What if feels like being at Ground ZERO in Las Vegas

I have 18 houses in my neighboorhood that are in Foreclosure. I have seen the value of my house drop 400,000 in the last year Still there are NO BUYERS for these houses that SIT Its demoralizing... instead of 1000 dollar call girls i only feel right about dropping a c note now!!! (kidding...kind of) I bought in 2003 before the RAMP...I know how i feel knowing what money was left on the table i can only imagine what the newbies must be feeling knowing they are underwater by 200-300- 400k in a year!!!! you cant move , cuz your stuck, you see no reason to keep making payments on a house that you wont see postitve for 30 years you walk.... If guys like me who put 35-40% down BEFORE the run up start to see their equity dissapear...then FOLKS we have ARMAGEDDON!!! So i am at ground zero, but its that bad in CA, AZ and Florida..... So all these people who have subrime loans resetting is just the tip of the iceberg....your going to see PRIME holders walk over the next several years and its going to be an avalanche... its going to happen in the worlds 8th largest economy....california.....people who bought in 95 at the bottom and put home equity lines on are going to be back at par or even underwater... there is just no friggin way that this is discounted in the market...i went back and looked at tech stocks and noticed that most of them lost 75% of their value while the spx was only 10 percent off its highs....this rally is nothing more than a sentiment rally cuz too many shorts were clogging the system... the only hope is that buyers start stepping in to buy..but you basically need 20% down NOW and not many people have 150K

For what it's worth, I think there is an active market right now for real estate. But, it's at a lower level. I posted about an auction that I participated in where the final sales prices was roughly 50% of the value the seller was trying to get before the property was foreclosed and taken back by the bank. The bank auctioned the property. What it takes right now to move property is the ability to price it low enough to attract the bargain hunters. Alot of these guys aren't mom and pop, retail type buyers. They're guys who buy for cash. So the seller has to be able to lower his property sufficiently. One seller that can do this is the bank. And that's mostly what I see selling these days....bank owned property. They want to sell they simply blow it out low enough. That doesn't help the guy who wants to sell, but has too high a loan to value. That guy is a candidate to walk away. Or, to do a short sale. I have a good friend in California....been an investor for years. He's buying today. The principal is to buy cheap enough to be able to hold and rent the property. As you know, that's no easy task in California. But he can do it occasionally in todays market. Typically at an auction. His idea is that he can rent for a positive cash flow, and hold until the prices are better. In other words, he's a "value investor". It's an old saying. But people got to live somewhere. Maybe many of these people really need to rent. So in the end, there is a rental market...the rents will establish what the value of the property is. It's low...but there is a value that you can sell a property at. I think the above is where the market is going on it's own. However, I think the governement is going to attempt to do something. We'll see what that is, and whether it can change anything. IT

I have 18 houses in my neighboorhood that are in Foreclosure.

I have seen the value of my house drop 400,000 in the last year

Still there are NO BUYERS for these houses that SIT

Its demoralizing... instead of 1000 dollar call girls i only feel right about dropping a c note now!!! (kidding...kind of)


I bought in 2003 before the RAMP...I know how i feel knowing what money was left on the table i can only imagine what the newbies must
be feeling knowing they are underwater by 200-300- 400k in a year!!!!

you cant move , cuz your stuck, you see no reason to keep making payments on a house that you wont see postitve for 30 years

you walk....

If guys like me who put 35-40% down BEFORE the run up start to see their equity dissapear...then FOLKS we have ARMAGEDDON!!!


So i am at ground zero, but its that bad in CA, AZ and Florida.....


So all these people who have subrime loans resetting is just the tip of the iceberg....your going to see PRIME holders walk over the next several years and
its going to be an avalanche...

its going to happen in the worlds 8th largest economy....california.....people who bought in 95 at the bottom and put home equity lines on are going to be back at par or even underwater...


there is just no friggin way that this is discounted in the market...i went back and looked at tech stocks and noticed that most of them lost 75% of their value

while the spx was only 10 percent off its highs....this rally is nothing more than a sentiment rally cuz too many shorts were clogging the system...

the only hope is that buyers start stepping in to buy..but you basically need 20% down NOW and not many people have 150K

IC -- how's this any different than buy and hold? you are a bright guy --- i'm really surprised you didn't see it coming .

ed rader

Edited by ed rader, 03 May 2008 - 01:55 AM.

I have 18 houses in my neighboorhood that are in Foreclosure.

I have seen the value of my house drop 400,000 in the last year

Still there are NO BUYERS for these houses that SIT

Its demoralizing... instead of 1000 dollar call girls i only feel right about dropping a c note now!!! (kidding...kind of)


I bought in 2003 before the RAMP...I know how i feel knowing what money was left on the table i can only imagine what the newbies must
be feeling knowing they are underwater by 200-300- 400k in a year!!!!

you cant move , cuz your stuck, you see no reason to keep making payments on a house that you wont see postitve for 30 years

you walk....

If guys like me who put 35-40% down BEFORE the run up start to see their equity dissapear...then FOLKS we have ARMAGEDDON!!!


So i am at ground zero, but its that bad in CA, AZ and Florida.....


So all these people who have subrime loans resetting is just the tip of the iceberg....your going to see PRIME holders walk over the next several years and
its going to be an avalanche...

its going to happen in the worlds 8th largest economy....california.....people who bought in 95 at the bottom and put home equity lines on are going to be back at par or even underwater...


there is just no friggin way that this is discounted in the market...i went back and looked at tech stocks and noticed that most of them lost 75% of their value

while the spx was only 10 percent off its highs....this rally is nothing more than a sentiment rally cuz too many shorts were clogging the system...

the only hope is that buyers start stepping in to buy..but you basically need 20% down NOW and not many people have 150K

IC -- how's this any different than buy and hold? you are a bright guy --- i'm really surprised you didn't see it coming .

ed rader

i saw the wave coming ED...unfortunately from the beach it looked surfable...it turned out to be a tsunami

For what it's worth, I think there is an active market right now for real estate. But, it's at a lower level. I posted about an auction that I participated in where the final sales prices was roughly 50% of the value the seller was trying to get before the property was foreclosed and taken back by the bank. The bank auctioned the property.

