ABC News: Homeowners losing and defaulting
 

ABC News just ran a story on homeowners due to lose out big.

As the interest rate discounts run out and their rates go up about a million will lose their homes and 700,000 will lose from foreclosure over the next few years.

Gadzooks. It's like being a homeowner is some scary shit.

Didn't Lensman predict this would happen not too long ago?

It doesn't look like a real estate bust by a long shot but more of a people who bit off more than they could chew and made the mistake of 'hoping' something good would happen from out of the blue.

How bad is it really?

So when all these houses start to get foreclosed on, does that mean I can swoop in and snatch one up for a song? (I own a house now but it's nothing special and almost paid off)

Why would their rates go up??

Most of us locked in our rates at lifetime lows..

The key word here is "locked" .......

Why people do "arm" financing and dont lock in a rate is beyond me.

Anyhow.. Im still bullish on the real estate market when it comes to quality.

In fact we just closed last month on a waterfront high end condo.
It will be ready next year.

Here's the only concern.. We hope intrest rates dont get too out of control between now and then. The closest we can lock in a rate is 90 days before closing..

www.thejohnross.com

Pretty pumped for it. Another litte investment property for the BP4L..

Because debt is at a record high and a LOT of people have taken out home equity loans which are not locked.

Mix that in with lower wages and you have a recipe for foreclosures.

Smart home equity loads are locked..

Many are locked, but balloon after 15 years..

Pay them off in 15 years, and locking in on a good rate home equity loan for investments that pay higher % returns only makes sence.

But I hear ya.. The typical Joe American blows that home equity loan on paying off creditcards, going on trips or doing some other bullshit with no plan on paying it off.

Anyhow, for the smart, the market is still a great oppertunity to be bullish.

But the typical Joe, as with any market, reality will set in and the bad money decsions always catch up.

Its going to be intresting to see how all the debt the avarage American is in will pan out over the years.. Whather it be from creditcards, home equity loads or whatever.

The key here is, we need to figure out how to make money off these people.

That will be key.

can't wait to pick some real estate up when the prices drop :)

What I see is lots of people using equity to buy new cars. People who shouldn't have the Bling Bling are driving in 40-50k suv's when they really should have ford minivans.

The short term real estate investors will get clubbered in the next couple years. Also people that did creative financing pushed to the limit who thought they could skate in on the bonanza.

The long term investors with cash positive properties will be fine and will scoop up foreclosure properties at deeply discounted prices.

"When everyone is selling I'm a buyer, when everyone is buying I'm a seller."

Warren Buffett

Same here. I have the cash to pay my house off but I'm holding onto it in hopes of getting some decent foreclosures when the shit starts happening. :thumbsup

I've seriously even thought of using my HELOC to invest in more RE, but haven't bit that bullet yet......

Don't see that happening here yet, but it's probably just a matter of time. House prices are still increasing here and being bought at record levels.

I can only pray this will happen in NY and Miami.

because their dumb enough to fall for a half point lower, not thinking of how they will get screwed later.

You would think that they would say "hmmm, interest is at an all time low. if it adjusts, where will it go?"

Very nice. I bet the views are amazing!:thumbsup

I like the way you think.

It's also because a lot of times they wouldn't qualify for the loan even if it's just half a point higher.

There are SO many people who have been buying houses with 0 down, ARMS, etc. who really had no business owning a home. Those are the ones I plan on renting their houses back to :thumbsup

and the guys really taking it in the shorts are the guys that sold the old place and used the $$ to get moved into the 650K+ house . . . a financial guy told me this was on the agenda last year . . seen it happen already in the palm desert in the late 80's early 90's . . . something like 20k folk got upside down on the mortgages and walked on the houses . . Then the GOV made them HUD houses to save the banks ass . . Moved South Central LA up to the palm desert and now they shoot 'cops' there all the time . . And all those poor fucks that managed to save their houses, you know the guys that moved their families 60-80 miles form the ghetto bullshit for safety . . Well the GOV was kind enough to bring all that shit right back to 'em :thumbsup

Thats already been done. Its called the Payday (aka Check Advance) Loan. 500% APY and higher is a pretty good return, dont ya think?

You're right, if you're brave enough to deal with the folks you'd be dealing with, check advance shops are pure cash cows.

its sad people dont understand what they are getting they just hear we will lower your monthly payment.

I read recently that a huge % (sorry, I forget exactly, but it was like 70%) of all recent mortgage loans were ARM. Many of those people are fucked.

