Hmmmm.... the 'beginning' of increasing foreclosure activity? I thought foreclosures were up 90 percent, US wide?
In any case, bad juju. Doesn't matter if the economy officially goes into a recession or not. Many, many people will be hosed.
Yossarian, yes, just the beginning as far as time. I expect foreclosure activity to increase each year for several years.
In California, in the early '90s, foreclosure activity (and I'm using Notice of Default - NODs to define "activity") increased every year for six years.
CR- if you are sooo negative on foreclosure activity - then how can you say the US in a previous comment to the last post- that the US may only drop to sluggish growth?
If the largest asset in the US drops 5% even- wiping billions off household's net worth- leaving 100's billions of bad debts on the banks's books (see The Big Picture Blog) for the numbers of how a very small drop could lead to this- what will make up for this to cause growth?
We are already at War so increased military spending won't help. Will we start becoming an exporter nation again?
The auction process is accelerating a bit in California, between Hudson and Marshall and REDC there have been several big auctions in California with another new one scheduled for next month.
My brother in law will be selling a home I own a piece of in the Atlanta suburbs and moving the family to Germany for several years in the next few weeks...months. Things would have to be pretty bad for it not to work out very well, we've owned for over a decade.
Three of the topic stories in Barron's this week are negative on housing and mortgage securities. It will be interesting to see how stocks in these sectors open this morning.
And yet the builders are still throwing up spec homes like it's 2002 and Easy Al just dropped the fed funds rate to 1.25%.
In our Atlanta suburb I am noticing more and more unbuilt lots for sale, though. Some genius builder put up 5 spec homes about a mile away from us priced in the 900's. Not a one has sold, I'd love to know what bank is holding that construction note it would make a good short candidate.
Three of the topic stories in Barron's this week are negative on housing and mortgage securities. It will be interesting to see how stocks in these sectors open this morning.
all these stocks (with one or two exceptions such as AHM and DSL) were up 2%-3% on Friday....
Wonder how many times we'll see this repeated in the next 30 days or so:
"Huntington Bancshares Incorporated Expects to Report 2007 Second Quarter Earnings of $0.34 [vs. .43 expected] Per Common Share
Monday July 9, 7:25 am ET
- Net negative impact of $0.11 per common share related to higher loan loss provision expense, merger-related costs, and market-related net losses
- Good growth in commercial loans
- Decline in consumer loans reflecting mortgage loan sales
- Strong growth in non-interest bearing demand deposits
- Strong fee income growth
- Well-controlled expenses, exclusive of merger-related costs"
$60 million pre-tax of provision expense, a $31 million ($0.08 per share) increase from the 2007 first quarter, including $25 million ($0.06 per share) related to three large credits including two East Michigan real estate credits and one Northeast Ohio commercial loan
The Spring and early-Summer selling season is important for homebuilders, and while we had expected softness, in the case of East Michigan, it turned out to be far worse than planned
The Credit Suisse piece cited in the Bloomberg article is meant to be bullish. $52b is a low-ish estimate, and they say no danger of "systemic" risk from subprime.
This is the type of piece vol-sellers love. They think the credit market is "panicking" about subprime. The are cash rich and ready to sweep in and buy "distressed" credit assets at "fire-sale" prices. They are betting that a systemic problem is a six-sigma event with less than one-in-a-thousand odds.
Its so ironic: during the internet bubble, growth investors were too pie-in-the-sky about future growth, and the bubble popped. Now everyone's a value investor. Everyone thinks they're stepping in to buy, "when there's blood in the street". Everyone thinks the blood of Buffet is running through their veins.
Problem is, the downturn's just started. This credit-market bubble will stop when people realize that six-sigma way understates the odds of systemic risk.
Having lived in atlanta when this lending debacle first started, Georgia legislators saw it coming and in 2002 passed a fair lending law that ran many lenders out. We had seen some early fall out but now its intensifying????? And Atlanta is picked in the top 10 of most affordable places to live??? No shit. Watch Atlanta Carefully, because however bad it gets there the rest of the nation will follow only worse because of other states not passing sim,ilar lending laws. And remember now Atlanta is comprised of 13-16 counties with Fulton being the leader. Also, ATL was about 2 years ahead of everywhere else. It had a ;larger actually a majority minority population and thats where the lending was done. Similar to the DC area.
