Stephen Roach has been saying for some time that Americas inflated asset prices must fall !
There is a nominal and a real component to the fall as well... Roach is in Asia now IIRC and he'd be seeing an even larger fall in 'our valuations' denominated in other currencies than the poor folks in Sacramento see in USD alone.
Last quarter the number of homes going into default surpassed (102.6%) the number of homes sold in LA County.
The number of trustee sales was about was 34.1% relative to the number of sales in LA County in Q4.
All numbers from DQ.
Here is how the last 3 quarters progressed for NTS/Sales:
Q2: 11.6%
Q3: 20.3%
Q4: 34.1%
Here is how the last 3 quarters progressed for NOD/Sales:
Q2: 46.7%
Q3: 76.2%
Q4: 102.6%
If you consider the fact that the percentage of homes going into NOD that are then being foreclosed is increasing rapidly (59% in Q4) and home sales are slowing and NOD are increasing... You can see that LA county might not be that far behind.
Things are clearly melting from the bottom up and from the outer areas inward.
The more money people make the less they have to worry about reality. So far everything is progressing along the same path its just the starting points are staggered. With the massive number of toxic loan concentrated in LA county.. the whole thing is going to get pretty bad imho.
Which brings up the question of how long will foreign investors take the double hit of falling currency and assets/investments. The CB's may be able to take it, but the private investors will get fried. So where's the pain threshold where they'll start to jump?
America, soon to be a great place to invest in but it really sucks to be there already.
From 387k down to 253k - whao! Now we are seeing real price corrections. It might be interesting to follow when the median wages were last at today's value, like sometimes in 2003. As long as must-sell inventory is flooding the market, house prices are moving in the right direction, down to their long-term baseline.
"We have to be a little careful using median home prices, since the mix of homes matters"
thanks for pointing that out again. this is too often missed by all the journalists and bloggers using the median trend data. the pain being distributed is wildly uneven from neighborhood to neighborhood.
I grew up in SacTown and I'm currently looking to buy into something there (hell, that's why I starting reading this blog as well as a number of others, to learn about what is happening in the market). (Almost) Needless to say... I'm firmly on the fence at least until I start seeing 2000 prices (and a turn up from "a bottom").
Anyway... here's my favorite sale here recently: MLS# 80000160. It's a 2455 sqft, 5/3 in a very nice suburb (Roseville, 95747) listed at $399,000. It went pending sometime in January and finally sold on Feb 7th for $385,000 (96.5% of asking).
In the time it took to go from Pending to Sold (30-45 days) other homes in the same zip have had their asking prices drop well below the sale price (MLS# 80001355 for example at $369,900, though it's a 4/3 but with 200+ extra sqft). In the time it takes to go from Pending to Sold prices fall greatly... so who the hell is buying!?!
Another good one: MLS # 80006150. Its description is as follows:
"Bank owned. Sold in 2006 for $815,000! Heavy interior cosmetic fixer, no fixtures, appliances, or hardware. Bring all of your ideas! Priced to sell! Sold strictly As-Is."
It's currently listed price? $399,900. That's more then a 50% haircut in around 24 months (it's stripped to shit internals not withstanding).
And I'm not even looking at Antelope or Elk Grove! SacTown is scary as hell, and it's only getting worse!
I don't get why we have to be careful about using median prices. The mix of homes doesn't matter. What is selling does. And, if the upper market is locked up, what is an illiquid upper market house worth? Until the new conforming mortgage limits, if you had to sell tomorrow, I'd say somewhere around $455k. Now maybe more. Either way, a lot less than before.
Even if there are still some people willing to overpay on the high end and prices are holding up in select neighborhoods, this segment will ultimately deteriorate rapidly over the upcoming few years. Why pay more when you can pay less?
"What would be nice, for me anyway, is to see the city of LA following the same trend. It's still insane here... :-("
I was in Santa Monica/Venice this weekend and saw maybe one "for sale" sign in my travels. There's demand. Prices might fall out there, but I doubt they'd ever be considered "cheap" by the standards of us hoi polloi.
It's currently listed price? $399,900. That's more then a 50% haircut in around 24 months (it's stripped to shit internals not withstanding).
