Underwater houses

[moneymaker]

According to Zillow 16.9% of houses are still underwater. Better than 5 years ago when it was twice that, still seems high to me though.

[spdrun]

You say this as if it weren’t a good opportunity. 😉

Not all areas had prices inflate as dramatically as San Diego or Phoenix, and some places crashed harder. Think Vegas, the ‘troit, parts of Ohio.

Even parts of the Northeast that went down 20-25% on average have been basically flat in the last few years.

[FlyerInHi]

Underwater just means mortgages outstanding are more than the value of the houses.

That sounds about right to me. Lots of houses purchased or refinanced at or near peak are still underwater.

Even in San Diego, not all areas are back to peak pricing. Some areas are back to near peak, so people would had downpayments are not underwater.

spd, Vegas crashed hard, up to 3/4 in some areas, but recovered fast. People how bought at bottom, easily doubled their money. Home prices have recovered so well that new housing construction is very healthy.

[livinincali]

[quote=FlyerInHi]Underwater just means mortgages outstanding are more than the value of the houses.
[/quote]

Theoretically a house (the structure) is a depreciating asset. It’s only the land/location that makes home prices go up.

[spdrun]

spd, Vegas crashed hard, up to 3/4 in some areas, but recovered fast. People how bought at bottom, easily doubled their money.

If prices dropped by 75% and now doubled, then there are still a lot of people under water.

Not even close to peak right now…
http://www.jparsons.net/housingbubble/las_vegas.png

Same goes for the ‘troit.

[moneymaker]

I heard Detroit has a 25% vacancy rate on housing, that’s pretty bad. Our place is valued 41.7% higher than purchase price in 2009, while it would have to go up another 51.4% to be back up to peak value.

[FlyerInHi]

spd, the chart you posted looks right.

Vegas still has the highest underwater rate in the nation. 27.8% today, 71% at the bottom.
http://www.vegasinc.com/business/real-estate/2014/dec/16/las-vegas-underwater-mortgage-rate-improving-still/

The underwater ratio is meaningless however, unless it leads to more foreclosures and inventory.

Today, it’s much harder or nearly impossible to get short sale approval. And people who hung on that long, are not giving up, thinking there’s light at the end of the tunnel. They should have defaulted right at the beginning of the recession, or they will keep on paying their mortgages, keeping the houses out of distressed inventory.

Today, inventory is very low and there’s not much to choose from.

[spdrun]

Apparently 10 1/2% of sales in Vegas are short — doesn’t sound like it’s impossible. And the issue is that some people can’t pay at this point, due to the Loser Vegas economy being a turd.

Also, some people may have been delaying short sales due to the short sale tax break expiring last year. Looks like Congress just reinstated itbretroactively and for next year.

[FlyerInHi]

The short sales that I’ve seen have been in the pipeline for months and years. Some do get through, but fewer and fewer.

The banks’ hope is that they can trickle out the inventory while the market rises. That’s exactly what they’re doing and it’s working.

[spdrun]

I doubt that they’re planning that far ahead. From what I see here in NJ (and NE in general), there’s actually more inventory being put on the market by banks in recent months than before.

Any slowdown in inventory there likely has more to do with the NV law making illegal foreclosures a felony, and the expiration of the tax break for short sales. Soon to be reinstated.

If they’re not waiting for prices to rise in a market that dropped 20-25%, they’re not holding their breaths in a market that’s down 50% from peak. Especially since Vegas (IMHO) has very little future.

Everyone and their momma allows gambling right now, and there is very little attraction that can’t be replicated anywhere else. (Concerts and shows can happen anywhere if you think about it.)

[FlyerInHi]

[quote=spdrun]I doubt that they’re planning that far ahead. [/quote]
I agree. I doubt that banks are that competent.

But regardless, inventory is trickling out as the market rises or stagnates. But new inventory as it enters the market is not causing prices to drop, as you’re hoping.

Are you seeing price drops in Jersey?

There’s also the Neveda Supreme Court’s decision that’s slowing down the foreclosure process.
http://www.vegasinc.com/business/real-estate/2014/oct/01/courts-hoa-foreclosure-ruling-win-nevada-las-vegas/

[spdrun]

Some areas are still dropping, especially down in South NJ. Others are rising, but slightly.

A few rare areas (mostly very near NYC or wealthy towns) are doing well.

As far as the NV decision that HOA liens take first precedence, wouldn’t that actually have the potential to lower prices.

On the one hand, an HOA foreclosure would be more valuable since the status is less ambiguous. On the other, it would allow the HOA to auction at minimal reserve. If the bank gets fawked, what do they care as long as they get theirs back?

[FlyerInHi]

I hear of a friend’s relatives in Atlantic City.
Both husband and wife lost their jobs. The rental house is not renting. And they are having to pay the mortgage on the newer move up house out of savings. They are depressed and thinking about abandoning the sinking Atlantic City ship.

[FlyerInHi]

[quote=spdrun]

As far as the NV decision that HOA liens take first precedence, wouldn’t that actually have the potential to lower prices.

On the one hand, an HOA foreclosure would be more valuable since the status is less ambiguous. On the other, it would allow the HOA to auction at minimal reserve. If the bank gets fawked, what do they care as long as they get theirs back?[/quote]

From what I understand, an HOA foreclosure is not marketable title. The HOA or whoever buys the HOA foreclosure needs to take quit claim action and notify the other lien holders. Process can take up to 2 years. It’s basically a lawsuit to quiet claims on title.

[spdrun]

AC has always been an armpit, even when the casinos were supposedly doing well.

As far as the Nevada HOA issue: the article seems to state that the HOA sale extinguishes the bank’s claims. Any residual funds from the auction beyond that HOA’s claims go to pay off the banks, but beyond that, the banks aren’t entitled to money.

Of course, the banks themselves can bid at the HOA foreclosure auction.

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