It's no surprise that foreclosures have shot up. I think a lot of people bought more house than they could afford because of all these shady brokers and now are finding out those house payments are nearly impossible to make.

What's sad is a lot of the same companies who had got them into those ARM's and interest only are now advertising to get them out of their "teaser" loans.

:disgust

Think you are right in riding out the storm. There are plenty incentives from developers to encourage buying, but the only reason for the incentives are that the developers are under pressure to move product.

It's hard to say if this is the main event yet or just a preamble, tho many small things indicate a hardening up in lifestyle/money supply. Example.. the use of plastic cards, - these were traditionally used for impulse mall purchases etc. But now cards are being used to buy basics, like food - and less on impulse buys of non-essential products.

On a bigger scale and more related to property - there have been a lot of mortgages issued based on fantasy and little hope of repayment and home builders are throwing out high sales incentives in an effort to move stock and meantime dumping land stock assets to anyone willing to take a risk, - that suggests a problem.

When you think that homes account for about 23 percent of the U.S. economy when you add sales of home contents, housing-related jobs, small home building companies - skilled laborers - contractors/subcontractors - real estate agents - title companies - retailers/ manufacturers of home products et al - that is one large lump for any economy and vital it remains intact/stable.

There are too many other factors which can be good/bad, but generally the good side is harder to find in Pandora's sustainabilty box...

the true value of residential income property has to be based on market rents.

and if you are paying more than about 100 x current monthly market rent roll you are really rolling the dice, trying to get inflation to bail you out.

you can still make $ in real estate if you buy based on market rent factors.

That is definately true. Last year my mortgage broker was so busy you could hardly ever get a hold of her. This year I've gotten here every time I've called. She has mentioned business slowing down a bit for her company. She een joked if my business partner wasn't buying up all this property every month, she wouldn't be busy (all joking aside, he's picked up maybe 8 units in 2007).

But I have noticed that between the realtor's calling, and e-mailing me more. Plus her, and the 'price reduced' signs. There is definitely a few things brewin here locally for me.

Right now I am waiting it out, and just adding more money to the war chest. But I'm thinking by fall some of this should shake out, and stabilize the market, and prices.

Very true.

My business partner has 40+ residential rentals now. He's been doing it like 20 years, and said that this market the most you can get for rents is like $700-750 a month. So you have to make sure that you manage your credit, and purchases to come in below that so you stay in the black.

Housing has been overpriced for years. In some areas, it will go down a little. Housing isn't a national thing though, it's entirely regional. While the Northeast may be hurt, the Southwest may increase. I'm in Chicago, and my area will continue to increase no matter what.

The housing economy overreached a bit, gave out loans to people who couldn't afford homes. It's fixing itself now. Might be bumpy for people on interest-only loans or looking to flip houses, but for most of us, it's just a good opportunity to start buying (especially when they lower rates).

Stock market is doing well, and the economy has been growing steadily despite the high gas prices. I don't expect to be lining up for government cheese in the next year.

Which is precisely why I put a bid on a home in northern Indiana today. One hour from Chicago. I have seen what happened to property within one or two hours of LA.

You hit the nail on the head.

For my area, with Pfizer cutting a lot of jobs, and not a lot of growth. The real estate market FAR overreached it's limits years ago. It's time that they adjust back to true market value for this area. This is mainly a college town now, although we still have a decent amount of medical around. There has been a mass exodus that coincides with the housing glut when they pulled R&D out of here.

I'm hoping to capitalize once some of these things balance themselves out. I am cash positive, and that's good to have. But it's a buyer's market, and I think it will be even more so a bit later this year as things correct themselves.

Regional is definitely true as the high demand areas will level off, or continue to grow while Midwest, among other places adjust.

Good call!

:winkwink:

50 houses for sale

It's still a good time to buy because the interest rates are still low. If the next president is a democrat, the rates will probably go up, possibly to 9 or 10 percent. We'll all be wishing for these 6 percent rates.

That's fucked up....

:Oh crap :Oh crap

You win the prize for most idiotic post of the whole weekend. :thumbsup

Bernanke will still be fed chairman regardless of who gets elected president.

The housing market is pure bullshit. The concept of a house doubling in value in two years is silly. Don't tell me that they are "running out of land"; They are building tens of thousands of houses right up the street from me.