CN - offer the bank $50K-$40K for the fixer ... a friend of mine just did that in the Naples area - bought a fixer house in a neighborhood with homes VALUED at ~$300K... offered $40K and they took the offer without blinking. He expects to put $50K in it... and resell in a couple 2-3 years.
Oh and if you do that - watch out for the neighbors... my buddy said the neighbors were so mad when they found out what he paid he was fearful they might try to burn him out. Fort Apache Florida...
Dryfly,
Where is that banker, because the bankers in my area are still way too hopeful. Unfortunately for them, their hope will cause them misery in the end.
I looked at a McMansion sat morn. 4/4 with a four car. Needs the inside done(never finished). Asking 105k. On a canal to the gulf. To big for me,I was interested cause of the garage.
Naples is over priced by at least 50%. My sister and husband have a place there. Peak probably could have got 525-550. They paid 185k in 1999 and figure it will end up right back there. Oh,empty homes everywhere in Naples also...
Sacramento is an interesting market. There was a ton of money from the SF area chasing investment deals several years ago.
I was one of the potential buyers looking at taking equity out of my place in SF and buying an investment property there. The negative cash flow was pretty extreme unless you were willing to put 40-50% down, which made the investment look fairly poor from an ROI perspective.
Still, many speculative buyers took cash out of their SF area properties to buy negative cash flow Sacramento properties as investments. Looks like that trend has reversed.
I have to admit I was tempted by the potential for appreciation, but was too scared to take the leap.
Based on the amount of speculative cash flowing into that market, I wouldn't extrapolate those dire results all over california.
I think localities and neighborhoods where there was a lot of speculative investment and building will crash, and more stable neighborhoods will simply take a haircut.
Of course, if I was smart enough to know which ones and when, I wouldn't be wasting my time posting to the blog
I'm actually looking to get a lot and build "the dream home". Probably not the "best" decision to make but with a little luck in the FX markets (I'm living and working in Australia) and patience in the SacTown RE market, I should be able to sweep in with cash in 1-2 years, no banks required.
But you are right. There was a listing for 5+ acres in El Dorado ("2 towns over" from Roseville) that dropped to $225,000 from something much higher and sold for ~$160,000 (or ~$31,000 an acre). I'm still kicking myself over that one!
If it wasn't for the distance, I'd be chucking in lowball offers left and right to see if anything would stick!
But damn... $40k in a $300k neighborhood? I'm guessing he did cash? Any more details on that transaction would be much appreciated!!
UBS seems to be the most aggressive locally in Port Charlotte. They just had a 2/2 disappear off the mls at 46k. It will be very interesting to see if it closes in 4-8 weeks. The last two I followed didn't make closing for some reason. Oh,the five houses on my street only one is listed with a 60k cut after 12 months !!
If you were interested in SW Florida man I could hook ya up !!. The amount of "hidden inventory"(empty but not REO) is getting hard to describe. Ex. Ii is approx 1.5 miles from I75 to the house. 7 mls listed homes. Not bad you say? How about 39 empty not yet REO ?? People really have no idea how bad this is gonna get...
Campbeln,
In the not-too-distant future, land will be virtually free compared to today. I'd hold off for awhile if I were you. But, if I were you, I'd stay in Australia.
Cobradriver,
You have any insight on the Boca Raton or Plantation vicinity? I'm considering a job opportunity in Boca and I'm looking to rent initially until I figure out what's a decent area school wise (7 and 11 yo). I'm currently in a 'burb of NYC and have only been to Boca on an overnight business trip.
There is a nominal and a real component to the fall as well... Roach is in Asia now IIRC and he'd be seeing an even larger fall in 'our valuations' denominated in other currencies than the poor folks in Sacramento see in USD alone.
I think that the Chicoms are discovering that we can make the dollars that we've given them worthless almost a quick and the cr@p that they sold us becomes worthless.
Wrong side o' the state. Mike in Fl is from that area and he linked some stats last night. Pretty much all buying has stopped. The inventory is at 5+ YEARS.
It's gonna be a long slog down. I would for sure rent for at least a year. You should have a good idea of the market/areas by then...Please don't fall into the "Oh looks like a smokin deal". My thoughts now...The house will still be there tomorrow !!
But damn... $40k in a $300k neighborhood? I'm guessing he did cash? Any more details on that transaction would be much appreciated!!