"For example, a three-bedroom house near Turner Field, where the Atlanta Braves baseball team plays, fetched a high bid late last month of $134,000 at an auction by the bank that took possession of it. Almost three years ago, the new home was bought for $330,000."
ummmm.....how representative do you think this example will be for future forclosures? Let's see 134,000/330,000 * 100 ~ 40.6% of price originally paid. Seems kind of bad to me. What do the models say?
(Sorry if this double-posts, haloscan seems to be unhappy)
The Great Depression happened less than 100 years ago. So even if you count that as the only systemic failure that's ever occurred, you get a measured systemic failure rate of about 1% per annum. That puts you at about 2.5 sigma, not six.
If you start counting less dramatic system failures (LTCM, Asian currency crisis, Mexican Peso bailout, October 1987, etc) you pretty quickly get to a per annum failure rate that's more like 1.5 sigma.
When the Florida and San Diego markets started to falter last year, Atlanta was often touted as one of the non-bubble markets, but things are definitely starting to buckle under.
Although the pillar neighborhoods like Sandy Springs and Dunwoody seem to be okay, there are some real debacles starting to unfold in the outlying counties such as Paulding and Douglas and the neighborhoods on the frontier of gentrification (such as the Turner field area mentioned in the article). There also seems to be a big problem in the established intown neighborhoods where a lot of single lot infill has been occuring.
In my own in-town Dekalb neighborhood every ranch home sold over the past four years became a site of single lot infill. For $275,000, the pattern has been to tear-down and build a 7500 square foot $925,000 home. Within a half mile of my home, there are at least thirty MM dollar homes on the market, which has cleared two in the past year. Around the block from me, a 12,000 square foot Hampton Inn-like absurdity has been stalled out for six months at the Tyvek wrap stage looking for all the world like the abandoned child of a bankrupt builder.
It looks like all the battles we had over infill at the County Commision a few years ago are going to be a moot point, although I have to say that my own neighborhood looks like crap with enormous unsold McMansions towering over dilapidating rentals.
In 2004, fully 50.4% of the mortgage loans issued for purchases of single-family homes in Georgia were to pay interest only. That made the Peach State No. 1 in the nation in its share of interest-only mortgages.
The deeper you go into the lending-bag-o-tricks the thinner the deal is.
Maybe it causes prices to be bid up.
Maybe it permits dirt poor folks to make payments for awhile.
"Banks' direct exposure to CDOs is not as high as people think," said Vatchkov. "They stand to lose $5 billion to $15 billion from direct exposures over time on the basis of what we know now. Banks have lent money to the people who bought the risky equity tranches of CDOs, but that market isn't transparent enough to estimate exposure and risks there could be bigger."
English translation: it's the pension funds and other places that Got Stuffed that will lose money. That's why the assets were Securitized in the first place.
No, not in Brookhaven, but about five miles East of that area in Oak Grove (the Briarcliff corridor north of Clairmont).
You could probably generalize the infill debacle across all the inner ring neighborhoods from the edge of Decatur through Oak Grove to Brookhaven and Chastain all the way to Vinings. From what I can see, many of the best neighborhoods in Atlanta are going to be screwed up for a long time, and there are going to be hundreds of millions of dollars of losses for these builders.
The Implode-O-Meter stands at 96, and we are only in the second inning. A lot of people will be upset when they lose their pensions, and find out the 2 foreclosures down the street are the comps for their house.
Most models used to determine credit losses only look back to the eighties (at the most -- FICO and securitization of ABS really dates back to the early 90's).
These models assume a Gaussian distribution, so the derivation of six-sigma is not based on historical "tail" data points but on the assumed distribution, IMO.
Of course, what's missing is that the probability of house prices declining 20% and 40% is not that different given the leverage employed; i.e., the systemic failure caused by a 20% decline would in all likelihood lead to a 40% decline. Instead, the bell-curve distribution would peg the 40% decline as orders-of-magnitude less likely than a 20% decline.
"...what's missing is that the probability of house prices declining 20% and 40% is not that different given the leverage employed..."
I was thinking something similar but also wondering how loss models dealt with opportunity or carry cost(s); that is, either prices decline or the time it takes to find a buyer and close a deal is extended, or both.
Depending upon circumstances there might not be that big a difference between a house that drops 40% in price but sells within a month and a house that drops 20% and sells in 14 months.
