A Realtor friend of mine printed about 200 MLS listings for me. I invest in real estate and was thinking a bottom may be in.
I had the shock of my life!
The criteria was very simple: every single family home under 220k in the county.
Of the 200 listings, about 175 were foreclosure related: "Pre-foreclosure or "bank-owned." The rest were "motivated seller." Not one single traditional sale.
My Realtor said the "normal" traditional sales between a willing buyer and a willing seller were still being listed for 250k and above. The problem is, the foreclosed property had super value. We're talking 3 and 4 bedrooms, newer construction for 200k vs. 260k for a 2 bedroom shithole "normal" listing.
Needless to say, anything that isn't bank owned foreclosure is having significant trouble selling as no seller wants to cut the offer (below what they paid for the house).
A short-sale on the other hand (where the mortgage on the property is higher than the selling price) is common as banks do not want to be in the business of property management. They would rather take a loss and get rid of the property. You could low-ball the bank's offer by as much as 30% and the bank just might say yes. Can't blame them when considering property taxes and sky-high insurance on insuring a vacant property (potential fire hazard and attracts gang-related activity).
My intuition tells me this could be a messy situation. 175 to 200 foreclosed properties where the banks are competing to unload as fast as possible can only mean prices will have to come down in the near future. Normal sellers will never be able to sell their property until the glut of superior foreclosed properties have been sold.
All those people with ARMs, I/Os, and Ballon mortgages are fucked because no bank will refinance when the value of the property is falling so rapidly. This will only means more foreclosures... talk about death spiral of the RE market.
With the 125% home equity loans, banks need not worry due to double-digit gains that would have the loan-to-value fall to 80% within a few years. Now they're at 150 to 200% and the borrower is no longer interested in paying the mortgage. Multiple banks (1st, 2nd, and even 3rd mortgages) are tring to recoup whatever they can.
Just some observations and thoughts...
I had the shock of my life!
The criteria was very simple: every single family home under 220k in the county.
Of the 200 listings, about 175 were foreclosure related: "Pre-foreclosure or "bank-owned." The rest were "motivated seller." Not one single traditional sale.
My Realtor said the "normal" traditional sales between a willing buyer and a willing seller were still being listed for 250k and above. The problem is, the foreclosed property had super value. We're talking 3 and 4 bedrooms, newer construction for 200k vs. 260k for a 2 bedroom shithole "normal" listing.
Needless to say, anything that isn't bank owned foreclosure is having significant trouble selling as no seller wants to cut the offer (below what they paid for the house).
A short-sale on the other hand (where the mortgage on the property is higher than the selling price) is common as banks do not want to be in the business of property management. They would rather take a loss and get rid of the property. You could low-ball the bank's offer by as much as 30% and the bank just might say yes. Can't blame them when considering property taxes and sky-high insurance on insuring a vacant property (potential fire hazard and attracts gang-related activity).
My intuition tells me this could be a messy situation. 175 to 200 foreclosed properties where the banks are competing to unload as fast as possible can only mean prices will have to come down in the near future. Normal sellers will never be able to sell their property until the glut of superior foreclosed properties have been sold.
All those people with ARMs, I/Os, and Ballon mortgages are fucked because no bank will refinance when the value of the property is falling so rapidly. This will only means more foreclosures... talk about death spiral of the RE market.
With the 125% home equity loans, banks need not worry due to double-digit gains that would have the loan-to-value fall to 80% within a few years. Now they're at 150 to 200% and the borrower is no longer interested in paying the mortgage. Multiple banks (1st, 2nd, and even 3rd mortgages) are tring to recoup whatever they can.
Just some observations and thoughts...