Absolutely cash. And he stalked the place for weeks. NOBODY wanted it so he walked through it with a contractor buddy - they did an estimate of what it would take to bring back to a reasonable quality level and made a cash offer. Bank's representative handed them the keys.
BTW - another guy I know where I live (not Naples) said a mutual friend (a realtor) was assigned 30 local REOs lately. What is interesting is these suckers have NO RESERVE... meaning the realtor is allowed to get rid of them at whatever price it takes to move them - he gets a percentage of the gross take so has an incentive to try and get as good a price as possible but is not constrained by a minimum offer.
This is different in that in MOST cases the banker's broker has a minimum bid he can't sell below without going back to the bank to petition - our buddy's minimum is zero.
I think that the Chicoms are discovering that we can make the dollars that we've given them worthless almost a quick and the cr@p that they sold us becomes worthless.
I guess they are not to worried about the broker picking up something cheap to flip !!!
What worries me is just the sheer volume. I don't see how this shit will clear. One of the houses on my street was FC'd 3 years ago Jan. The lady lived there 2 years paying only utilities. Still hasn't been on the market...
What worries me is just the sheer volume. I don't see how this shit will clear.
Hey I agree - I asked about the 'zero reserve' and said why not just auction them all? I was told they would except they have even more held in backlog yet to release. If they auctioned them all at once they'd all sell at zero! There aren't any buyers!
Our realtor friend's job is to meter them out and try to get SOMETHING better than zero... else he gets no commission.
I am definitely going to have to have a talk with him.
Cobradriver,
Thanks. With 5 years of inventory sounds like I should have plenty of time to find something if I decide to make the move. Not sure I'm ready to give up the change in seasons but you gotta go where you can get work...
Firstly... long time fan of your posts! FL seems to be leading Cali/Sac so I've very much enjoyed and found your posts very informational. Secondly, thanks for the offer, but all my friends and family are in Sac (or Canberra, Australia where I'm at now). But 105k on a canal does sound appealing!
I'll need to go back to SacTown to look into the hidden inventory, cause Im sure theres tons of it there too! Any tips on doing that?
Elvis (7:16):
I know! But it hasnt been happening yet in Sac!? Which is quite frustrating Course the wife and I are not too interested in getting into a cookie-cutter neighbourhood so the low end of the market wont be an option for us but weve not really seen much to any movement as of yet on land. Ive read up on the builders approach that builders use to value the land (box cost + profit margin current going rate for RE comps = land value, which of course means that the land falls first and hard), yet it seems not many of the sellers are hungry enough yet. Then again Ive only seen 2-3 REO lots thus far, and seemingly nothing from a BK developer but that may be my lack of seeing that hidden inventory again!
So anyone tips on uncovering that hidden inventory?
Thanks for the info, and damn! No reserve!? I may have to re-think the whole "build dream house" idea!? Then again if that's true for houses then it'll be for lots as well. I just wish the damned lots would break loose (but I guess many sitting on them were for "investment" in the "traditional" sense so don't need to sell?). Remind me again were you hollor from, Dryfly? East-coast (DC-ish) if I remember correctly?
Also forgot to mention. I read a SF newspaper article linked off Patrick.net last Friday (-ish, I think) that mentioned that many people they contacted for the article had stopped making payments 7 or more months ago without a NOD! Now thats some hidden inventory! Im not even convinced that weve even seen all of the first wave yet, and here we are at the second wave with the third on the horizon
Also anyone have good resources on FX? Or more specifically some informed commentary on what the hell the USD will do once the rest of the world realizes that the US is headed into a deep recession, or depression? I cant imagine that the Aussie AUD will escape clean (China is our engine down here, and itll falter eventually) but with the RBA still hawkish thanks to our employment rates, etla I think well fair better but yea anyone with some good places to look on those subjects?
"I'll need to go back to SacTown to look into the hidden inventory, cause Im sure theres tons of it there too! Any tips on doing that?'
You really need to be in the area a bit to see it. I notice little stuff over time like...taller grass,never any cars around, curtains always wide open or closed. The telltale sign where we are is if the county thinks the house is vacated they put a bright green sticker on the front door.
The sticker lets the owner/bank know the lawn gets mowed by a mowing service and 50.00 gets added to the liens each time.
