You guys check out the stats on bubbleinfo?

[CA renter]

[quote=flu][quote=carlsbadworker]Overleveraged bum-losers are actually doing great and could be the seed of the next RE bubble.

Bruce Norris recently told a story happening in Moreno Valley, a person owed $250K on a 2-bedroom house. It went for $57K to one of the Norris Group’s investors, and the owner was given $25,000 to agree to the transaction. After closing costs, the lender netted $23 grand. But the owner who was current on the payment had $25 grand and was able to go buy another house right away since he was just given the money.

And then Bruce gave an example of someone who bought a house back in February for $205,000. This same house has already gone up to $285,000. When they tell this story to their friends who did not receive an $80 grand increase for anything and they began thinking they need to buy something, eventually that’s how the CA RE cycle runs. It almost never stays in a fair value because you will get people migrate into the state when the RE price is rising rather than the other way around. As a rational person, I cannot understand this but that’s how the process goes.[/quote]

+++ding ding ding…[/quote]

Sounds like fraud to me.

[outtamojo]

[quote=CA renter][quote=flu][quote=carlsbadworker]Overleveraged bum-losers are actually doing great and could be the seed of the next RE bubble.

Bruce Norris recently told a story happening in Moreno Valley, a person owed $250K on a 2-bedroom house. It went for $57K to one of the Norris Group’s investors, and the owner was given $25,000 to agree to the transaction. After closing costs, the lender netted $23 grand. But the owner who was current on the payment had $25 grand and was able to go buy another house right away since he was just given the money.

And then Bruce gave an example of someone who bought a house back in February for $205,000. This same house has already gone up to $285,000. When they tell this story to their friends who did not receive an $80 grand increase for anything and they began thinking they need to buy something, eventually that’s how the CA RE cycle runs. It almost never stays in a fair value because you will get people migrate into the state when the RE price is rising rather than the other way around. As a rational person, I cannot understand this but that’s how the process goes.[/quote]

+++ding ding ding…[/quote]

Sounds like fraud to me.[/quote]

It IS fraud, spoken causually because that is the way business is done these days. Pity anyone
looking to buy a place to live these days, the wink wink crowd gets all the pretty shiny places at 2008-2009 prices while the common man gets to tour fixers at full market price.
I am starting to wonder now, how much inventory is held by samll time investor groups along with big time hedge funds. I hope it is not a lot, because hedge funds have a tendency to piss and poop on everybody else.

[bearishgurl]

[quote=outtamojo]. . . I am starting to wonder now, how much inventory is held by samll time investor groups along with big time hedge funds. I hope it is not a lot, because hedge funds have a tendency to piss and poop on everybody else.[/quote]

It IS a lot and there WILL be a lot more of these types of deals in the very near future, IMO.

See: http://piggington.com/as_predicted_frannie_is_beginning_to_sells_blocks_of_assets_in_b

[carlsbadworker]

[quote=outtamojo]I am starting to wonder now, how much inventory is held by samll time investor groups along with big time hedge funds. I hope it is not a lot, because hedge funds have a tendency to piss and poop on everybody else.[/quote]

I think there is a lot. DQNews said 28% of the houses are bought by absentee buyers in SoCal. Keefe, Bruyette & Woods, an investment bank, estimates that around $6-8 billion is being lined up to invest in single-family homes, the most appealing part of the market. Blackstone is said to be buying some 100 houses a day in selected markets. Normal home owners are the ones with FHA/conventional loans. They cannot compete with hedge funds with REIT to refinance what they just purchased using debt. You cannot beat Blackstone with your credit rating and they are leveraging using loans to improve yields.

Rick Sharga from Carrington recently said: there are three different sources for properties that you can purchase. There is new home development of which there has been virtually none of over the last five years. There is existing home sales, which are limited since between 1/4 and 1/3 of all homeowners who are upside-down do not or cannot sell their property. There are also distressed properties, which are technically existing homes that are put into a different bucket. All three of these things are lower than normal, and there is a limited amount of inventory available. At this precise moment in time Wall Street came in and gave $8 billion to spend on REO properties. Imagine what would that do to the price and that’s exactly what happened. Common men are screwed.

The good comfort is that they may not dump all their rental all at once, because they need the cash flow for the business structure to work so they can only sell a portion of their properties at a time in the future. But it’s not all the evil hedge funds at work, they, like the rest of us, are driven by yield and Ben Bernanke doesn’t give them any other options.

[bearishgurl]

[quote=outtamojo] . . . It IS fraud, spoken causually because that is the way business is done these days. Pity anyone looking to buy a place to live these days, the wink wink crowd gets all the pretty shiny places at 2008-2009 prices while the common man gets to tour fixers at full market price . . . [/quote]

outtamojo, I agree that the selection for FTB’s and other similarly-situated buyers is lower right now, partly due to the “secret, backroom deals” you speak of here. The <$400K price range is VERY attractive to buy and hold investors, ESP to those who pay all cash for a property. HOWEVER, there ARE plenty of SFR listings that have been in the MLS for 2+ weeks in MANY zip codes which "apparently" have not gotten "good enough" offers on them yet. I don't see a cosmetic fixer as a problem for these types of buyers. Those in the <$400K price range who need >1500 sf w/garage should actually expect this, IMHO.

