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View Full Version : Current state of the R/E market?



totenhosen
07-14-2006, 07:34 PM
So what are all you experts seeing?
I know the company I work for is committing $40+ million in financing for construction of apartments. They feel that too many people are in loans they can't afford and will either dump the property or go into BK. Those people will go into rentals which will cause a higher demand for rentals, increasing rents.

Daytona100
07-14-2006, 07:46 PM
If everyone predicts doom and gloom long enough it,s bound to come true. My neibhor sold his house about two years ago thinking the bottom was going to fall out of the market and he was going to come in and swoop something up for pennies on the dollar. Well two years later and thousands paid out in rent it still hasnt collapsed. Our equity went up and his rent probably went up. The sky is falling The sky is falling!!!!!!!!!!

totenhosen
07-14-2006, 08:11 PM
Psychology plays a big part!

FREIND OF AA AND TA
07-14-2006, 08:34 PM
Sales are down 40% and prices have come down 10% in some areas of Santa Clarita. Average marketing time is over 60 days. I'd say we have a little stablization!

unleashed
07-14-2006, 08:58 PM
50 houses for sale here in my neighborhood...some have been on the market for 3 months. Its definitly coming down.
Deano
Unleashedclothing (http://www.unleashedclothing.com) :crossx:

welk2party
07-14-2006, 08:59 PM
Like all things, Real Estate has peaks and valleys. If you need a place to live, and you can afford the house you want... BUY IT! Those looking to invest need to lose the idea that the market is going to change and when it does that is the time! I am no expert, but that is very one dimensional in thinking. If you are serious about investing, there are opportunities in every market. IMHO :argue:

buzzaro
07-15-2006, 05:37 AM
Im more curious about the folks in adjustable mortagages than how far home values will fall.

GoCiggie31
07-15-2006, 05:52 AM
???????????????
well, we just closed on a house well below the market value in a very nice neighborhood in a great school district in NorCal that an Intel exec used the house as a rental since new. He was being transfered and didn't want to take a chance if the mkt went any lower; was rental, needs work I like sweat equity. Will this go any lower, maybe but because of location and the excellent schools, <10 year old house, for me I had to diversify-don't want too much in stocks, they take short term beatings for me. This will be my rental-speculating long term.
So for me and my family I believe it was a good bet, a good deal in a down mkt.

buzzaro
07-15-2006, 06:06 AM
well, we just closed on a house well below the market value in a very nice neighborhood in a great school district in NorCal that an Intel exec used the house as a rental since new. He was being transfered and didn't want to take a chance if the mkt went any lower; was rental, needs work I like sweat equity. Will this go any lower, maybe but because of location and the excellent schools, <10 year old house, for me I had to diversify-don't want too much in stocks, they take short term beatings for me. This will be my rental-speculating long term.
So for me and my family I believe it was a good bet, a good deal in a down mkt.
Just read in the paper theres going to be some more cuts at that facility(Intel), strange part is I also heard they are currently working on another new building to add to their campus.

RitcheyRch
07-15-2006, 06:33 AM
Same in my neighborhood. We have about a dozen houses on the market. The local realtor said houses are staying on the market for atleast 180 days.
50 houses for sale here in my neighborhood...some have been on the market for 3 months. Its definitly coming down.

bigq
07-15-2006, 07:56 AM
I can look down my street and see 5 houses for sale about a 1/3. Riverside inventory is almost 11,000 houses and last year at htis time it was about 4,100 :rolleyes: . Next year the adjustables and interest only should start coming due, this is only starting to crest the downhill slope, but we will see.

Havasu Cig
07-15-2006, 08:00 AM
I have been saying for a long time the bubble was going to burst and some on here said I was crazy. I think the market is just starting on the downturn and it is not going to stop anytime soon.
A friend just bought in Havasu about 6 months ago and was shocked when he just had it appraised and it had not gone up in value. All the homes around my house out there that were for sale in April are still sitting.

Hallett19
07-15-2006, 08:29 AM
Last month was the first month where in my area I have seen more than a small handfull of zip codes fall in price. As far as rentals go, rents are on the rise as it is because of all the condo conversions. But with more homes on the market and longer market time, the only way to be competitive and selling your home is to list low (or reduce), everyone will follow and it will be a domino effect. Sellers cant get the premium they were getting this time last year, and rarely do you see a multiple offer situation. So mix that situation with the fact that those who did 100+% financing, zero down, interest only or a combination of them all now owe more than what the house is worth with no equity in it or appreciation..... once their interest only payment period is up and they have to pay principle and go adjustable, they will be forced to sell and potentially take a loss, or be forclosed on....which is a whole other story :cool:
I work in So Cal by the way, and this is what I'm seeing.
And if anyone has questions or needs more info, I'm more than happy to help
Aaron J. Van Wagner
aaron.vanwagner@dilbeck.com
818-949-7860

topless
07-15-2006, 08:52 AM
Last month was the first month where in my area I have seen more than a small handfull of zip codes fall in price. As far as rentals go, rents are on the rise as it is because of all the condo conversions. But with more homes on the market and longer market time, the only way to be competitive and selling your home is to list low (or reduce), everyone will follow and it will be a domino effect. Sellers cant get the premium they were getting this time last year, and rarely do you see a multiple offer situation. So mix that situation with the fact that those who did 100+% financing, zero down, interest only or a combination of them all now owe more than what the house is worth with no equity in it or appreciation..... once their interest only payment period is up and they have to pay principle and go adjustable, they will be forced to sell and potentially take a loss, or be forclosed on....which is a whole other story :cool:
I work in So Cal by the way, and this is what I'm seeing.
And if anyone has questions or needs more info, I'm more than happy to help
Aaron J. Van Wagner
aaron.vanwagner@dilbeck.com
818-949-7860Wow, it might be a good time to go into acting or something. :crossx: :crossx: :rollside:

lalhc
07-15-2006, 09:20 AM
How would there be any opportunities in a buyers market? I don't get it.
You really have to look at all aspects of real estate. For instance, I've been looking at duplexes and 4-plexes in the San Antonio, TX area. You can p/u new property their and have a positive cash flow. I could not afford to do that in California.

Debbolas
07-15-2006, 09:58 AM
:220v: I'm worried about all those people that decided on "interest only" loans.
(ouch)
Our area is pretty stable, but slowing down......Just hope it doesn't fall like it did back in 1991, THAT was horrible.......so many forclosures:(

cdog
07-15-2006, 10:13 AM
:220v: I'm worried about all those people that decided on "interest only" loans.
(ouch)
Our area is pretty stable, but slowing down......Just hope it doesn't fall like it did back in 1991, THAT was horrible.......so many forclosures:(
It's the option arms that you NEED to be worried about. At least with I/O's you stay above water.

lalhc
07-15-2006, 10:21 AM
Thanks for the clarification HM.
I don't invest in real estate for a living, but I do own several properties and I'm looking to buy more. I guess you can say I purchase real estate as an alternative to buying stocks. I feel much more comfortable buying something that I can see and have a little more control of.

axkiker
07-15-2006, 10:49 AM
I think as the market starts the downward run that there will still be money to be made. Never in history have people completly stopped buying homes. I think that to not be in the red you are gonna have to predeict the trends. Trend that I think you will see is lower end housing being more saught after as well as rental property. Not as many people selling to upgrade houses. Probably the exact opposite is what i see.
my o2

locogringo
07-15-2006, 11:26 AM
If I can throw out my two cents (which is probably only worht a cent here), the market is correcting and I honestly believ it will correct to 30%. So a house valud at 600k would lose 30% of that value over the next 5 years. IO loans which neg. defer are in my opinion a bad loan at this time in the market and if it is a 1/5 yr. fixed which and then becomes adjustable with the deferred interest accruing, then many people will be in a quandry when the adjust. It already is happening and will only get worse.
Factors which need to be looked at are Interest rates, the affordability factor (which is at 11%) and other vital keys. I'm just a peon but can tell you that there are over 800 foreclosure a day in Southern California whereas a year ago, if I remeber correctly, it was only at 147/day. Currently, I am purchasing between 4 and 7 homes a month which are in foreclosure. It wasn't this way a year ago by any means.
For those who say it is not going to be that bad, it will. For those who say it will just slightly correct expect a major correction. Granted, 5 years is a long time for many people to look ahead being that we live in a present "now" day, but the wise investors are holding on to their mula for the next few years and what they'll be able to buy.
I'll stop my rant, carry on.
Hy, HM, I no longer do loans anymore (though my wife does her and there just for past clients mostly). The homes I am buying are at 60-70% ltv.
Later

welk2party
07-15-2006, 11:35 AM
The amount of foreclosures everyone is predicting because of interest only loans or Neg Am loans is only one side to the story. Creative financing has given more people the chance to own a home than ever before. More new homeowners naturally means more foreclosures. Remember folks, banks are not in the real estate business. They are in the lending business. They underwrite to peoples ability to repay. Now I am not saying that creative financing has given a broader look at peoples ability to repay, therefore driving up risk. There are always going to be people in trouble...way of the world. I am reading comments about people getting screwed because they have an adjustable. That is way to much of a blanket statement. The average life of a mortgage is only 4 years. In other words, most people will never see their mortgage turn over from fixed to adjustable. With the size of mortgages and the cost of homes these days, the idea of paying off your mortgage simply by making your mortgage payment is not very probable for many. If you have a choice to keep the relatively meager amount of principal in a fully ammortized loan or being forced to give it to the bank, I would choose the former. I can do more with that money for my benefit.
Wow...that was a lot of random thoughts...I think I will go back to my regularly scheduled programing! :rollside:

2Driver
07-15-2006, 11:52 AM
Sellers with homes on the market now for 60-120 days are starting to realize they may need to drop price to sell. We have been kicking around a home south of us and while we were doing it the home was lowered $110K!
It's funny real-estate people were saying the prices are holding but the homes are just on the market longer - duh what do they think comes next? It growing inventory, saturation, way fewer buyers and supply and demand takes over.
Our friends are closing on a home in Havasu next Friday. $400K for a 1500 sq foot home. Hope he makes out ok. I think he will in the long run :rolleyes:

GoCiggie31
07-15-2006, 11:57 AM
locogringo,
"I'm just a peon but can tell you that there are over 800 foreclosure a day in Southern California "
is that (800)per day or month SoCal count?
sounds like a lot of opportunities :rollside:
just checking-thanks?

slink
07-15-2006, 12:33 PM
Sorry for the ignorance, but don't ARM's usually have a ceiling that they max out at? Kind of like worst case scenerio you would be at (X) interest rate, with a payment of (Y). I'm currently in a 30yr fixed and know what my payment is for the next 22yrs. We live within our means and put some money away. I like knowing what my monthly bills are going to be, but I get bombarded everyday with re-fi request. I don't invision us living in the current home for the next 20yrs and we have plenty of equity. Would it be better to re-fi to an ARM that has a ceiling, thus cutting my payment down and giving us more money to put away/invest? (not into a bigger boat). Just asking. Thanks

locogringo
07-15-2006, 01:30 PM
locogringo,
"I'm just a peon but can tell you that there are over 800 foreclosure a day in Southern California "
is that (800)per day or month SoCal count?
sounds like a lot of opportunities :rollside:
just checking-thanks?
800 per day

locogringo
07-15-2006, 01:37 PM
Sorry for the ignorance, but don't ARM's usually have a ceiling that they max out at? Kind of like worst case scenerio you would be at (X) interest rate, with a payment of (Y). I'm currently in a 30yr fixed and know what my payment is for the next 22yrs. We live within our means and put some money away. I like knowing what my monthly bills are going to be, but I get bombarded everyday with re-fi request. I don't invision us living in the current home for the next 20yrs and we have plenty of equity. Would it be better to re-fi to an ARM that has a ceiling, thus cutting my payment down and giving us more money to put away/invest? (not into a bigger boat). Just asking. Thanks
This is a great way to buy if it can be afforded and fits within the paramters. The problem is so many people intend to do the right thing but then do the opposite which gets them in trouble. Case in point, someone wants to lose weight, knows what they need to do to lose weight but gt caught up in the day to day events, etc. and next thing you know, the weight lose is forgotten until they are reminded by another 25 lbs. added.
Good luck

2Driver
07-15-2006, 03:25 PM
locogringo,
"I'm just a peon but can tell you that there are over 800 foreclosure a day in Southern California "
is that (800)per day or month SoCal count?
sounds like a lot of opportunities :rollside:
just checking-thanks?
Where did that number come from? That's 24,000 a month and 288,000 a year. I say no way possible but I'm not that close to it.

Enen
07-15-2006, 03:49 PM
I am a mortgage banker in Phoenix, and we are rolling out a forclosure bail out loan that will go to 70% LTV stated income, down to a 400 fico score. This product is designed to offset the forcasted default rate. The rates aren't half bad for someone who is currently in a forclosure.... My point is that the market is always adapting to cope.
Thanks,
Aaron

ThongMagnet
07-15-2006, 06:13 PM
Not much is happening in the northeast Valley of Phoenix. It's not going up 5% a months like it was for the past 36 months, but its not going down either. Its all about location, location, location.
Like always...Starter homes, and homes built further out will feel the most downward pressure. Extra miles to commute will wear out vehicles sooner, as well as, higher fuel costs pinching the budget. Homes closer to higher paying Jobs will be more attractive. :idea:

locogringo
07-15-2006, 11:23 PM
Where did that number come from? That's 24,000 a month and 288,000 a year. I say no way possible but I'm not that close to it.
thank you 2driver for making me research my blabber mouth. I checked over the last 3 months for all counties in S. Calif. and the average is 300 per day new foreclosures being listed, and an average of 100 per day going to trustee sale per day.
Sorry for the inaccuracies before. I was going off a day that I had checked back in June.

FREIND OF AA AND TA
07-16-2006, 05:51 AM
I am a mortgage banker in Phoenix, and we are rolling out a forclosure bail out loan that will go to 70% LTV stated income, down to a 400 fico score. This product is designed to offset the forcasted default rate. The rates aren't half bad for someone who is currently in a forclosure.... My point is that the market is always adapting to cope.
Thanks,
Aaron
Good luck finding 70% LTV as the market gets worse. Great idea not too many takers I bet. I would be very interested to see if that LTV changes.

soupersonic
07-16-2006, 08:40 AM
I am a mortgage banker in Phoenix, and we are rolling out a forclosure bail out loan that will go to 70% LTV stated income, down to a 400 fico score. This product is designed to offset the forcasted default rate. The rates aren't half bad for someone who is currently in a forclosure.... My point is that the market is always adapting to cope.
Thanks,
Aaron
No offence, but stated income down to a 400 fico with 70% ltv, to someone who is already in a foreclose or close to it? Seems like another Long Beach Mortgage deal where you are just prolonging the inevitable but making sure you end up holding the note when they lose it.

callbob4homes
07-16-2006, 03:37 PM
The amount of foreclosures everyone is predicting because of interest only loans or Neg Am loans is only one side to the story. Creative financing has given more people the chance to own a home than ever before. More new homeowners naturally means more foreclosures. There are always going to be people in trouble...way of the world. I am reading comments about people getting screwed because they have an adjustable. That is way to much of a blanket statement. The average life of a mortgage is only 4 years. In other words, most people will never see their mortgage turn over from fixed to adjustable. With the size of mortgages and the cost of homes these days, the idea of paying off your mortgage simply by making your mortgage payment is not very probable for many. If you have a choice to keep the relatively meager amount of principal in a fully ammortized loan or being forced to give it to the bank, I would choose the former. I can do more with that money for my benefit.
Wow...that was a lot of random thoughts...I think I will go back to my regularly scheduled programing! :rollside:
This is one of the more sensible comments made regarding RE I have read lately. There will always be the naysayers, the gloom and doom predictors, and those waiting for the huge influx of foreclosures to rush out and buy. The problem as I see it would be the amount of "investors" (and I put it that way because those types are not what I consider investors, but opportunitists looking to make a quick buck) all trying to cash in. BUT......if there are that many, who you going to flip it too? I/O loans? If you plan on selling within 4 or 5 years, why tie up that extra when you only pay the interest in the time frame anyway? Pay a little something extra on your principal and make it a win win situation. Is the bubble burst? Don't think so, but it is coming back to reality. At least in the Phoenix area.