Meanwhile the value of my car dropped in value the moment I drove it off the lot. They built about ten thousand models of my car and they aren't building any more; My car should be going up. I know that dents and scratches lessen the value of my car, but.... Well, my house has more dents, nicks, scratches, and other problems than my three year old car does.

And what really blows me away is my in-law's house in Fontana, California, is worth $600k. It's a small shack in a nasty city....

I think there have been more idiotic posts this weekend, but.......

Interest rates are generally controlled by central banks, not the legislative or executive branches of the federal government.

Sure it is - that's what the realtors and developers have been saying *lol*

Sure is - it's a nice concept...

Who said "they" were? Home developers are selling land, not buying it.

Obviously there is a massive plot right up the street from you where "they" are building a town of "tens of thousands of houses" - whatever :pimp

Not sure what you're getting at with him, but new home sales are up big time. Developers are not the ones feeling the pinch.

Agree pk - home sales are up, prob in part due to the incentives being given by developers and a reduction in overall home values.

On the contrary - developers are sure feeling the pinch and selling off sections of their land assets to ensure a piggybank in the hope the market may change.

Inflation-adjusted house prices in the US increased by an average of 0.7% per year between 1940 and 2004 (and that includes most of the 2001-2005 period when prices in some place began to rocket). Over the previous 50 years the real increase in prices was even lower.

In other words, anyone who wants to believe that within the next couple of years prices will not generally return to "normal" levels, is effectively proposing that a 100-year trend has been replaced by something totally different. Anything is possible, but it seems to me that such sudden and dramatic change is far more in need of solid justification, than the more credible notion that we have witnessed a hysteria-driven bubble.

Not only that, but if changes on this scale are to prove sustainable, the economic indicators should be loud and clear. But even those with a vested interest in talking up the housing market seem to have problems identifying any such indicators. What we are hearing instead is exactly the same kind of waffle and wishful thinking which preceeded the dot-com crash and I imagine, other bursting bubbles in the past.

yep, sad but true. they fuck you over then want to sell you something to fix what they fucked you on.

Jayeff, you read too many articles that try to adjust everything per inflation. If you adjust any investment per inflation then bank notes put you in the - column, as well as S&P.
Housing prices in METROPOLITAN areas double every 10 years. Its a statistical fact.

It's a normal part of business.

It may save some ecologically sensitive areas from development.

It's also a good time for price sensitive buyers and investors.

good idea :thumbsup

Good news for me. I plan on buying a house in the US in the next 15 months.

:thumbsup

:winkwink:

Correct. Although from what I've read it's those high growth, or Los Angeles, Miami, and those type of cities (i.e. top 500 markets).

Yep. Funny but sad. Two years ago they were all over the tele talking about ARM loans. Now they are offering to get you out of your 'teaser' loans. :disgust

I have a business partner, and friend who are both fairly heavy in real estate. One doing it over 20 years experience. One in flipping, and the other in rentals. I talk to them often about the stuff going on, and has been going on. While this doesn't apply for EVERY market out there. It does for this town, and the next one down the highway.

Before the boom. Housing prices were typically the 7% you refer to. But a few years back people with $100k/150/175 houses started asking double for the property, lake or not, that my friend is a huge jump over a handful of years. These are now the same areas where the prices are coming down by tens of thousands of dollars because every 3rd house is on the market.

Agreed.

The offers I get on mortgages and such now versus end of last year are definitely a lot different. They are more aggressive in trying to get people into homes. But also some of the asking prices have come down.

I have watched the market the past number of years, and some of the same homes I recognize because they have been on the market that long. They were asking unrealistic asking prices have been dropping in prices because their shit hasn't sold. Now you are finally seeing some of them with "sale pending" once the "price reduced" started coming out.

:Oh crap :Oh crap

Thank god for bush!:321GFY

builders are definitely trying to move inventory.....i just bought a house appraised at $370K for $300K brand new....10% down and 90k in equity at close.....kinda hard to not to buy new here in Fl...less than $100 per sq ft...very few builders are even applying for building permits atm...existing homes are taking a beating right now...

Whoa! That's crazy!

Congrats on the good deal though.