What it takes right now to move property is the ability to price it low enough to attract the bargain hunters. Alot of these guys aren't mom and pop, retail type buyers. They're guys who buy for cash. So the seller has to be able to lower his property sufficiently. One seller that can do this is the bank. And that's mostly what I see selling these days....bank owned property. They want to sell they simply blow it out low enough. That doesn't help the guy who wants to sell, but has too high a loan to value. That guy is a candidate to walk away. Or, to do a short sale.

I have a good friend in California....been an investor for years. He's buying today. The principal is to buy cheap enough to be able to hold and rent the property. As you know, that's no easy task in California. But he can do it occasionally in todays market. Typically at an auction. His idea is that he can rent for a positive cash flow, and hold until the prices are better. In other words, he's a "value investor".

It's an old saying. But people got to live somewhere. Maybe many of these people really need to rent. So in the end, there is a rental market...the rents will establish what the value of the property is. It's low...but there is a value that you can sell a property at.

I think the above is where the market is going on it's own. However, I think the governement is going to attempt to do something. We'll see what that is, and whether it can change anything.

IT

I guess the purpose of my message is that i really wonder just how many consumers are going to walk and not be able to get credit again or at least for 7 years

I think its much bigger than one can conject and therefore it will lead to a recession much deeper and longer than people think... look at Japan in the 90's ...

i dont see how we are different...not so much from a banking standpoint but from the consumer end..could it be that because Japan didnt allow foreign investment or ownership in their soverign companies enabled their market to go down for ten years because the only form of capital that could invest (ie their own people) were washed out?

Perhaps that is our stock markets saving grace in the sense that we do allow foreign ownership and even though our own citizens may be tapped out to invest that its the foreign investors that prop us up... I dont know...Jesse Livermore may have been a great trader but I think the markets are much more complex now then they were then simply because of international trade and the likes...


ONe prognosis i have is that SO many people understand how dire the situation is , that they had no reservations about shorting down at the lows in Feb and March. The Fed was on the other side flooding the system with cash and won the first battle...now however my guess is that you get the market to roll over on its own again but this time the shorts stay away cuz they just got burnt bad and wont be back...thus taking away the natural buyers who at some point need to cover...

we shall see...


on a side note...i was looking at the rentals here in Vegas and its a joke...these people have their houses listed for rent in the 6 to 7,000 per month category...

jesus H...who are they kidding...

Look at the polulation numbers. Who bought the homes? I think home ownership expanded, but the was i see it, that was bottom end property. They foreclose and the inv banks bail them out. Higher end property was bought by wealthy and also people already on the ladder. Also by the buy to let market. ie second homes. Can they afford to keep paying off loans even with house prices lower? Can they keep stocks even after they fall 20%. OF COURSE THEY CAN. property as an asset class is not attractive now. the market is being deliberately supported by the fed. being the other part of the personal us balance sheet. can thre market be held up, while property goes down, giving a net net neutral effect on the personal balance sheet? My view is yes.

The housing bubble burst because the first time buyers could no longer keep the upper food chain going. Affordability does matter! The first time buyers have used up every possible creative financing option that could be conceived! POP goes the bubble! Housing prices & rents must now evolve to meet the affordability of the local population -AND/OR- supply & demand of the local market going forward as it should. It no longer matters where the price was, that price is NOT coming back. This is the "dot-com" of housing. Value will survive. Microsoft is still holding it's value, but has not exceeded it's "dot com" high. Dr Koop is toast! So the only value going forward in the housing market is when the purchase price meets the future rent market. I think we have started a housing dead cat bounce when people think 40% off is a deal without any consideration of affordability and the rent market. This applies to all the previous 'hot" markets. After this dead cat bounce is over is when things will get back to normal in the housing & building markets.

IC -

an executive from Wells Fargo Corp. was interviewed a few mos. ago on Bloomberg.

he spent a good amount of time covering the items you mention, with a bent to the magnitude of this problem.

he said that 2/3rd of the mortgage resets are ahead of us.

he provided his estimate of the look-forward date by which we will actually know the magnitude of this problem, I did not make a note of how many quarters ahead that date resides.

------

an interview transcript of ex-Secty of the Treasury, R. Rubin may interest you...scroll down in this thread -

http://www.websiteto...post?id=2575552

Edited by hiker, 03 May 2008 - 06:05 AM.

been fairly insulated thus far...... on our amelia island Fl we have a very slow market. homes / condos over 1 mill still being built and selling at a much slower pace than they did 2 years ago , but still selling. re broker buddy says many are cash paying older Baby Boomers from up north. have not had many forecloserures 2 speak of here yet.... well not in the over 500k market here anyway. think according to realty trac this may change soon tho. see more & more folks on the island where owners have paid the note and simply canceled their homeowners INSURANCE in light of the super high rates since the hurricane threat has increased. paid 24k last year in taxes & insurance (with flood) to live here....14 feet above sea level in paradise;) tekno

Here's an old TT post I bookmarked ~18mos ago that some may find of interest. Houston remains firm to strong on the west side and softening on the northwest side (at least that's what we saw in our recent move)....have no feel for any other areas, but it feels like it's just a matter of time when the proverbial hits the fan especially if/when the energy boom cools off.

Confessions of a Houston TX loan officer