Results 1 to 13 of 13

Thread: new and dangerous twist in real estate bubble collapse

  1. #1
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default new and dangerous twist in real estate bubble collapse

    "Thursday, April 05, 2007
    "‘Unprecedented’ foreclosure activity"

    From the Central Valley Business Times:

    With the Central Valley leading the way, 5,316 homes were lost to foreclosure sales in March in California, according to figures compiled by Foreclosure Radar, a Discovery Bay-based foreclosure listings and software company.

    The homes sold at auction last month represented a 27 percent increase from February and a 264 percent increase in the last six months, the company says. Of the $2 billion worth of properties sold in March, 4,796 went back to the lender after receiving no bids, representing $1.82 billion, it says.

    While foreclosure sales are increasing throughout the state, Foreclosure Radar says there are significant regional differences.

    Despite considerable news coverage of San Diego foreclosures, San Diego County ranked 15th highest with one foreclosure for every 5,668 residents in March and while Los Angeles easily ranks number one in volume each month, adjusted for population, Los Angeles County ranks 38th with one foreclosure for every 12,182 residents.

    The real foreclosure leaders are in the Central Valley, the company says.

    Four of the state’s top five counties for foreclosure sales last month, on a per capita basis, are in the Valley.

    Sacramento County ranks first with 2,605 residents for every sale. Neighboring San Joaquin County is third, one sale for every 2,872 residents. Yuba County is fourth, at 2,909 residents per sale and Stanislaus County is fifth with 3,597 residents per sale.

    Riverside County is second with 2,747 residents for every foreclosure sale, according to the company’s figures.

    “Foreclosures sold at auction now account for 15 percent of all home sales in California and continue to rise,” says Sean O’Toole, CEO and founder of Foreclosure Radar. “This isn’t just a story about failing subprime lenders and their customers. At the current pace, foreclosures will be a significant part of the real estate economy. A fact which bears close scrutiny even in areas that are not yet affected.”

    Foreclosure Radar says it is the only service that tracks the actual auctions of property on a daily basis. It says its data are based on individual sales results at daily foreclosure auctions throughout the state, not estimates or projections. "(snip)

    from


    Put another way, there are now so many homes subject to forced auction sales, and so few qualified buyers, that 90% of the (dollar value) foreclosed properties now have no takers. This of course prevents the mortgage lender (and that lender's upstream investors) from recovering any 'cash' from the defaulted mortgage. As a result, the mortgage lenders are now literally sitting on thousands of houses which they now technically own and are unable to 'cut their losses'. Gridlocked cash flow spells bankruptcy for the mortgage lenders. After that, liquidation at any price will be pushed by the bankrupt mortgage lenders' creditors (who are typically huge financial houses, pension funds, hot foreign money). When that happens it will result in 'shock and awe' in regard to how fast the assessed values of residential real estate can drop !

  2. #2
    Featured Member lunchbox's Avatar
    Joined
    Sep 2005
    Location
    falling from grace
    Posts
    1,943
    Thanks
    0
    Thanked 8 Times in 6 Posts

    Default Re: new and dangerous twist in real estate bubble collapse

    Now, you can't go a single day and not find something interesting. Unfortunately we live in a country where Anna's Baby Daddy is the most important news story...

    http://www.washingtonpost.com/wp-dyn...040901463.html

    http://users1.wsj.com/lmda/do/checkL...322565654.html
    (registration required)
    http://online.wsj.com/public/resourc...0704-sort.html

  3. #3
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: new and dangerous twist in real estate bubble collapse

    ^^^ not wanting to veer too far off topic, but this is what happens when US mainstream media is forced to prioritize their news content based on 'entertainment value' rather than on newsworthiness. Of course this should come as no surprise, given that 80-90% of Americans have next to zero basic knowledge of how the interconnected 'wheels' of a national / world economy works. Even worse - most don't care, given that their long term financial planning horizon is limited to how they're going to make end of month mortgage and utility bill payments !

  4. #4
    Featured Member scorpio's Avatar
    Joined
    Nov 2003
    Location
    Chicago
    Posts
    868
    Thanks
    0
    Thanked 3 Times in 3 Posts

    Default Re: new and dangerous twist in real estate bubble collapse

    perfect, now is the time to do short sale purchases. lenders are selling off pre forclosure properties for as low a s.60 on the dollar. taa daaa, instant equity!

  5. #5
    Veteran Member
    Joined
    Jul 2004
    Posts
    521
    Thanks
    1
    Thanked 0 Times in 0 Posts

    Default Re: new and dangerous twist in real estate bubble collapse

    Quote Originally Posted by Melonie View Post
    ...When that happens it will result in 'shock and awe' in regard to how fast the assessed values of residential real estate can drop !
    Speaking of "shock and awe," I wonder how well the Socialist contingent we have in Sacramento will cope with this? I don't believe they've ever considered property taxes dropping like a stone when the real estate bubble finally does burst. Whether it's tulip bulbs or real estate, it seems we never learn from history.