And then, on another planet entirely, there are price drops like those that occurred during the 1925 Florida real estate crash -- losses in excess of 90% were not uncommon between 1925 and 1926 -- folks in Florida were probably so low they barely noticed the beginning of the great depression 5 years later.
While it's true that the gentrifying neighborhoods of Atlanta are getting hit, I'm still waiting for the exurbs (alpharetta and north, lilburn and east of stone mountain, beyond marietta) to get nailed. It doesn't seem to be too bad yet. I've only seen prices go from "totally ridiculous" to "somewhat ridiculous".
That said, in midtown and buckhead, condos are going up still like crazy.
I understand there are tons of single one-bedrooms on the market. Not sure about the two bedrooms.
But again, I don't think prices are dropping.
Sellers seem to be trying to dig in their heels. They want the crazy gains over the past 5 years.
How will it all end? and how many years will it take to play out?
Sellers seem to be trying to dig in their heels. They want the crazy gains over the past 5 years.
How will it all end? and how many years will it take to play out?
Many years. What you just described is the very definition of 'sticky prices'. Until folks are FORCED to sell they WON'T sell. Hope you aren't in a hurry.
The reason that Georgia is having so many foreclosures is because it is the highest fraudulant lending state in the nation bar none. I am a review appraiser who reviews appraisals across the U.S. Every appraisal that comes in from Georgia especially Atlanta is reviewed twice before being accepted. The biggest fraudulant appraisal I saw was in Atlanta and we went after his license. What you have in Georgia is a state enforcement agency that does not have the moral fortitude to fulfill the obigations of the office and what you see is the outcome. In my opinion the state of Georgia has been derelect in its duty to enforce the appraisal and lending industry in general.
dry:
i am on the other side of the fence as to how long prices will take to adjust. i think its going to be way faster than in any previous housing downturn and its because of the financing mechanism.
pricing is always set at the margin. i totally agree that people will not voluntarily sell a huge loss but there are now and will be even more shortly, a great sea of forced sellers due to who owns the paper.
the economic value of housing to a value investor is based on the rental value of the property. as has been documented ad nauseum, that number is probably 40% down from here.
d
i think its going to be way faster than in any previous housing downturn and its because of the financing mechanism. pricing is always set at the margin.
I hope you are right because the faster it clears the sooner things improve for all - even those who lost their ass.
I doubt it however. I believe the 'system' will do all it can, all in its power, to hang on & stretch this insanity out. Everyone wants to be a survivor, even those who are doomed.
david p:
spot on.
once markets get as geared as they are its very hard to get a small decline. either the thing keeps going or it gets crushed. the housing market is getting crushed.
We've been waiting for this for a few years now. Friends think I'm crazy for waiting to buy a house in intown Atlanta. We experienced the rising home prices and was almost a victim of fraud, but we backed out of a deal that was suspect.
Now home prices are slowly, slowly coming down. The Atlanta market has experienced bubble prices, but I think the median numbers are skewed by the range of house prices within Atlanta and the size of the Atlanta market. House prices in the Atlanta market can vary by $20M. The MSA lists 26 counties for the Atlanta-Sandy Springs-Marietta market: South East Metro Area Maps
This article confirms all of my suspicions about the Atlanta real estate market, and it encourages me to continue to wait. Meanwhile, I'll just continue saving my money....
Atlanta is the fastest growing Metro Area in the Country. More than 110,000 people moved to the Metro Atlanta Area last year. A lot of these foreclosures provide a great opportunity for anyone moving to the Atlanta Area now. You can get a free list of foreclosure homes, divorce homes, relocation sales, and many other homes priced below value from Atlanta Foreclosures HUD Homes Atlanta Investment Property Houses in
GA
Just what we all need -- a realtor to spin this thing into something positive and take advantage of people who don't know any better than to buy into a foreclosure neighborhood when the value of homes are going down. Or would you happen to be a flipper in trouble or someone who pushes fraudulent deals?
Thanks atlanta_renter:
When do you go shopping? Do you go shopping on a Black Friday when everything is on sale or when prices are going up? Smart people who invest in stocks or real estate sell when prices are up and buy when prices are falling. (You sell when demand is high and buy when supply high) There are a lot of bargains out there now. This is a Buyer's Market. It's not a flippers' market, but a market for smart long term investors. Real estate is not a get-rich-quick business.
