Discussion: Is there a real estate housing bubble, and, if there is, what will pop it? Part 3

Does anybody know if you need a realtor to buy forclose property?

gwu1986 said: winter said: samko said: clyde_frog said: if my ARM reset today it would 'explode' from 5.125% to 4.25%. thanks ben b.At the risk of feeding a troll.... Do you care to explain how your ARM would be at 4.25%? What index are you using and what's your spread? Also, who is carrying this loan? It's hard for me to believe that an ARM after a reset will have a lower rate than a 30 yr fixed. Please check with your bank and get back to us.I don't know about clyde_frog's ARM but why are you surprised that an ARM reset rate right now would be lower than a 30-year fixed?

ING uses 1-year LIBOR for their ARM index:

This week 2.66
Month ago 2.58
Year ago 5.23

You don't think its possible to have a 1.5% margin?
I agree, Winter. If my 5/1 ING arm were to reset today, the rate would be 4.125% (1yr CMT + 2.5 on first reset, rounded to nearest eighth).

My VA 3/1 ARM from CitiMortgage just reset for May to 4.375%. (Was @ 5.375%) Thanks a million Ben B.

ETA: My new rate is good for 1 year, and next reset, cannot reset higher than 1% above current rate.

Based on this story, I think it might be time for a different thread.

A growing majority say they won't buy a home anytime soon, the latest sign of increasing pessimism about the nation's housing crisis, a poll showed Monday.

When a majority believe that they don't want to buy a home, things are getting interesting. I'd also like to see credit tighten up a just little bit more. Then, for the few that have both access to cash / credit and still have an appetite for real estate, it could be time to go binge buying.

Here is another bubble source:
http://online.wsj.com/article/SB120735504829291471.html?mod=residential_real_estate

I first found that those L. V. properties were very attractive...now...well....
STAY AWAY FROM THEM!

When's part 4 coming out?

Sounds like to me Kahlifohnia is in deep doodoo:

Mr Mortgage esplaining el problemos in housing

From the vid: 68k homes sold in a 10 state region for Feb, vs 70k foreclosure filings in cali alone in March.. WoW! I just heard a big explosion..

After doing nothign but reading the past 1 week. Worst case scenario, prices bunches back to 1998 level. Best case scenario, 2002 level.

Dealguy123 said: michal1980 said: ahhh guy is similar to flip this house.

using foreclosure data from march, but sales data from feb.

then making extrapolations that mean to imply that boa/chase/wells 2nd mortages are ALL worthless? so now all homes are going to foreclose?

His a good speaker, but full of fluff and crap.

Wow, seems your level of comprehension is pretty weak. He acknowledges it's comparings apples to "sorta apples." You missed the point though genius. SALES numbers were lower in 10 states including CA than the total number of foreclosure filings for just CA alone! Sure it's using Feb sales numbers to March foreclosure numbers. But it's likely a pretty safe assumption sales were lower than foreclosure filings in FEB (and quite possibly March) for CA. What does that mean? NET there were ZERO sales in Feb. Fluff and crap? Try using your brain.

Net zero sales is a big problem.

yes using march forecloser to feb sales. He even admits that the sales data is coming out in 2 days, why not wait to post the blog?

Why dont you use your brain instead of following some fear monger. Guy double talks all the time, starts by saying his comments relate generally to the 4-5 hot now cold states. Then moves on to talk in generalities.

And tops it off by implying like I said before, that ALL 2nd mortages/LOC/helco whatever. Are worth 3-5 cents on the dollar, and points out how many billions the big banks have in these loans.

I'm sorry but thats CRAP. Saying that because foreclosed homes 2nd mortages are worth zero, the entire pool of 2nd mortages is junk math.

The guys a used car sales men that uses some truth to hide his ignorance, Just because his a good speaker doesnt mean he's saying anything worth hearing.

sammy1224 said: michal1980 said:
I'm sorry but thats CRAP. Saying that because foreclosed homes 2nd mortages are worth zero, the entire pool of 2nd mortages is junk math.

That's a good point... The first thought that came to mind is that I, for one, have a second mortgage, and by no means should my bank consider it "worthless". When he made this general statement, he lost all credibility with me.Worthless? No.

A few pennies on the dollar? Yes.

You have to remember that we're nowhere near the bottom of the credit crunch.

Current 2nd mortgage note buyers are knife catchers. I wouldn't touch them with Suze Orman's money.

It's been over 6 months, and I'm still not seeing opportunity: Wait about 4-6 months

Panic is getting closer, but it's not here...yet. Keep an eye on the dollar. When we lose 10%+ in a few day period, and we see consumer credit card lines being slashed en masse, that's when bargain buying opportunities in the consumer debt market will arrive. Look for the headline on the evening news: Credit Card Crisis!

P.S. if you had taken the Euro advice I gave in that post, you'd be up 15% since the post was written in August

euro / dollar / dow

Just slightly better than 4.05% from a Countrywide CD

michal1980 said: yes using march forecloser to feb sales. He even admits that the sales data is coming out in 2 days, why not wait to post the blog?

Why dont you use your brain instead of following some fear monger. Guy double talks all the time, starts by saying his comments relate generally to the 4-5 hot now cold states. Then moves on to talk in generalities.

And tops it off by implying like I said before, that ALL 2nd mortages/LOC/helco whatever. Are worth 3-5 cents on the dollar, and points out how many billions the big banks have in these loans.

I'm sorry but thats CRAP. Saying that because foreclosed homes 2nd mortages are worth zero, the entire pool of 2nd mortages is junk math.

The guys a used car sales men that uses some truth to hide his ignorance, Just because his a good speaker doesnt mean he's saying anything worth hearing.

Maybe he didn't wait because he got the foreclosure numbers before the sales numbers, and wanted to get the info out?? Seems like the trend down is ACCELERATING, that's the point. I don't care what you think about 2nd's and HELOC's, etc. Fact of the matter is he has a point, whether or not you completely agree. Yes he's exagerrating the fact that they're "worthless," but they're clearly only worth a fraction of the original value.

I love folks who just prefer to bury their head in the sand rather than acknowledge the enormous problem. His point is there's a huge $h!tstorm coming up, and to watch out. Like I said, his MAIN point is pretty obvious, that foreclosure filings are going through the roof. If you don't think that's a problem, I don't have much else to say.

cameron2003 said: Bay area prices drop again, but mainly due to unavailability of jumbo loans and severe drops inland. True bay area market holding up well compared to rest of country due to resilient local economy, such as international high tech sales.

 

http://www.dqnews.com/News/California/Bay-Area/RRBay080417.aspx

I'm so glad I didn't give in and buy "investment" property when things were heating up! A co-worker offered me a chance to invest in Florida property with him back in 2006. I thanked him and politely turned him down. Although I was feeling like I was really missing out on the real estate boom, my gut feeling kept telling me that things just didn't seem right. Whew!!! I'm glad I listened to that little voice!

Dealguy123 said: cameron2003 said: Bay area prices drop again, but mainly due to unavailability of jumbo loans and severe drops inland. True bay area market holding up well compared to rest of country due to resilient local economy, such as international high tech sales.

Cameron,

Not as if you have any credibility left, but how is the "true bay area holding up well?" From the article:

Bay Area 8,317 4,898 -41.1% $639,000 $536,000 -16.10%

Bay area down 2.2% in ONE MONTH! Not sure what data you're looking at.. Keep in mind that you're constantly referencing a real estate backed site, hence they spin it as it's "just a jumbo loan issue." Keep in mind that ANYONE can get a loan, you just have to make the necessary downpayment in order to get the loan. Problem is, people don't have the money. Guess what? That means people can't afford them which means lower prices. They should've said "jumbo loans are no longer available to anyone with a pulse with a low downpayment."

Article said: Last month's median price would have been closer to $597,000 if the availability of jumbo home loans had remained stable. A year ago jumbo loans, mortgages above $417,000, accounted for 62.2 percent of all Bay Area home loans. Last month they were 29.8 percent.

LOL. I love that first sentence. I'm glad they KNOW prices would have stayed flat if irresponsible lending would've continued. There's a reason jumbo loans come with a much higher interest rate and downpayment now.. because they're more risky. Risk is now being priced accordingly and hence these loans are drying up without the cash for a downpayment. That's like me saying, "well we wouldn't be having a recession IF the US found a huge oilfield under the entire US." Reality is that jumbo loans are harder to qualify for and I don't see that changing.

How is this a real estate backed site? This site sells data. They have no agenda. They completely rip other real estate markets.

Take another look. Like I said, the true bay area, which I consider to be silicon valley, is the higher priced areas. They are down only single digits. The inland areas are getting ripped by 20% and more.

As far as jumbo loans, this data was from the time when jumbo loans were being recalibrated to conforming. People were just waiting if they could.

sammy1224 said: michal1980 said:
I'm sorry but thats CRAP. Saying that because foreclosed homes 2nd mortages are worth zero, the entire pool of 2nd mortages is junk math.

That's a good point... The first thought that came to mind is that I, for one, have a second mortgage, and by no means should my bank consider it "worthless". When he made this general statement, he lost all credibility with me.

ditto...

that is quite the fuzzy math he was using

however, think of it this way... he might mean this...

if everyone just stopped paying their second mortgage the second mortgage holder wouldn’t likely start the foreclosure proceedings because first taxes, then first mortgage holder will get paid, leaving nothing left for the second mortgage holder based on his real numbers of what homes are selling for at auction.

Does anyone know how the second mortgage foreclosure process works? Can the second lien holder even start foreclosure proceedings without the first lien holder's permission?

If the answer is no, then yes the 2nd mortgages are next to worthless and if you already have bad credit what is the incentive to pay it? Of course not everyone will stop paying them so they are not worthless in that sense, but as for as collateral value they are indeed worthless.

sailmaster1955 said: however, think of it this way... he might mean this...

if everyone just stopped paying their second mortgage the second mortgage holder wouldn’t likely start the foreclosure proceedings because first taxes, then first mortgage holder will get paid, leaving nothing left for the second mortgage holder based on his real numbers of what homes are selling for at auction.

Does anyone know how the second mortgage foreclosure process works? Can the second lien holder even start foreclosure proceedings without the first lien holder's permission?

If the answer is no, then yes the 2nd mortgages are next to worthless and if you already have bad credit what is the incentive to pay it? Of course not everyone will stop paying them so they are not worthless in that sense, but as for as collateral value they are indeed worthless.

Bravo sailmaster, that's exactly his point. The first mortgage gets dibs on everything FIRST. IF (and this is a damn big IF) anything is leftover, the second mortgage creditor gets dibs. I was too lazy/busy to explain it at the time.

Anyway, to answer your question, YES, the 2nd mortgage holder can actually start the foreclosure process. The problem here is that if the 2nd mortgage creditor starts the foreclosure process, the 1st mortgage has to be paid off IN FULL, and THEN the 2nd mortgage creditor gets paid off. In a declining market, well you see that this just leaves the 2nd mortgage creditor with nothing, and essentially they have zero collateral in the whole deal. From what I've read online (not sure how accurate they are but seems plausible), banks tend to recover 50-60% of the loan amount after the foreclosure process and re-selling the house, which means 2nd mortgages are probably next to worthless in post-boom areas.

It's funny, because Mark has been in the biz and making commentary all over the place (and was on cnn recently). He's hardly blowing smoke up everyone's @ss.

EDIT: HELOC's are in the same position as 2nd's.. so let's not forget about how a lot of them are near worthless. They're in line behind the 1st mortgage as well.

Strong rental market, From San Jose Mercury today. There are similar pieces on commercial real estate and Google. Housing is correcting here, no doubt. Time will tell if we are in a bubble, but it doesnt seem like it, and the economy is great.

Need more proof that Silicon Valley seems to be dodging the worst of the economic downturn? According to a report scheduled to be released today, the local apartment rental market remains strong, with rising rents and occupancy rates holding steady.

RealFacts, a rental research group based in Novato, issued the findings as part of its quarterly survey of activity at rental complexes with 50 units or more. The latest data showed that the South Bay was faring better than other parts of the state and remained well above some of the national averages for rates and occupancy.

"Santa Clara County and San Francisco have very high occupancy rates, given that we are in a recessionary downturn," said Gerald Cox, director of sales and marketing for RealFacts. "That's a sign that your local markets remain strong."

According to the report, the current average rent for an apartment in the San Jose area is $1,660 a month. That's up 0.8 percent from the previous quarter, and up 9.1 percent from the same period a year ago. The year-over-year increase was the second largest in the state, behind only the San Francisco-Oakland-Fremont region, whose rents jumped 9.4 percent.

Occupancy rates for the San Jose and San Francisco regions also remained stable. San Jose's occupancy rate was 96.5 percent, up 0.4 percent from the last quarter, and flat from a year ago. The San Francisco region's occupancy rate stood at 95.6 percent, up 0.3 percent from last quarter,

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and up 0.8 percent from a year ago.
Cox noted that any occupancy rate above 95 percent is considered a pretty robust indicator of a market's health.

By comparison, the Los Angeles region saw rents jump just 4 percent over the past year. But potentially more troubling: Occupancy rates in the Los Angeles area fell 0.4 percent from the last quarter, and 1.9 percent from a year ago. A drop in occupancy rates often precedes a fall in rental prices.

The RealFacts report pulled data from 3.2 million rental units across 15 states. For that group, the average occupancy rate was 92.6 percent, though rents were up 0.4 percent in the most recent quarter.

The picture of Silicon Valley's rental market remains very different than during the previous downturn, back in 2001. The end of the dot-com bubble led to mass layoffs, and eventually an exodus of unemployed people out of Silicon Valley. The rental market collapsed as occupancy rates and rental prices tumbled.

Cox noted that the overall health of rental markets tracks very closely to employment. While the local economy has clearly cooled, and the housing market has slumped, the biggest employers in Silicon Valley remain relatively stable and have not begun slashing

payrolls.
In addition, the drop in housing prices and low interest rates don't appear to be enticing people to leave rentals in favor of buying a home. In part, Cox said that may be because credit markets have tightened, making it harder for some people to obtain financing.

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Guess things in Detroit are not too good.
House for $100. Yes $100. Although you have to pay back taxes on it which are around $3200.

6BR 3000sf

mikef07 said: Guess things in Detroit are not too good.
House for $100. Yes $100. Although you have to pay back taxes on it which are around $3200.

6BR 3000sf
I'd laugh paying the realtor commission on that. "Hey Bob, here's your six bucks, you can buy lunch if you don't supersize your value meal."

mikef07 said: Guess things in Detroit are not too good.
House for $100. Yes $100. Although you have to pay back taxes on it which are around $3200.

6BR 3000sfAnd it's a duplex, too.

You could live in one side and rent out the other!... (for 5 bucks a month)

iLoveTahoe said: mikef07 said: Guess things in Detroit are not too good.
House for $100. Yes $100. Although you have to pay back taxes on it which are around $3200.

6BR 3000sfAnd it's a duplex, too.

You could live in one side and rent out the other!... (for 5 bucks a month)

Anyone know if I can use Redfin to get at least 1% or 2% back?

ifyouhavetoask said: All of the small $10-50k HELOC's/loans, taken out to bring people up to 80%+LTV, are worth pennies on the dollar, at best.This is just absurd, I think what got folks to tune out on anything else the video guy said. Maybe you meant "All of the small HELOCs on foreclosed properties are worth pennies on the dollar"? That's probably correct, and while a significant problem it's orders of magnitude smaller than "all" of them.