South Florida is way out in front on this deal so it's going to take time to spread to the rest of the country like it is here.
I don't know if you caught it but we had approx 250 sales vs 800+ foreclosures in our county last month. I am hearing from friends at the courthouse it could be even worse this month...
Heck,Lee County is looking for lawyers to make temp judges out of. The backlog is freakin insane...
So anyone tips on uncovering that hidden inventory?
Well I had a nice response typed up and fucking haloscan ate it...
I drive the hood and look for unkept lawns,curtains always open or always closed,never any cars around. The good giveaway in this area is a bright green notice on the front door saying the county will contract the lawn mowing and 50.00 gets tacked on monthly to cut it...The house doesn't need to be REO to do this.
I have heard rumors that Charlotte and Lee counties are backed up a year plus on FC's. When you ask anybody at the courthouse they just look at ya funny.
dryfly- 40K. I'm salivating. What state? Minnesota? I'm waiting to hear of these fixers in San Diego. I had to put the copper back in my first house and now I think we paid too much for it! Thanks, stories like that make my day. I wish it made sense for us to invest in property out of state (or even beyond close driving distance) but Hawaii is as far as we go. (We figured if we had to fly somewhere to clear a toilet, it might as well be Oahu.)
I live in Sacramento. It appears that the banks aren't offloading property very quickly. Perhaps they're hoping that prices will rise relatively quickly and they won't have to write off 50% of the loan.
But there's really no need to buy here. Rentals are easily available, rents have been fairly stable for the last few years, and buying would more than double housing costs (yes, even with the mortgage interest deduction). It appears that most of the buyers are investors--which only shows that they aren't very good at it.
Remind me again were you hollor from, Dryfly? East-coast (DC-ish) if I remember correctly?
I live in the Midwest - Minnesota but not terribly far from the Twin Cities. Definitely NOT bubbleville.
But when I looked at local inventory a year ago there were only three 'official' foreclosures underway in this town... and now they are metering them out 30 at a pop. Times & practices have changed.
My guess is Sacto will start having zero reserve contracts with realtors also unless they have'em already.
"The county's $253,000 median sales price is down now 34.6 percent from an August 2005 high of $387,000."
Pure data mining. Question, how far (up/down) are prices since say 2000? The only people suffering from this are the ones that are incapable of understanding that house prices don't double every 5 years. These inferior organisms need to be left to extinction.
Before any of you get to eager to buy these houses you should take a drive through North Philadelphia and see what neighborhoods with properties worth 40K look like after a few years.
Isn't also a fact that the pending sale numbers in January are the highest the region has seen in the last two years? It very easy to be negative, almost human nature. Let's be extraordinary and look at the other side in a balanced manner. Look for the positive..it's there.
Stephen Roach has been saying for some time that Americas inflated asset prices must fall !
A sharp decline in asset prices ( first and foremost with homes ) is necessary to rebalance the US economy.
Glad to see Sacramento region is doing its part.
Stephen Roach has been saying for some time that Americas inflated asset prices must fall !
There is a nominal and a real component to the fall as well... Roach is in Asia now IIRC and he'd be seeing an even larger fall in 'our valuations' denominated in other currencies than the poor folks in Sacramento see in USD alone.
Last quarter the number of homes going into default surpassed (102.6%) the number of homes sold in LA County.
The number of trustee sales was about was 34.1% relative to the number of sales in LA County in Q4.
All numbers from DQ.
Here is how the last 3 quarters progressed for NTS/Sales:
Q2: 11.6%
Q3: 20.3%
Q4: 34.1%
Here is how the last 3 quarters progressed for NOD/Sales:
Q2: 46.7%
Q3: 76.2%
Q4: 102.6%
If you consider the fact that the percentage of homes going into NOD that are then being foreclosed is increasing rapidly (59% in Q4) and home sales are slowing and NOD are increasing... You can see that LA county might not be that far behind.
" You can see that LA county might not be that far behind."
What would be nice, for me anyway, is to see the city of LA following the same trend. It's still insane here...
JBR,
Things are clearly melting from the bottom up and from the outer areas inward.
The more money people make the less they have to worry about reality. So far everything is progressing along the same path its just the starting points are staggered. With the massive number of toxic loan concentrated in LA county.. the whole thing is going to get pretty bad imho.