Interesting comparison. Yes, it is better to buy low and sell high, but prices are still relatively high to what people can truly afford according to traditional lending practices. I think a better analogy is the stock market in the fall of 2000. If you bought dotcom stocks in the fall of 2000 the market was still set to plunge 3000 points over another two years and still hasn't made it back to those levels. No one expects housing market to get better for now, not even the NAR.
Even Paul Kasriel questions Realtor's assessment that this is a good time to enter the housing market and thinks "buyers are smart to be sitting on the sidelines right now." No one is buying into their Kool-Aid; that's why prices are falling," he said. "It could be that they're going to fall a lot more."
Between the increasing foreclosures and interest rates, prices will continue to fall. Why would anyone buy a house now? Foreclosures will decrease comps of neighborhoods and home sales prices so why get in the game early?
Obviously, you are a Realtor(R). I understand you need to keep selling houses to make a living.
The numbers for their example home near Turner field are very skewed. The opening bid of a foreclosure auction is always the bank that is foreclosing on the property, and the opening bid is the amount owed on the property, plus attorney's fees, late fees, etc. The only implication illustrated by their example is that a) the owner did not owe much when they lost the property and b)there are so many foreclosures every month that there are some great deals to be had. It's a real stretch for them to assume that the auction price indicates the FMV of the property. With over 4,000 foreclusures per month in GA, this is a great time to pick up property. I've been investing part-time for 7 years and I've purchased 3 foreclosure properties in the past two months.
Hmmmm.... the 'beginning' of increasing foreclosure activity? I thought foreclosures were up 90 percent, US wide?
In any case, bad juju. Doesn't matter if the economy officially goes into a recession or not. Many, many people will be hosed.
Yossarian, yes, just the beginning as far as time. I expect foreclosure activity to increase each year for several years.
In California, in the early '90s, foreclosure activity (and I'm using Notice of Default - NODs to define "activity") increased every year for six years.
I believe this is just the beginning.
Best Wishes.
CR- if you are sooo negative on foreclosure activity - then how can you say the US in a previous comment to the last post- that the US may only drop to sluggish growth?
If the largest asset in the US drops 5% even- wiping billions off household's net worth- leaving 100's billions of bad debts on the banks's books (see The Big Picture Blog) for the numbers of how a very small drop could lead to this- what will make up for this to cause growth?
We are already at War so increased military spending won't help. Will we start becoming an exporter nation again?
"This is probably just the beginning of increasing foreclosure activity in Atlanta and the entire country."
No shit. Ya think?
Auction.com | Online Real Estate Bidding | Foreclosures | REO Homes
The auction process is accelerating a bit in California, between Hudson and Marshall and REDC there have been several big auctions in California with another new one scheduled for next month.
Fascinating.
My brother in law will be selling a home I own a piece of in the Atlanta suburbs and moving the family to Germany for several years in the next few weeks...months. Things would have to be pretty bad for it not to work out very well, we've owned for over a decade.
Banker,
define "work out well"...
Three of the topic stories in Barron's this week are negative on housing and mortgage securities. It will be interesting to see how stocks in these sectors open this morning.
And yet the builders are still throwing up spec homes like it's 2002 and Easy Al just dropped the fed funds rate to 1.25%.
In our Atlanta suburb I am noticing more and more unbuilt lots for sale, though. Some genius builder put up 5 spec homes about a mile away from us priced in the 900's. Not a one has sold, I'd love to know what bank is holding that construction note it would make a good short candidate.
$52B:
CDO Losses May Be $52 Billion, Credit Suisse Says (Update4) - Bloomberg.com
Three of the topic stories in Barron's this week are negative on housing and mortgage securities. It will be interesting to see how stocks in these sectors open this morning.
all these stocks (with one or two exceptions such as AHM and DSL) were up 2%-3% on Friday....