  6. #6
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: new and dangerous twist in real estate bubble collapse

    taa daa, instant equity
    Maybe so at this moment. However, I doubt you can guarantee that will hold through the end of the year. A 60 cent on the dollar short sale on a house that is mortgaged at a value 25% over the current market value does represent instant equity of maybe 10%-15%. However, if market values continue to decline by 15-20% from here, by the end of the year that short sale property would also be underwater !

    I wonder how well the Socialist contingent we have in Sacramento will cope with this? I don't believe they've ever considered property taxes dropping like a stone when the real estate bubble finally does burst
    not a factor. The local gov't will simply readjust stated property tax rates in order to collect the same amount of dollars in property tax revenue next year from the same properties. They really don't have any other choice. However, in terms of backlash from local homeowners, trying to still collect $10k a year in property taxes is a lot harder to explain when the actual market value of the house is now $200k instead of $400k !

  7. #7
    sun child
    Guest

    Default Re: new and dangerous twist in real estate bubble collapse

    What does this mean for those who want to buy a house in the next 5-10 years? Is this a bad time to buy because prices are just going to go lower and lower?

  8. #8
    sun child
    Guest

    Default Re: new and dangerous twist in real estate bubble collapse

    Also, how does one get in on these properties that are foreclosed? Are they sold at public auctions? Are there any websites that tell you when they will be sold? Could you buy a foreclosed house and get your own mortgage loan towards it? Or do they just want buyers who can front a large amount of money? Sorry if that's too many questions. Just want to know how this is going to fit in with my own personal "buying a house" dream.

  9. #9
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: new and dangerous twist in real estate bubble collapse

    Where the 'Sherriff's Auction' houses are concerned, one way or another the bidder has to pay in full at the time of purchase. This is not to say that a potential bidder can't go to the auction with a pre-approved loan in hand if they have a big enough cash down payment available. You can find announcements for Sherriff's Auctions in the 'official' local newspaper announcements sections.

    But the risk is that, in the opinion of most financial experts, real estate prices are headed even lower in the short term. Thus anybody who buys a home today, by normal means, by a short sale directly from a lender, or at auction, still runs the risk of the house depreciating further.

  10. #10
    BrunetteGoddess
    Guest

    Default Re: new and dangerous twist in real estate bubble collapse

    Ugh. This is all too familiar for our home. It's getting forclosed on very soon.

  11. #11
    sun child
    Guest

    Default Re: new and dangerous twist in real estate bubble collapse

    Quote Originally Posted by VenusGoddess View Post
    You don't WANT to buy a foreclosed property!!! You want to buy PRE-foreclosure! Banks would rather sell (on average) a home with a mortgage of $150,000 for $90 - 100,000. Why? Because it's easier to take a $50,000 loss than it would be to have a note for $150,000, add attorney fees for foreclosures (about $6-7,000), auction costs, and if it doesn't sell at auction, realtor costs.

    Buy pre-foreclosure.
    How can you tell if a house is pre-foreclosure? Thanks Venus.

  12. #12
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: new and dangerous twist in real estate bubble collapse

    ^^^ just ask any local bank or mortgage lender ! They have an increasingly long list of houses where the homeowner's mortgage is in default, and are becoming increasingly willing to sell at a loss (in terms of sale price of the home vs outstanding balance of the defaulted mortgage).

    However, these same lenders are now very wary of taking one loss on a home mortgage via short sale in order to get out from under further losses on that mortgage, only to turn around and take a second loss on the same home if the short sale buyer defaults on a new mortgage. The banks and mortgage lenders are now looking to recover whatever cash they can, and are in no hurry to write a new mortgage unless the person's credit is impeccable plus the person is able to put up a sizeable down payment to insure against further declines in market value of the bank's collateral.

    This is the essence of a liquidity crisis. Very few people have cash / positive net worth, while at the same time very few lenders are now willing to write new loans for people that don't !

  13. #13
    Featured Member lunchbox's Avatar
    Joined
    Sep 2005
    Location
    falling from grace
    Posts
    1,943
    Thanks
    0
    Thanked 8 Times in 6 Posts

    Default Re: new and dangerous twist in real estate bubble collapse

    Relevant information from a fellow SW poster:

    http://www.stripperweb.com/forum/sho...4&postcount=13

Similar Threads

  1. real estate
    By cheetahchick in forum The Lounge
    Replies: 14
    Last Post: 06-01-2018, 09:18 PM
  2. Replies: 0
    Last Post: 02-12-2011, 01:21 PM
  3. Panama Real Estate....
    By arctic717 in forum Dollar Den
    Replies: 22
    Last Post: 04-03-2008, 01:41 AM
  4. Real Estate 4 Sale
    By cash777 in forum For Sale & Wanted
    Replies: 0
    Last Post: 07-09-2007, 06:04 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •