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Amazing Foreclosure Facts


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#31 milbank

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Posted 12 April 2008 - 10:11 PM

Everyone wanted and expected their homes to appreciate in the many decades before this bubble but, not in the same sense that they have in the five plus years leading to the collapse of the housing bubble. I think those who bought their homes 10 or more years ago did not do it with the idea of using it as an ATM or, as an aggressive growth investment the same way as one would with stocks.

Posted Image

Posted Image

I found these charts in the article sited below which was published exactly one year ago 4/13/07

http://www.financial.../2007/0413.html

"The power of accurate observation is commonly called cynicism by those who have not got it."
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#32 Data

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Posted 12 April 2008 - 10:34 PM

Investors are a factor in the purchase foreclosures. There are a substantial number of foreclosures arising from the refinancing that occurred in the last three years. A large segment of the subprime refinancers were households that were on the verge of bankruptcy because of job loss, medical bills, etc. Pulling out the equity from the homes was their last chance to keep afloat. I read that the average subprime loan from 2006 became delinquent in the first eight months.

#33 Mike McCarthy

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Posted 12 April 2008 - 11:33 PM

Everyone wanted and expected their homes to appreciate in the many decades before this bubble but, not in the same sense that they have in the five plus years leading to the collapse of the housing bubble. I think those who bought their homes 10 or more years ago did not do it with the idea of using it as an ATM or, as an aggressive growth investment the same way as one would with stocks.

Posted Image

Posted Image

I found these charts in the article sited below which was published exactly one year ago 4/13/07

http://www.financial.../2007/0413.html



> Everyone wanted and expected their homes to appreciate in the many decades before this bubble but,
> not in the same sense that they have in the five plus years leading to the collapse of the housing bubble.


Agreed: equity withdrawals went parabolic. But the thing about parabolic blow ups is they are already unsustainable before they blow up. It's not the parabola that's the problem, it's the conditions that set the stage for the parabola.

A lot of marginal buyers got loans they really couldn't afford, and then promptly tapped their equity. Ka-boom.

But, how many homeowners were queuing up to do the same darn thing, only slowly and more "responsibly?" They've now been blown up, too, and they are realizing (however unfair they think it is) that the wealth they thought they owned was just as much an illusion as the sub-prime buyer who can't afford the post-teaser rate.

UFO expressed the thought that it's inevitable that 500K becomes 750K in 10 years. Folks have been lulled into believing that, as if a house were a bond with a coupon they could safely redeem year after year. Big mistake. The blowup in the last few years is just a symptom of a larger problem, not the problem itself.

#34 U.F.O.

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Posted 13 April 2008 - 12:05 AM

"UFO expressed the thought that it's inevitable that 500K becomes 750K in 10 years. Folks have been lulled into believing that, as if a house were a bond with a coupon they could safely redeem year after year. Big mistake. The blowup in the last few years is just a symptom of a larger problem, not the problem itself."

Au contraire. Find a way to get rid of population growth and inflation and I'll believe there's no logical reason for hard asset price appreciation. You think that same $500,000 home trades for $100,000 in 10 years? Not a chance in hell. One reason is if asset depreciation existed over the long-term, this system we call capitalism wouldn't exist. You wanna guess what happens to the worldwide corporate pension plans and insurance annuity programs if equity growth goes negative 50% for the next 10 years? I don't have to guess...I know. Disaster. I'm "lulled" into believing prices should rise? When have they ever not risen over the long haul? I think I'm actually on the low side. That $500,000 in 10 years will probably double in value. Our economic system, to a large degree, is rigged. It will do what it's supposed to do, burping and farting, all the way to our bank. If we don't lose faith in the system. Anyone who bets on the collapse of this system is, IMO, "dead money walking". Best ya'll. See you tomorrow.

U.F.O.
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#35 Rogerdodger

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Posted 13 April 2008 - 12:20 AM

UFO, I was getting ready to say something similar, but you said it better.

My wife's grandfather bought a 40 acre farm in the 30's for $6,000.
It's been cut up into 90 lots and the cheapest homes there go for $600,000.

See my 2006 post below proclaiming a peak in home prices...for the time being:

"Real Estate just went up a lot and I believe it may be a long time before it goes up much more."

Edited by Rogerdodger, 13 April 2008 - 12:33 AM.


#36 Rogerdodger

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Posted 13 April 2008 - 12:25 AM

"Buy Real Estate. They are not making it anymore."
"Don't gamble. Take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it."
- Will Rogers

From WILL ROGERS AND THE GREAT DEPRESSION - William R. Linneman

When the stock market went into a tailspin in October 1929, Will Rogers was not concerned. It would be a greater loss to America, he said, if the cows were not milked one night. The whole nation was more dependent on the cackling of a hen than on Wall Street ( Vol. 2, 90). America's real wealth, he argued, lay in its natural resources and agriculture, not in scrip. Rogers regarded the stock exchange as a bunko game to take advantage of suckers. He could not take the lamentations of Wall Street seriously.

Rogers avoided stocks for his own investments. He preferred land because "You could always walk on it." Ocean frontage was his specialty because there was only so much of it and they weren't making any more (WA, Vol. 4, 134). He eventually owned several miles of coastline at Santa Monica, California.

When Roosevelt cut the trading sessions down to three hours a day, Rogers said that this was FDR's way of telling the brokers that there were only three hours allowed to work on the suckers, "and the other twenty-one hours they are under the protection of the fish and game laws"




The price of real estate, like stocks goes up and down, but mostly up over time.
Sometimes a long time. And sometimes a lot!

The 1930's were a hard time for most folks, including Will Rogers' fellow Okies.
The Great Depression topped by the Dust Bowl sent many Okies packing to California.
But my wife's grandfather had done fairly well selling and servicing oil well equipment.
So in the late 30's he bought a nice 2 story limestone house on 40 acres adjacent to the Arkansas river.
I haven't a clue as to what he paid but I'm guessing it was "dirt cheap" below $20K.
(EDIT: My father-in-law who used to live in the basement apartment says the purchase price was $6,000!)

After raising a half dozen kids and many more grandkids, Grandpa and Grandma grew old and died.
The empty house "mysteriously" burned down and Uncle Buddy got the insurance money.
The vacant land was sold in the late 80's for maybe $300K.

Today, I drove through that same area.
It has been divided into 90 lots and homes built, each selling for $600K and up to $2.5 million.
Not bad work if you can get it.

Check out what you can get in Tulsa for $600K: LINK

The Old Farmhouse was behind lot 33 on the right side of the map. "Waterstone" Map
(It was up on the hill cause the river used to flood before the dam was built.)

I think Grandpa would not believe what I saw there today. I didn't.
I think Will Rogers would not believe what his "several miles of coastal property in Santa Monica" is worth.

PS: While walking through an undeveloped part of the land I found a nice limestome and brought it home.
I don't know why. But that relic makes me feel connected to another time.

Posted Image

Edit:
The price of real estate, like stocks goes up and down, but mostly up over time.
Sometimes a long time. And sometimes a lot!

Real Estate just went up a lot and I believe it may be a long time before it goes up much more.



#37 Mike McCarthy

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Posted 13 April 2008 - 12:50 AM

"UFO expressed the thought that it's inevitable that 500K becomes 750K in 10 years. Folks have been lulled into believing that, as if a house were a bond with a coupon they could safely redeem year after year. Big mistake. The blowup in the last few years is just a symptom of a larger problem, not the problem itself."

Au contraire. Find a way to get rid of population growth and inflation and I'll believe there's no logical reason for hard asset price appreciation. You think that same $500,000 home trades for $100,000 in 10 years? Not a chance in hell. One reason is if asset depreciation existed over the long-term, this system we call capitalism wouldn't exist. You wanna guess what happens to the worldwide corporate pension plans and insurance annuity programs if equity growth goes negative 50% for the next 10 years? I don't have to guess...I know. Disaster. I'm "lulled" into believing prices should rise? When have they ever not risen over the long haul? I think I'm actually on the low side. That $500,000 in 10 years will probably double in value. Our economic system, to a large degree, is rigged. It will do what it's supposed to do, burping and farting, all the way to our bank. If we don't lose faith in the system. Anyone who bets on the collapse of this system is, IMO, "dead money walking". Best ya'll. See you tomorrow.

U.F.O.



I certainly didn't say 500K goes to 100K. I said something much simpler: whatever people believe (eg, it goes to 100K, or 750K, or 1,000K) they then start acting as if it's inevitable. That gets them in trouble.

#38 cgnx

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Posted 13 April 2008 - 04:12 PM

$6000 in the 30's? Your folks were rich. What happened to homeowners during the great depression. I guess most were wiped out. Just think from the 30's till now isnt very long. 80 years long is this case study. This could be wipe out time once again. My guess is that the $500 g to 1 million homes will have to get slammed in price to compete with all those 200 g homes that are enough home for anybody. Lower taxes and maintenance will be the order of the day. Mcmansions will be a dime a dozen hammering the price. Baby Boomers will be fleeing to lower tax areas buying smaller homes. Kids are gone. Population growth barring illegal aliens is a dead concern.
If it can be cornered, it will.