Wonder how many times we'll see this repeated in the next 30 days or so:
"Huntington Bancshares Incorporated Expects to Report 2007 Second Quarter Earnings of $0.34 [vs. .43 expected] Per Common Share
Monday July 9, 7:25 am ET
- Net negative impact of $0.11 per common share related to higher loan loss provision expense, merger-related costs, and market-related net losses
- Good growth in commercial loans
- Decline in consumer loans reflecting mortgage loan sales
- Strong growth in non-interest bearing demand deposits
- Strong fee income growth
- Well-controlled expenses, exclusive of merger-related costs"
Expired
this earnings release has some excellent quotes
Huntington Bancshares Incorporated
Expired
$60 million pre-tax of provision expense, a $31 million ($0.08 per share) increase from the 2007 first quarter, including $25 million ($0.06 per share) related to three large credits including two East Michigan real estate credits and one Northeast Ohio commercial loan
The Spring and early-Summer selling season is important for homebuilders, and while we had expected softness, in the case of East Michigan, it turned out to be far worse than planned
uh...
havn´t seen you post winjr
Yal,
The Credit Suisse piece cited in the Bloomberg article is meant to be bullish. $52b is a low-ish estimate, and they say no danger of "systemic" risk from subprime.
This is the type of piece vol-sellers love. They think the credit market is "panicking" about subprime. The are cash rich and ready to sweep in and buy "distressed" credit assets at "fire-sale" prices. They are betting that a systemic problem is a six-sigma event with less than one-in-a-thousand odds.
Its so ironic: during the internet bubble, growth investors were too pie-in-the-sky about future growth, and the bubble popped. Now everyone's a value investor. Everyone thinks they're stepping in to buy, "when there's blood in the street". Everyone thinks the blood of Buffet is running through their veins.
Problem is, the downturn's just started. This credit-market bubble will stop when people realize that six-sigma way understates the odds of systemic risk.
Having lived in atlanta when this lending debacle first started, Georgia legislators saw it coming and in 2002 passed a fair lending law that ran many lenders out. We had seen some early fall out but now its intensifying????? And Atlanta is picked in the top 10 of most affordable places to live??? No shit. Watch Atlanta Carefully, because however bad it gets there the rest of the nation will follow only worse because of other states not passing sim,ilar lending laws. And remember now Atlanta is comprised of 13-16 counties with Fulton being the leader. Also, ATL was about 2 years ahead of everywhere else. It had a ;larger actually a majority minority population and thats where the lending was done. Similar to the DC area.
$52b? When the black swan shows up and craps on your doorstep it is best to describe it as a very small black swan.
"For example, a three-bedroom house near Turner Field, where the Atlanta Braves baseball team plays, fetched a high bid late last month of $134,000 at an auction by the bank that took possession of it. Almost three years ago, the new home was bought for $330,000."
ummmm.....how representative do you think this example will be for future forclosures? Let's see 134,000/330,000 * 100 ~ 40.6% of price originally paid. Seems kind of bad to me. What do the models say?
(Sorry if this double-posts, haloscan seems to be unhappy)
The Great Depression happened less than 100 years ago. So even if you count that as the only systemic failure that's ever occurred, you get a measured systemic failure rate of about 1% per annum. That puts you at about 2.5 sigma, not six.
If you start counting less dramatic system failures (LTCM, Asian currency crisis, Mexican Peso bailout, October 1987, etc) you pretty quickly get to a per annum failure rate that's more like 1.5 sigma.
When the Florida and San Diego markets started to falter last year, Atlanta was often touted as one of the non-bubble markets, but things are definitely starting to buckle under.
Although the pillar neighborhoods like Sandy Springs and Dunwoody seem to be okay, there are some real debacles starting to unfold in the outlying counties such as Paulding and Douglas and the neighborhoods on the frontier of gentrification (such as the Turner field area mentioned in the article). There also seems to be a big problem in the established intown neighborhoods where a lot of single lot infill has been occuring.
In my own in-town Dekalb neighborhood every ranch home sold over the past four years became a site of single lot infill. For $275,000, the pattern has been to tear-down and build a 7500 square foot $925,000 home. Within a half mile of my home, there are at least thirty MM dollar homes on the market, which has cleared two in the past year. Around the block from me, a 12,000 square foot Hampton Inn-like absurdity has been stalled out for six months at the Tyvek wrap stage looking for all the world like the abandoned child of a bankrupt builder.
It looks like all the battles we had over infill at the County Commision a few years ago are going to be a moot point, although I have to say that my own neighborhood looks like crap with enormous unsold McMansions towering over dilapidating rentals.
I sure am glad I don't plan to move anytime soon.
Possible causes?
From BusinessWeek May 2005:
In 2004, fully 50.4% of the mortgage loans issued for purchases of single-family homes in Georgia were to pay interest only. That made the Peach State No. 1 in the nation in its share of interest-only mortgages.