At the risk of stating the obvious, an "investment" which doesn't allow you to buy more loaves of bread (or whatever) when it is liquidated, may be a slower way to lose money than other options, but it is not the profitable instrument the word implies (or at least that most of us hope it implies).

In this context that is irrelevant. The point of using inflation-adjusted prices here is precisely that - courtesy of inflation - apparently quite dramatic increases are normal (a dollar today buys roughly half of what it did twenty years ago). It is much easier to see whether the perceived value of something has actually increased, by removing that distortion.

I must have expressed myself badly, because even the couple of people who have agreed with me, appear to have assumed I was forecasting a bursting bubble. All I actually wrote was that those claiming the increases between 2001 and 2005 do not indicate a bubble, are by definition claiming a major, fundamental change in the housing market. That seems to me the side of this debate which is most in need of a defense, since 50-100 year economic trends do not generally change overnight, simply because people want them to.

The most I did was to imply that I am cynical and that is because I don't see that defense being adequately made. In fact I don't recall reading or hearing of a remotely similar change being claimed for any of the economic, social and political factors which underpin house prices. Your response did not address that vacuum.

Well I can't speak for the rest of the country, but up here in Seattle our housing prices took a big jump last month due to a flood of buyers coming to the market. I have to wonder if those quotes are based on markets that have already peaked (or at least you think they had) like LA and San Diego...

i've been in the re market/financial biz for quite awhile (my mainstream revenue)...and it's a cycle, for people who make a living doing this and who are still around it's a natural course. we all made huge money for the past few years when it was a sellers market esp. in ca, fl and az...a big reason is the errors of the mortgage business

here is something you guys may enjoy reading...
http://ml-implode.com/ or mortgageimplode.com

cool info site and links

I love my beginning of the work week e-mails from my Realtor.

Seems some of those I've been keeping an eye on are dropping on average $5-10k a week.

:drinkup

All the talk about Foreclosures....look alittle deeper majority are in the Ghetto

NY Times
As Condos Rise in South Florida, Nervous Investors Try to Flee
By ABBY GOODNOUGH

MIAMI, May 25 ? As dozens of condominium towers conceived during Florida?s real estate boom near completion, investors who snatched up units in the preconstruction phase in hopes of turning a quick profit are increasingly trying to break contracts, even walking away from fat deposits.

?Motivated? sellers are flooding online forums like Craigslist with advertisements for condo units still months or years from being finished. And lawyers have been inundated with calls from people hoping to avoid closing on units they bought during the speculative craze of 2004 and 2005.

?I get two or three of these calls a day,? said James Ryan, a lawyer in Boca Raton who said he had 40 clients looking to get out of condo contracts. One, Mr. Ryan said, abandoned a $340,000 deposit rather than close on a $1.6 million unit that lost its appeal as the market faltered.

The numbers suggest that it will only get worse. In Miami-Dade County alone, 8,000 new condo units will be completed this year and nearly 12,000 more in 2008.

But demand has dropped markedly, and people who thought they could ?flip? condos ? buying, then selling for a steep profit before construction is done ? are parting with that fantasy. After years of stunning price increases ? 25 percent in the West Palm Beach-Boca Raton area, for example, from March 2005 to March 2006 ? condo prices have started dropping.

Condominiums in West Palm Beach and Boca Raton sold for a median price of $211,800 in March, down from $224,600 a year earlier, according to the Florida Association of Realtors. And in Fort Lauderdale, the median price in March was $195,500, down from $202,600 the previous year.

As a result, many buyers want out ? not an easy prospect unless they are willing to forfeit the 10 percent or 20 percent they put down, from $15,000 for an inexpensive studio unit to hundreds of thousands of dollars for a waterfront penthouse.

?I see buyers unleashing all possible means to try to get out of contracts,? said Gary Saul, a lawyer in Miami for developers, adding that in some projects, 20 percent of buyers want their money back.

Frank Scarfone, a retired engineer who bought two preconstruction units at Hollywood Station, a complex going up in Hollywood, is seeking to cancel his contracts. Each unit is priced at $300,000. The developer promised a city view from both units, Mr. Scarfone said, but now another building in the complex is blocking it ? a change that he said made the contracts unenforceable.

He sent a letter demanding his total deposit of $120,000 back, and after getting no reply, picketed the developer?s office. Then Mr. Scarfone called a lawyer, Matthew Schlesinger, who has been unable to recoup the deposit so far.