I view this as a good thing....for me, at least! :)

Yep...a very good thing. Been waiting 4 years now for this opportunity of having a huge amount of defaults that are/will be flooding this market.

Nah, you just hire people to deal with them from behind bullet proof glass and pay them $12 an hour (thats the going rate here anyway). Some of the people are rather, well, undesireable, to put it mildly. Cash checking places make a ton more selling prepaid calling cards, no deposit local phone service, prepaid cell phones and recharge cards, money orders and everything else to this crowd. Oh, and lottery tickets.

You would count the cash in the back office, or even off site.

i've got my eye on several homes... waiting for all these peopel with a.r.m.s to fold.. then i swoop in

duke

Anybody who got a 4.75% rate on an ARM when they could have gotten a fixed 30 yr rate of 5.5% is too stupid to be a homeowner IMHO.

Same goes for all the idiots who thought they were geniuses buying "investment" properties AFTER prices had shot up 100% over 5 years.
They're no different than the people who mortgaged themselves to the hilt to buy the NASDAQ at 5000. "Gee this dot com stuff will just keep booming forever"

Apparently they don't teach financial common sense in the public schools.

I fail to understand the housing market in any way, shape or form. I just moved to Rocklin, California, to join ICS. I'm about to sell my house in Phoenix. I bought my house three years ago for $220k. I'm about to sell my house for $450k. I need someone to explain to me why my house doulbed in value in less than three years.

Supply, demand, (and speculators that pushed the market up).

i have family members who refinanced on a condo twice because the value of the condos went up. when those prices start to fall, they'll be in BIG trouble.

thiese are the ones who double crossed me for 10 grand. now that they've burned their bridges, they have no one else to go to.

then to rub it in, i'll buy myself a million dollar home when the prices drop.

I just moved back to Portland after living in NYC for the last 15 years. My how things have changed. Which building is that. Is that the new area by Johns Landing?

It's funny. My old photo studio in SE by OMSi used to be the only thing down there except for industrial. Now there are condos and shit going in there. It's amazing what is happening in the Portland area.

Had 4000 sq ft for like $500 bucks, heh now I can't afford the rent in that area.

I didn't mortgage myself for the stock market, but I certainly lost 10's of thousands of dollars in it. :Oh crap And I went to private school. :helpme

Because lots and lots of people we told that by taking adjustable, they could get an even lower rate, which they did. But now those rates will hit 6 7 and in some cases 10%

First house I bought was something like 17% interest. Damn, I'm old :(

I predicted this about 3 years ago and I am right on target. I don't think it will be as bad as they are saying it will be but it will be bad.
There is so much inventory out there right now, it's crazy.

But as long as you can ride out the wave, you are still ahead of yourself.

That's about the gist of what the ABC News story covered.

They also stated that foreclosures/defaults are at a 10 year high. These things come in waves but I'm betting this is the last wave as the cost for a new home is far beyond what the average person can handle.

It used to be one person could buy a home. Then two. Now you need an investment group damn near.

I was surprised when I was able to convince my younger brothers and sisters to pool their money and buy a ranch instead. Far cheaper and roomier where they won't be getting into one another's hair. Sit on it for 5 years and sell it later.

We who work remote are luckiest. We can buy a great home in the wayback suburbs or country side and still save tons of money. I'm wrapping up on doing that now. Some of these properties, with lots of land are piss cheap. The same houses and land in or near a city would be $1 million easy. In my neighborhood a house with 20 acres would be worth $8 million easy, yet I can find better houses with more land for $100k.

It's to the point a great amount of the population can't afford decent housing and with the weather disasters forget it.

Quite an eye opener this real estate market is. If you don't have $500k to futz around with you're gonna be in trouble in a few years as real estate prices are going to increase because of greed not value. It distances people from acquiring new homes. Forces them to rent for more than had they mortgaged. They're pinched tween a rock and a hard place for sure.

It's a battle for survival of the fittest and people who sat around waiting for some help from above are going to find out a hard ass lesson in life.

It's gonna get real nasty out here very soon.

inflation owns us all

Yeah, I moved here and thought I'd be carried out in a wooden box. But the burbs have moved here fast in just 5 years. You used to be able to get an acre of GOOD (waterfront/mountain view) land for less than $7-8K. Now crap land is $15K+. There are half acre lots on top of the mountain I live on that are selling for $70K+. This is 60 miles away from ATL and honestly there are people making the commute, but it's mostly retirees who don't want to move to FL but don't want to be away from family in ATL either.