The deeper you go into the lending-bag-o-tricks the thinner the deal is.
Maybe it causes prices to be bid up.
Maybe it permits dirt poor folks to make payments for awhile.
Wetzel,
Are you in Brookhaven?
The build that put up all the spec homes next to Oglethorpe went into Bankruptcy.
"Banks' direct exposure to CDOs is not as high as people think," said Vatchkov. "They stand to lose $5 billion to $15 billion from direct exposures over time on the basis of what we know now. Banks have lent money to the people who bought the risky equity tranches of CDOs, but that market isn't transparent enough to estimate exposure and risks there could be bigger."
English translation: it's the pension funds and other places that Got Stuffed that will lose money. That's why the assets were Securitized in the first place.
Can we get an update on that sign?
Hi Miguela,
No, not in Brookhaven, but about five miles East of that area in Oak Grove (the Briarcliff corridor north of Clairmont).
You could probably generalize the infill debacle across all the inner ring neighborhoods from the edge of Decatur through Oak Grove to Brookhaven and Chastain all the way to Vinings. From what I can see, many of the best neighborhoods in Atlanta are going to be screwed up for a long time, and there are going to be hundreds of millions of dollars of losses for these builders.
This is going to get really ugly!
The Implode-O-Meter stands at 96, and we are only in the second inning. A lot of people will be upset when they lose their pensions, and find out the 2 foreclosures down the street are the comps for their house.
atlanta's anecdotal ticking time bomb.....
Atlanta Real Estate - Atlanta Homes for Sale — Metro Brokers/GMAC Real Estate
she dropped by 1,800 right at the beginning of July
Professor Foland,
Most models used to determine credit losses only look back to the eighties (at the most -- FICO and securitization of ABS really dates back to the early 90's).
These models assume a Gaussian distribution, so the derivation of six-sigma is not based on historical "tail" data points but on the assumed distribution, IMO.
Of course, what's missing is that the probability of house prices declining 20% and 40% is not that different given the leverage employed; i.e., the systemic failure caused by a 20% decline would in all likelihood lead to a 40% decline. Instead, the bell-curve distribution would peg the 40% decline as orders-of-magnitude less likely than a 20% decline.
"...what's missing is that the probability of house prices declining 20% and 40% is not that different given the leverage employed..."
I was thinking something similar but also wondering how loss models dealt with opportunity or carry cost(s); that is, either prices decline or the time it takes to find a buyer and close a deal is extended, or both.
Depending upon circumstances there might not be that big a difference between a house that drops 40% in price but sells within a month and a house that drops 20% and sells in 14 months.
And then, on another planet entirely, there are price drops like those that occurred during the 1925 Florida real estate crash -- losses in excess of 90% were not uncommon between 1925 and 1926 -- folks in Florida were probably so low they barely noticed the beginning of the great depression 5 years later.
While it's true that the gentrifying neighborhoods of Atlanta are getting hit, I'm still waiting for the exurbs (alpharetta and north, lilburn and east of stone mountain, beyond marietta) to get nailed. It doesn't seem to be too bad yet. I've only seen prices go from "totally ridiculous" to "somewhat ridiculous".
That said, in midtown and buckhead, condos are going up still like crazy.
I understand there are tons of single one-bedrooms on the market. Not sure about the two bedrooms.
But again, I don't think prices are dropping.
Sellers seem to be trying to dig in their heels. They want the crazy gains over the past 5 years.
How will it all end? and how many years will it take to play out?
Sellers seem to be trying to dig in their heels. They want the crazy gains over the past 5 years.
How will it all end? and how many years will it take to play out?
Many years. What you just described is the very definition of 'sticky prices'. Until folks are FORCED to sell they WON'T sell. Hope you aren't in a hurry.