I see only opportunities for these buyers. Your statement above assumes buyers who pay “full market price” (whatever that is, lol, it’s low to reasonable) today will not have made a good or great deal, in hindsight, tomorrow … ESP if they locked in the prevailing prime mtg interest rates.

I understand that a few of these current listings which have been languishing on the market may have structural damage and thus will only sell to a particular kind of buyer. But that leaves at least ~1500 current SFR listings in the county which are NOT “moving like hotcakes.” Perhaps investors don’t want them because the sellers won’t sell them cheap enough to effect a good rental ROI or flipper ROI. But that doesn’t mean they aren’t good houses for joe6p and his family for the time it takes them to buy and flip (abt 1-3 yrs if both have FT jobs). Hundreds of very well-located SFRs in SD County appear to be sitting on the market today waiting for good/reasonable offers while buyers whine and wring their hands, lamenting that there is nothing out there for them.

Nothing could be further from the truth.

*****

Back in the “olden days” of 10%++ mtg interest rates, we boomers (at the ages Gen Y is now) were happy to buy those cosmetic-fixer SFR’s here in SD County for between $32K and $90K. You may think those prices are “cheap” by today’s standards but it’s all relative, as is the lower profit (than today) we were able to make on each one.

I’m partly as secure as I am today because of decisions I/we made decades ago to engage in serial fixup/rehab work of local SFR’s for later sale.

If you (as a Gen Y’er who just bought a cosmetic fixer), have young children, put them in a playpen and/or a swing (now they’re elec and you don’t have to crank them up every 15 mins :-D) and let them fall asleep to the sound of power tools or rock n roll (there were no ipods back then ;-]) and get to work scraping, dumpster loading, etc. Your future net worth depends on it!

[CA renter]

Good post, Carlsbadworker.

[bearishgurl]

[quote=carlsbadworker] . . . Rick Sharga from Carrington recently said: there are three different sources for properties that you can purchase. There is new home development of which there has been virtually none of over the last five years. There is existing home sales, which are limited since between 1/4 and 1/3 of all homeowners who are upside-down do not or cannot sell their property. There are also distressed properties, which are technically existing homes that are put into a different bucket. All three of these things are lower than normal, and there is a limited amount of inventory available. At this precise moment in time Wall Street came in and gave $8 billion to spend on REO properties. Imagine what would that do to the price and that’s exactly what happened. Common men are screwed . . . [/quote]

CW, you forgot to mention that of the 2/3 to 3/4 remaining local homeowners who are NOT upside down, the vast majority of the ones who appear to be selling are:

– possible heirs for homeowners who died;

– relos out of county (where an employer may be financially assisting in closing and moving costs);

– those who can’t wait another minute to move closer to or live with family members (usually 75+ yrs old);

– those getting a divorce;

– and, those who must move into assisted living or a nursing home NOW and their heirs don’t want their property.

All “other homeowners” appear to be sitting tight. WHY? Because they CAN! They don’t have to play games with bottomfishers … incl the cash offerors who want to use their properties as a launching pad for their next $150K ++ profit in less than 60 days.

These homeowners can ALL wait for a better day … and, in SD County, those better days WILL come … if not sooner, than later.

It’s all okay.

If today’s buyers want more inventory to choose from, that will happen when they lose the “I’m going to steal a house in excellent condition and/or a prime location,” mindset and face reality.

[carlsbadworker]

BG, you are basically saying inventory will improve at much higher price point, which is probably what is going to happen unless mortgage rate suddenly went up and dry up buyers (mostly investors for SoCal). Given Fed has pledged not to let the latter event happen, so you are probably right.

[Coronita]

What the hell do you guys expect…Our government is encouraging this…They want more money so they can do this.. So they can avoid any sort of fiscal pain…Why is any of this so surprising to any of you?

[The-Shoveler]

[quote=flu]What the hell do you guys expect…Our government is encouraging this…They want more money so they can do this.. So they can avoid any sort of fiscal pain…Why is any of this so surprising to any of you?[/quote]

The only thing is they are missing the part where minimum wage goes to $15.00 an hour.
But I guess they can’t do that and claim there is no inflation.
I have always said you will never get a recovery until home prices are close to peak nominal price.
The sad thing is it did not have to be this way, but I can’t see how they did not plan it this way as it was so obvious what was going to happen.

The housing market version of Pump and Dump.

[bearishgurl]

Most potential sellers don’t need to make a “killing.” But if market conditions are such that they do, then great.

But selling prices which are lower today than that exact same neighborhood sold for in mid 2003 are NOT adequately compensating legitimate buyers who bought with at least 20% down and qualified under the normal lending guidelines prevalent at the time. IMO, all properties from April 2003 and before were likely true market-rate sales bought by people who legitimately qualified for them.

If any of those owners have improved their properties since then and did not take out any equity, then they deserve to be compensated fairly for their investment today, IMHO.

In many areas of SD County, we are not quite there yet. There are dozens of shorts and potential shorts in the pipeline in most of these areas but a another cursory check of 8 local zip codes over the weekend revealed to me that the “winning” buyers who actually closed these SS’s in the last 10 weeks were, on average, paying $50K to $80K over the unrealistically low “opening bid” designed to attract bidders.

As it should be. It’s not where it needs to be yet but it is getting there.

[spdrun]

Bearishgurl – who says that the market was “right” pre-2003? Maybe it’s right now. Just because you lost your panties and bra on a house you bought in the early 2000s doesn’t make the current market wrong.

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