So......now I'm looking further out to buy my "retirement" property :( I didn't want my property values to go up, lol!

You are soooooo right the fuck on!

I'm a retard sometimes and a genius sometimes but I could see what you've just posted a long time ago.

My neighborhood prices shot up 200% in 5 years easy. Taxes are kicking the homeowner's asses too. Utilities etc.

In my line of work regarding cartooning and animation people lost their homes during the Michael Eisner years at Disney. I grieve not for many of them as they thought that happy kingdom shit would last forever and nobody bitched when their co-worker got fucked out of their job, til it was their turn. Like what happened in Germany to the Jews when the Nazis started rolling.

I've had to look at the practical side of things and realize I'm way more lucky and smarter in some respects but a dumb ass in others. At least I've come to my senses though. I saw the value of the web years ago when everyone else was laughing at how it was a fad. A day doesn't go by without some former colleague of mine begging for work. It's a shame. Some guys get a gig and buy the biggest fucking house and with no guarantee of self determined employment in the long run and sure enough they end up fucked.

I've re-invested excess capital into classes and courses that improve my knowledge of the web and traditional art. I can now take a year and hit the pedal to the metal to be bigger better and badder at art and by default increase my income substantially. By that time I can buy up some good properties that I can turn into studios. Work from home.

A home should generate capital by default and I like to work from home. By coupling online art with fine art like oil painting/portraits I can roll in the dough with fun work. Take that excess capital and build equity into a property instead of buying up everything under the Sun.

Yeah there's gonna be foreclosures like a mo' fo' soon. The cycle will start all over again but this time there's not going to be a price drop in new homes. These prices are going to grow, maybe not fast but will grow. The only thing that will boost these prices is the disaster factor.

If a big enough quake hits California, prices will drop like a fucking rock and the entire country will feel the ramifications. I'm surprised Florida has any real estate. The only reason it does is because it's a 'drug trafficking state'. Tourism and dope generate capital.

So when those foreclosures start and the alligators come out of the swamp that'll push prices back up as people will be outbidding each other like crazy.

I have learned two things in this business:

1.) Listen to CyberAge Dave
2.) Listen to Compdoctor

I remember when you stated the real estate turns Dave. I thought you were being merciful. Right now with the changes in government it's best to make hay while the sun shines and save your money for sound investment.

There is money to be made with this :)

Then you need someone to explain to you that you can only buy one thing in Rocklin, CA for $450,000.......
and that's a Roll Royce.


These days you can't own anything in CA that's decent for under $800,000.

That is your magic number, My friends just picked up a 2 bedroom, 1 1/2 bath house in Toluca Woods for 800. That is high but if you see the house and do the comparables, he got a good deal.

It's insane out here.

Smart to use the cash to pick up foreclosure properties, but do NOT take a HELOC!!! That is a VERY bad idea IMHO. I have seen WAY too many people screw up with that. Don't leverage a property purchase if you don't have to.:2 cents:

very bad, better fasten the seatbelts

Those who got variable rates will be the first to fall.

Sale, reinvest. carry on.....:thumbsup

I've always figured that no matter what your monthly major expense is (mortgage, rent, etc) you need to earn that much in 1 week, else you're not in too good shape.
But I'm no big risk taker either.
I'm hoping to put 10 to 20% down on a home, set up twice per month payments instead of once. And still pay more anyway. I hate being in debt that much.

Yeah, it would have to be a REALLY good deal I couldn't pass up and I couldn't get the cash elsewhere. It's already been taken out - took it out about 2 weeks after I bought the house so I'd have access to my downpayment if I ever needed it. It's only about 1/3 of the actual equity in the house so even if I went totally bust, I could still sell and cover it.

But again, it would have to be a VERY good deal where someone needed the cash immediately and I had no other liquid funds. :thumbsup

Everybody took a beating when the market crashed. That's just the way it works.
However, just like in 1929 the people jumping out of windows after the crash are the ones who were buying on margin and ended up losing more than they had to begin with.

Same thing with the people who are jumping on the real estate bandwagon, taking out interest only adjustable rate loans and thinking they'll flip the property in 1-2 years for a 50% return. Just plain dumb.

If you're going to invest in ANYTHING it needs to be for the long term. If you really think you can make ridiculous returns in a very short period of time because you're "smarter" than everyone else, you may as well just put all your money into a pyramid scheme.

buying opportunity!