The reason that Georgia is having so many foreclosures is because it is the highest fraudulant lending state in the nation bar none. I am a review appraiser who reviews appraisals across the U.S. Every appraisal that comes in from Georgia especially Atlanta is reviewed twice before being accepted. The biggest fraudulant appraisal I saw was in Atlanta and we went after his license. What you have in Georgia is a state enforcement agency that does not have the moral fortitude to fulfill the obigations of the office and what you see is the outcome. In my opinion the state of Georgia has been derelect in its duty to enforce the appraisal and lending industry in general.
dry:
i am on the other side of the fence as to how long prices will take to adjust. i think its going to be way faster than in any previous housing downturn and its because of the financing mechanism.
pricing is always set at the margin. i totally agree that people will not voluntarily sell a huge loss but there are now and will be even more shortly, a great sea of forced sellers due to who owns the paper.
the economic value of housing to a value investor is based on the rental value of the property. as has been documented ad nauseum, that number is probably 40% down from here.
d
I live in Atlanta. Can you say FRAUD? I'll say it again---fraudfraudfraud.
i think its going to be way faster than in any previous housing downturn and its because of the financing mechanism. pricing is always set at the margin.
I hope you are right because the faster it clears the sooner things improve for all - even those who lost their ass.
I doubt it however. I believe the 'system' will do all it can, all in its power, to hang on & stretch this insanity out. Everyone wants to be a survivor, even those who are doomed.
david p:
spot on.
once markets get as geared as they are its very hard to get a small decline. either the thing keeps going or it gets crushed. the housing market is getting crushed.
We've been waiting for this for a few years now. Friends think I'm crazy for waiting to buy a house in intown Atlanta. We experienced the rising home prices and was almost a victim of fraud, but we backed out of a deal that was suspect.
Now home prices are slowly, slowly coming down. The Atlanta market has experienced bubble prices, but I think the median numbers are skewed by the range of house prices within Atlanta and the size of the Atlanta market. House prices in the Atlanta market can vary by $20M. The MSA lists 26 counties for the Atlanta-Sandy Springs-Marietta market: South East Metro Area Maps
This article confirms all of my suspicions about the Atlanta real estate market, and it encourages me to continue to wait. Meanwhile, I'll just continue saving my money....
Atlanta is the fastest growing Metro Area in the Country. More than 110,000 people moved to the Metro Atlanta Area last year. A lot of these foreclosures provide a great opportunity for anyone moving to the Atlanta Area now. You can get a free list of foreclosure homes, divorce homes, relocation sales, and many other homes priced below value from Atlanta Foreclosures HUD Homes Atlanta Investment Property Houses in
GA
Thanks Eric -
Just what we all need -- a realtor to spin this thing into something positive and take advantage of people who don't know any better than to buy into a foreclosure neighborhood when the value of homes are going down. Or would you happen to be a flipper in trouble or someone who pushes fraudulent deals?
Thanks atlanta_renter:
When do you go shopping? Do you go shopping on a Black Friday when everything is on sale or when prices are going up? Smart people who invest in stocks or real estate sell when prices are up and buy when prices are falling. (You sell when demand is high and buy when supply high) There are a lot of bargains out there now. This is a Buyer's Market. It's not a flippers' market, but a market for smart long term investors. Real estate is not a get-rich-quick business.
Eric -
Interesting comparison. Yes, it is better to buy low and sell high, but prices are still relatively high to what people can truly afford according to traditional lending practices. I think a better analogy is the stock market in the fall of 2000. If you bought dotcom stocks in the fall of 2000 the market was still set to plunge 3000 points over another two years and still hasn't made it back to those levels. No one expects housing market to get better for now, not even the NAR.
Even Paul Kasriel questions Realtor's assessment that this is a good time to enter the housing market and thinks "buyers are smart to be sitting on the sidelines right now." No one is buying into their Kool-Aid; that's why prices are falling," he said. "It could be that they're going to fall a lot more."
Realtors forecast housing slump to linger into '08 - Jul. 11, 2007
Between the increasing foreclosures and interest rates, prices will continue to fall. Why would anyone buy a house now? Foreclosures will decrease comps of neighborhoods and home sales prices so why get in the game early?
Obviously, you are a Realtor(R). I understand you need to keep selling houses to make a living.
The numbers for their example home near Turner field are very skewed. The opening bid of a foreclosure auction is always the bank that is foreclosing on the property, and the opening bid is the amount owed on the property, plus attorney's fees, late fees, etc. The only implication illustrated by their example is that a) the owner did not owe much when they lost the property and b)there are so many foreclosures every month that there are some great deals to be had. It's a real stretch for them to assume that the auction price indicates the FMV of the property. With over 4,000 foreclusures per month in GA, this is a great time to pick up property. I've been investing part-time for 7 years and I've purchased 3 foreclosure properties in the past two months.