Which brings up the question of how long will foreign investors take the double hit of falling currency and assets/investments. The CB's may be able to take it, but the private investors will get fried. So where's the pain threshold where they'll start to jump?
America, soon to be a great place to invest in but it really sucks to be there already.
Brad Setser on the recent increase in CB buying of the dollar.
RGE - The worse the dollar does, the more dollars central banks want ...
From 387k down to 253k - whao! Now we are seeing real price corrections. It might be interesting to follow when the median wages were last at today's value, like sometimes in 2003. As long as must-sell inventory is flooding the market, house prices are moving in the right direction, down to their long-term baseline.
San Diego county trustee deeds in Jan was 1461 (InnoVest's Foreclosure Forum
San Diego county Jan. sales per the realtors themselves: 1335
(404 error page custom
So appears we had MORE foreclosures than sales here in Jan.
"We have to be a little careful using median home prices, since the mix of homes matters"
thanks for pointing that out again. this is too often missed by all the journalists and bloggers using the median trend data. the pain being distributed is wildly uneven from neighborhood to neighborhood.
I grew up in SacTown and I'm currently looking to buy into something there (hell, that's why I starting reading this blog as well as a number of others, to learn about what is happening in the market). (Almost) Needless to say... I'm firmly on the fence at least until I start seeing 2000 prices (and a turn up from "a bottom").
For those interested in loading up the MLS#'s, go to Homes and real estate in northern California - MetroList the official MLS and search by "ML Number" (right most tab).
Anyway... here's my favorite sale here recently: MLS# 80000160. It's a 2455 sqft, 5/3 in a very nice suburb (Roseville, 95747) listed at $399,000. It went pending sometime in January and finally sold on Feb 7th for $385,000 (96.5% of asking).
In the time it took to go from Pending to Sold (30-45 days) other homes in the same zip have had their asking prices drop well below the sale price (MLS# 80001355 for example at $369,900, though it's a 4/3 but with 200+ extra sqft). In the time it takes to go from Pending to Sold prices fall greatly... so who the hell is buying!?!
Another good one: MLS # 80006150. Its description is as follows:
"Bank owned. Sold in 2006 for $815,000! Heavy interior cosmetic fixer, no fixtures, appliances, or hardware. Bring all of your ideas! Priced to sell! Sold strictly As-Is."
It's currently listed price? $399,900. That's more then a 50% haircut in around 24 months (it's stripped to shit internals not withstanding).
And I'm not even looking at Antelope or Elk Grove! SacTown is scary as hell, and it's only getting worse!
Cn
How many of those sales are simply the banks buying back the properties?
I don't get why we have to be careful about using median prices. The mix of homes doesn't matter. What is selling does. And, if the upper market is locked up, what is an illiquid upper market house worth? Until the new conforming mortgage limits, if you had to sell tomorrow, I'd say somewhere around $455k. Now maybe more. Either way, a lot less than before.
Even if there are still some people willing to overpay on the high end and prices are holding up in select neighborhoods, this segment will ultimately deteriorate rapidly over the upcoming few years. Why pay more when you can pay less?
"What would be nice, for me anyway, is to see the city of LA following the same trend. It's still insane here... :-("
I was in Santa Monica/Venice this weekend and saw maybe one "for sale" sign in my travels. There's demand. Prices might fall out there, but I doubt they'd ever be considered "cheap" by the standards of us hoi polloi.
It's currently listed price? $399,900. That's more then a 50% haircut in around 24 months (it's stripped to shit internals not withstanding).
CN - offer the bank $50K-$40K for the fixer ... a friend of mine just did that in the Naples area - bought a fixer house in a neighborhood with homes VALUED at ~$300K... offered $40K and they took the offer without blinking. He expects to put $50K in it... and resell in a couple 2-3 years.
Oh and if you do that - watch out for the neighbors... my buddy said the neighbors were so mad when they found out what he paid he was fearful they might try to burn him out. Fort Apache Florida...
Dryfly,
Where is that banker, because the bankers in my area are still way too hopeful. Unfortunately for them, their hope will cause them misery in the end.
dryfly | 02.14.08 - 6:53 pm |
I looked at a McMansion sat morn. 4/4 with a four car. Needs the inside done(never finished). Asking 105k. On a canal to the gulf. To big for me,I was interested cause of the garage.
Naples is over priced by at least 50%. My sister and husband have a place there. Peak probably could have got 525-550. They paid 185k in 1999 and figure it will end up right back there. Oh,empty homes everywhere in Naples also...
Chris
Sacramento is an interesting market. There was a ton of money from the SF area chasing investment deals several years ago.
I was one of the potential buyers looking at taking equity out of my place in SF and buying an investment property there. The negative cash flow was pretty extreme unless you were willing to put 40-50% down, which made the investment look fairly poor from an ROI perspective.
Still, many speculative buyers took cash out of their SF area properties to buy negative cash flow Sacramento properties as investments. Looks like that trend has reversed.
I have to admit I was tempted by the potential for appreciation, but was too scared to take the leap.
Based on the amount of speculative cash flowing into that market, I wouldn't extrapolate those dire results all over california.
I think localities and neighborhoods where there was a lot of speculative investment and building will crash, and more stable neighborhoods will simply take a haircut.
Of course, if I was smart enough to know which ones and when, I wouldn't be wasting my time posting to the blog
Dryfly (6:53 pm):
I'm actually looking to get a lot and build "the dream home". Probably not the "best" decision to make but with a little luck in the FX markets (I'm living and working in Australia) and patience in the SacTown RE market, I should be able to sweep in with cash in 1-2 years, no banks required.
But you are right. There was a listing for 5+ acres in El Dorado ("2 towns over" from Roseville) that dropped to $225,000 from something much higher and sold for ~$160,000 (or ~$31,000 an acre). I'm still kicking myself over that one!
If it wasn't for the distance, I'd be chucking in lowball offers left and right to see if anything would stick!
But damn... $40k in a $300k neighborhood? I'm guessing he did cash? Any more details on that transaction would be much appreciated!!
C
Elvis | 02.14.08 - 6:56 pm |
UBS seems to be the most aggressive locally in Port Charlotte. They just had a 2/2 disappear off the mls at 46k. It will be very interesting to see if it closes in 4-8 weeks. The last two I followed didn't make closing for some reason. Oh,the five houses on my street only one is listed with a 60k cut after 12 months !!
Chris
Oh... and the $400k fixer is Pending, so we'll see #1: if it closes (only about 10-15% do on my list lately) and #2: what it eventually sells for.
Campbeln | 02.14.08 - 7:07 pm |
If you were interested in SW Florida man I could hook ya up !!. The amount of "hidden inventory"(empty but not REO) is getting hard to describe. Ex. Ii is approx 1.5 miles from I75 to the house. 7 mls listed homes. Not bad you say? How about 39 empty not yet REO ?? People really have no idea how bad this is gonna get...
Chris
Campbeln,
In the not-too-distant future, land will be virtually free compared to today. I'd hold off for awhile if I were you. But, if I were you, I'd stay in Australia.
Sactown Represent! War Renters!
Check Out Sacramento Area Flippers In Trouble
for more horror stories.
Cobradriver,
You have any insight on the Boca Raton or Plantation vicinity? I'm considering a job opportunity in Boca and I'm looking to rent initially until I figure out what's a decent area school wise (7 and 11 yo). I'm currently in a 'burb of NYC and have only been to Boca on an overnight business trip.
Thanks
come on mike, no penny stock trading from Boca...
There is a nominal and a real component to the fall as well... Roach is in Asia now IIRC and he'd be seeing an even larger fall in 'our valuations' denominated in other currencies than the poor folks in Sacramento see in USD alone.
I think that the Chicoms are discovering that we can make the dollars that we've given them worthless almost a quick and the cr@p that they sold us becomes worthless.
"In the not-too-distant future, land will be virtually free compared to today."
Didn't the Colonel warn you about taking too many valium's and posting on the internet, Elvis?
"Nik Naylor writes:
come on mike, no penny stock trading from Boca..."
No nothing like that lol...but it is in Fin Svcs...
Mike in Long Island | 02.14.08 - 7:25 pm |
Mike,
Wrong side o' the state. Mike in Fl is from that area and he linked some stats last night. Pretty much all buying has stopped. The inventory is at 5+ YEARS.
