 years. I have never seen it this bad,” Peter Von Der Ahe, vice president of investments for the brokerage Marcus & Millichap, said of New York City’s commercial real estate market. According to more veteran colleagues, he said, things have not been so dire since at least the early 1990s.

And that is not the most sobering assessment.

“It hasn’t hit bottom,” Mr. Von Der Ahe added.

He is not alone. More than half a dozen experts on commercial real estate in New York City said that despite some flickering signs of economic recovery here and elsewhere in the country, the universe of big buildings and giant apartment complexes has further to tumble.

Rents, they say, will go lower. Vacancy rates are likely to rise, too. Owners of troubled properties will face a final day of reckoning and in some cases lose their properties.

“We’re projecting the biggest value losses in the nation,” said Aaron Jodka, a senior real estate economist at Property and Portfolio Research, a Boston-based independent real estate research and advisory firm. He predicts that by 2011, the value of New York metropolitan area office buildings will decline by 58 percent from its late 2007 peak. It is already down 40 percent.

Some experts point to the bright sides of a down market — for example, the opportunity to snap up some great bargains. They say that investors who already have been shopping in London for skyscraper deals may set their sights on Manhattan later this year to find deals, and that may fuel some growth in overall sales. Some New Yorkers, especially businesses who have found the market too costly, also may find some deals.

“A correction might give opportunities,” said Jonathan Bowles, director of the Center for an Urban Future, an independent research group. “I think it’s healthy for the city’s real estate market to have a down cycle.”

But most members of the real estate industry are lockstep in their pessimism, and the reasons are multiple: Jobs must recover first to fill offices with workers, and job growth in New York City has been all but invisible. Many buildings are also tied up in complex financial arrangements that could take years to unravel.

Robert Bach, chief economist at the real estate brokerage Grubb & Ellis, compares recovery of the commercial market — which includes everything from office towers to rental apartment buildings to retail space — to turning a big ship around.

Taxes on commercial buildings also make up a sizable share of the revenue base for the city. Residential and commercial development generated $307.7 million in tax revenues, not including property taxes, from 2000 to 2007, according to the Real Estate Board of New York. In fact, the industry had a $12.4 billion effect — including construction costs like salaries and purchases made by workers — on the local economy during that period.

“The tax base is enormous,” said Michael Slattery, the board’s senior vice president of research. “It helps fund many of the basic services that make our city operate.”

Richard Persichetti, director of New York research for Grubb & Ellis, said that when the economy started to slide, office rents fell faster than in any period recorded in at least 50 years. The city has become stuck with more available office space than any other central business district in the nation except Chicago, Washington and Boston. Mr. Persichetti predicts it will take until 2014 to make a major turnaround.

“Rents probably won’t start to recover until job growth is created and some of that available space is absorbed,” he said.

Some foreign investors may swoop in this year and buy up some of the city’s most desirable and stable skyscrapers, said Robert White, president of the research company Real Capital Analytics which tracks the city’s troubled properties. Then the city will be left with properties in financial difficulties that are half empty and in less coveted locations. Recovery for those buildings, Mr. White said, “is going to take a little bit longer. It’s not going to be in a rush.”

No prospective deals on these buildings are apt to be helped by the fact that they are tied up in complicated mortgage structures that grew popular in the boom years. Joseph Harbert, chief operating officer for the New York City region of the commercial brokerage Cushman & Wakefield, says that working out ownership disputes for these buildings will take much longer than in past real estate meltdowns.

“In the ’90s, when you had the real estate workouts, you had a lot of single-lender properties. There are more parties and interests in every deal,” said Mr. Harbert.

Regardless of these complications, Mr. Harbert, who remains generally optimistic that parts of the real estate economy could recover this spring, says that lenders, skyscraper buyers and renters will not feel comfortable moving forward until they really see that jobs are being created.

“They’re kind of waiting for positive signs in the economy,” he said. “When jobs are going to recover, that’s the signal of when people are going to lease and buy.”

[Benny Profane]

yeah, commercial vs. residential. Two windows into contemporary capitalism. The commercial guys are proceeding as they should, people being polite in court, matters settled, well, maybe some asshole lawyers getting spunky, but, still, it's all a matter of, um, law. I was telling an old friend who lives in Stuyvesant Town that, whatever happens over the next five years, in the end, you'll have professionals figuring it out.

But, residential, jezuz, there's no hope in sight if Barney Frank wants me to buy something for 800,000 with 3.5 down.

[Spats]

yeah, commercial vs. residential. Two windows into contemporary capitalism. The commercial guys are proceeding as they should, people being polite in court, matters settled, well, maybe some asshole lawyers getting spunky, but, still, it's all a matter of, um, law. I was telling an old friend who lives in Stuyvesant Town that, whatever happens over the next five years, in the end, you'll have professionals figuring it out.

We're going to pay for busted CRE too. That deal has already been cut.
http://www.mybudget360.com/the-doctr...ill-be-paying/

[Benny Profane]

We're going to pay for busted CRE too. That deal has already been cut.
http://www.mybudget360.com/the-doctr...ill-be-paying/

Jezuz, you're a downer, dude. But, I'm not surprised if that happens. I read a post today in some forum that predicted the future at 2020, where we will finally become a banana like republic in maybe ten, but probably fifteen years where the best jobs will be protecting the wealth of the top one percent. If you think of it, that's why the military has been a career move for the lower middle class for a decade, and will blossom to upper management positions soon.

[skier666]

Commercial Real Estate is being hit HARD. The super smart mega investors who were loaned billions to buy skyscrapers lost the gamble. Downtown SF is full of vacancies, Silicon Valley has a glut of an early 80s R&D buildings that nobody want to rent or buy. Its worse in the South Bay because office space is spread out over a huge area....from Palo Alto over to South San Jose....its not centralized like a proper downtown.

Since the summer, I've seen stories about this topic...

Like this:

http://www.socketsite.com/archives/2...oing_back.html

with companies shifting around for better deals on better space:

http://www.bizjournals.com/sanfrancisco/stories/2009/12/21/story7.html?b=1261371600^2613141