?If we have to sue,? Mr. Scarfone said, ?we?re planning on suing.?

Tom Leon, a retired business executive who moved here from Illinois, said he planned to give up $200,000 in deposits on two condo units in Miami, priced at $500,000 each, after finding ?no loopholes? in his contracts. He said he was not especially bitter, since he had made money flipping other properties at the height of the boom.

?I?m of the frame of mind that you have to be prepared in business or investments to take a loss,? said Mr. Leon, 72, adding that he never had any intention of living in either of the units. ?There are some people that mentally can never bring themselves around to that, especially in real estate. But there?s a time to hold and a time to fold, and in my opinion, this is a time to fold.?

The condo mania of recent years also beset cities like Las Vegas, Phoenix and Washington, but while those markets are also full of resales, analysts say South Florida drew the most investors.

?Between the Latin American influence and the out-of-state buyers who have a love affair with Miami because of its ambience,? said Jack McCabe, a consultant in Deerfield Beach who tracks the South Florida housing market, ?they flocked to it and pushed it to the point where about 70 percent of all sales were to investors.?

Real estate analysts say South Florida?s housing market peaked late in 2005, and would-be flippers stopped buying in 2006. People who bought condos before 2005 might still make money or at least break even if they sell soon, the analysts say, but those who bought at the height of the mania stand to lose a bundle.

Ann Nortmann, a sales associate with Majestic Properties, said one of her clients, a New Yorker, bought 11 condo units in Miami starting in 2004 and has sold six ? the last at a $40,000 loss. Ms. Nortmann and others said that with the glut of properties for sale, it might be more prudent to lose a deposit than hold onto a condo indefinitely.

Many speculative condo buyers were foreigners, especially Latin Americans looking to shelter their wealth from precarious economies in their home countries. Mr. Schlesinger said he was trying to help some Colombian investors get out of contracts in a project on the Miami River, a hot area during the boom, where prices are now languishing.

Getting out of real estate contracts is hard, Mr. Schlesinger said, because under state law, buyers have to prove that developers ?materially? changed a project in a way that is ?adverse? to the buyer. Many buyers want soaring property insurance rates to fall into that category. But a new state law says they cannot.

?About half the time I have to tell people, ?Listen, there?s nothing I can do,? ? said Mr. Schlesinger, adding that 20 percent of his clients end up forfeiting deposits.

Gregg Covin, a developer building Ten Museum Park, a downtown high-rise overlooking Biscayne Bay, said that none of his buyers had lost down payments, but that 45 out of 200 had resold their units before closing, often at the same price they paid in 2003 and to so-called vulture investors looking to scoop up multiple units at pre-boom prices.

Like many other developers, Mr. Covin requires original buyers looking to resell to do so through an in-house program, and keeps a 6 percent commission. Because his is one of the first boom-time buildings to be finished, he said ? closings are taking place this month ? he has had no problem finding replacement buyers.

?Right now, today, there is no shortage of end-users in Miami for finished, nice product,? Mr. Covin said.

Still, the few new buildings that have opened report many units up for resale. In Blue, a downtown high-rise that opened last year, 87 of the 330 units, or 26 percent, are back on the market, according to the Multiple Listing Service. In One Miami, which also opened downtown last year, 155 of the 800 units, or 19 percent, are for sale.

?When you drive by in the daytime, they are gorgeous,? Mr. McCabe said. ?But when you drive by at night, there?s no furniture on the patios and only one light on out of 10.?

This being South Florida, some are figuring out how to profit from the downturn.

Mark Zilbert, a real estate agent, recently started CondoSuperCenter.com, a clearinghouse for people willing to resell preconstruction units at their original price. He said he expected thousands of listings.

?I ask if they?d be willing to sell at their 2003 price and walk away with their deposit back,? Mr. Zilbert said. ?A lot of people are saying, ?Yes, please, yes, please, yes, please.? ?

I heard on the radio that April was a good month for sales. Housing sales were up but this was credited to the fact that housing prices had dropped so much. I am still waiting a while longer before jumping in though.

Detroit is the worst in the country I guess.

:winkwink:

I think the housing bloom was false, when you consider lots of people who never should of got mortgages got them.