It's gonna be a long slog down. I would for sure rent for at least a year. You should have a good idea of the market/areas by then...Please don't fall into the "Oh looks like a smokin deal". My thoughts now...The house will still be there tomorrow !!
Chris
But damn... $40k in a $300k neighborhood? I'm guessing he did cash? Any more details on that transaction would be much appreciated!!
Absolutely cash. And he stalked the place for weeks. NOBODY wanted it so he walked through it with a contractor buddy - they did an estimate of what it would take to bring back to a reasonable quality level and made a cash offer. Bank's representative handed them the keys.
BTW - another guy I know where I live (not Naples) said a mutual friend (a realtor) was assigned 30 local REOs lately. What is interesting is these suckers have NO RESERVE... meaning the realtor is allowed to get rid of them at whatever price it takes to move them - he gets a percentage of the gross take so has an incentive to try and get as good a price as possible but is not constrained by a minimum offer.
This is different in that in MOST cases the banker's broker has a minimum bid he can't sell below without going back to the bank to petition - our buddy's minimum is zero.
Wow, how times change.
EL,
Don't follow land prices too much, do you?
I think that the Chicoms are discovering that we can make the dollars that we've given them worthless almost a quick and the cr@p that they sold us becomes worthless.
LOL. A 21st century yin-yang balance.
dryfly | 02.14.08 - 7:38 pm |
I guess they are not to worried about the broker picking up something cheap to flip !!!
What worries me is just the sheer volume. I don't see how this shit will clear. One of the houses on my street was FC'd 3 years ago Jan. The lady lived there 2 years paying only utilities. Still hasn't been on the market...
Chris
What worries me is just the sheer volume. I don't see how this shit will clear.
Hey I agree - I asked about the 'zero reserve' and said why not just auction them all? I was told they would except they have even more held in backlog yet to release. If they auctioned them all at once they'd all sell at zero! There aren't any buyers!
Our realtor friend's job is to meter them out and try to get SOMETHING better than zero... else he gets no commission.
I am definitely going to have to have a talk with him.
Cobradriver,
Thanks. With 5 years of inventory sounds like I should have plenty of time to find something if I decide to make the move. Not sure I'm ready to give up the change in seasons but you gotta go where you can get work...
Cobradriver (7:15 pm):
Firstly... long time fan of your posts! FL seems to be leading Cali/Sac so I've very much enjoyed and found your posts very informational. Secondly, thanks for the offer, but all my friends and family are in Sac (or Canberra, Australia where I'm at now). But 105k on a canal does sound appealing!
I'll need to go back to SacTown to look into the hidden inventory, cause Im sure theres tons of it there too! Any tips on doing that?
Elvis (7:16):
I know! But it hasnt been happening yet in Sac!? Which is quite frustrating Course the wife and I are not too interested in getting into a cookie-cutter neighbourhood so the low end of the market wont be an option for us but weve not really seen much to any movement as of yet on land. Ive read up on the builders approach that builders use to value the land (box cost + profit margin current going rate for RE comps = land value, which of course means that the land falls first and hard), yet it seems not many of the sellers are hungry enough yet. Then again Ive only seen 2-3 REO lots thus far, and seemingly nothing from a BK developer but that may be my lack of seeing that hidden inventory again!
So anyone tips on uncovering that hidden inventory?
C
Dryfly (7:38):
Thanks for the info, and damn! No reserve!? I may have to re-think the whole "build dream house" idea!? Then again if that's true for houses then it'll be for lots as well. I just wish the damned lots would break loose (but I guess many sitting on them were for "investment" in the "traditional" sense so don't need to sell?). Remind me again were you hollor from, Dryfly? East-coast (DC-ish) if I remember correctly?
C
Also forgot to mention. I read a SF newspaper article linked off Patrick.net last Friday (-ish, I think) that mentioned that many people they contacted for the article had stopped making payments 7 or more months ago without a NOD! Now thats some hidden inventory! Im not even convinced that weve even seen all of the first wave yet, and here we are at the second wave with the third on the horizon
Also anyone have good resources on FX? Or more specifically some informed commentary on what the hell the USD will do once the rest of the world realizes that the US is headed into a deep recession, or depression? I cant imagine that the Aussie AUD will escape clean (China is our engine down here, and itll falter eventually) but with the RBA still hawkish thanks to our employment rates, etla I think well fair better but yea anyone with some good places to look on those subjects?
Thanks to all
C
"I'll need to go back to SacTown to look into the hidden inventory, cause Im sure theres tons of it there too! Any tips on doing that?'
You really need to be in the area a bit to see it. I notice little stuff over time like...taller grass,never any cars around, curtains always wide open or closed. The telltale sign where we are is if the county thinks the house is vacated they put a bright green sticker on the front door.
The sticker lets the owner/bank know the lawn gets mowed by a mowing service and 50.00 gets added to the liens each time.
South Florida is way out in front on this deal so it's going to take time to spread to the rest of the country like it is here.
I don't know if you caught it but we had approx 250 sales vs 800+ foreclosures in our county last month. I am hearing from friends at the courthouse it could be even worse this month...
Heck,Lee County is looking for lawyers to make temp judges out of. The backlog is freakin insane...
Chris
Sacto, (former) happy hunting grounds of Casey Serin. . . . 'nuff said.
So anyone tips on uncovering that hidden inventory?
Well I had a nice response typed up and fucking haloscan ate it...
I drive the hood and look for unkept lawns,curtains always open or always closed,never any cars around. The good giveaway in this area is a bright green notice on the front door saying the county will contract the lawn mowing and 50.00 gets tacked on monthly to cut it...The house doesn't need to be REO to do this.
I have heard rumors that Charlotte and Lee counties are backed up a year plus on FC's. When you ask anybody at the courthouse they just look at ya funny.
Chris
Never mind the double post GAAAAAAA...
Chris
dryfly- 40K. I'm salivating. What state? Minnesota? I'm waiting to hear of these fixers in San Diego. I had to put the copper back in my first house and now I think we paid too much for it! Thanks, stories like that make my day. I wish it made sense for us to invest in property out of state (or even beyond close driving distance) but Hawaii is as far as we go. (We figured if we had to fly somewhere to clear a toilet, it might as well be Oahu.)
I live in Sacramento. It appears that the banks aren't offloading property very quickly. Perhaps they're hoping that prices will rise relatively quickly and they won't have to write off 50% of the loan.
But there's really no need to buy here. Rentals are easily available, rents have been fairly stable for the last few years, and buying would more than double housing costs (yes, even with the mortgage interest deduction). It appears that most of the buyers are investors--which only shows that they aren't very good at it.
First attempt at posting a pic.
FWB Lis Pendens
Anyway, here is the number of Lis Pendens per year and Final Judgement of Foreclosures per year in my neck of the woods, Fort Walton Beach, FL.
Nice little spike at the end for LPs, I am sure FCs will follow the uptrend.
Interesting, the highest number of LPs in the 20 year history--that's as far back as the online data goes.
Remind me again were you hollor from, Dryfly? East-coast (DC-ish) if I remember correctly?
I live in the Midwest - Minnesota but not terribly far from the Twin Cities. Definitely NOT bubbleville.
But when I looked at local inventory a year ago there were only three 'official' foreclosures underway in this town... and now they are metering them out 30 at a pop. Times & practices have changed.
My guess is Sacto will start having zero reserve contracts with realtors also unless they have'em already.
"The county's $253,000 median sales price is down now 34.6 percent from an August 2005 high of $387,000."
Pure data mining. Question, how far (up/down) are prices since say 2000? The only people suffering from this are the ones that are incapable of understanding that house prices don't double every 5 years. These inferior organisms need to be left to extinction.
Before any of you get to eager to buy these houses you should take a drive through North Philadelphia and see what neighborhoods with properties worth 40K look like after a few years.
As foreclosures become prevelant, and lenders start wanting accurate appraisals, what is the chance that sales of REOs will be used for comps?
From 387k down to 253k...
In 1999, the median price for a house in Sacramento was $144k. The median income was $42k. Prices were in line with the 3x rule.
Median house today in Sacramento is 253k. Median income is $45 - $49k.
The bottom is far below.
Isn't also a fact that the pending sale numbers in January are the highest the region has seen in the last two years? It very easy to be negative, almost human nature. Let's be extraordinary and look at the other side in a balanced manner. Look for the positive..it's there.