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ParticipantMost of the movement in prices will come during relatively brief periods at different times of the year; not at a steady and constant rate throughout the year. There will be these brief 6 and 8 week periods during different times of the year, like before and after the spring selling season and maybe just prior to the holidays. The rest of the time the pricing will appear to be stable, even if the pricing is lower than the previous plateau.
These periods of movement are so brief and the volumes involved include so much diversity among the housing stock that it’s hard to track the movement in real time.
Think of it this way; if an area or market segment loses a total of 10% of its value during a single year, the majority of the movement probably happened in 3% or 4% chunks during different times of the year. Taken by themselves they aren’t much, but over time they add up.
You guys just need to be patient – time is definitely on your side, and when that changes you’ll be among the first to see it because you’ll be looking for it.
ParticipantIt’s not the reality of school performance that matters, it’s the perception.
Participant“The Market in San Diego County” is actually about 100 little market segments. Loren Nancarrow would call them “micro markets”. While they are all connected they do move at different paces. During a declining market the less desirable areas and less desirable homes will pave the way for the others, and the better homes in the better areas will suffer a little less.
Poway has always been a desirable area because of its highly rated schools and its relatively young housing stock, so it should come as no surprise that it won’t get as beat up as Escondido or San Marcos to the north. There will still be losses over the long run, though; they’ll just be at the lighter end of the scale.
January 18, 2007 at 7:57 PM in reply to: Under-construction condo complex burns up; cause not yet known #43773ParticipantOn the TV news they were saying some embers blew over on this structure from a nearby restaurant that was on fire. It happened midday while construction crews were working.
I don’t think we can chalk this one up to “developer remorse.”
ParticipantYup, I think the Elfin Forest area is a good alternative to Vista. You can also check out Bonsall – there’s lots of horse properties out there and the path of development won’t change that.
ParticipantCommercial RE does march to a different beat, but that difference is generally about timing, not direction. Commercial RE in this region didn’t enter bubble territory until a couple years after the residential markets were in full swing. So far, most of the commercial markets haven’t entered into decline.
But they will go into decline, sooner or later, because they’re still subejct to the same economic forces that residential properties adhere to.
During the last downturn the different commercial market segments took a beating, some being hit worse than others. I expect the same thing to happen this time, and to at least the same degree as what happens to the residential markets.
The biggest difference between the two markets is that a home really does provide shelter and a given populace does require a certain amoung of housing. Businesses can die off or go dormant, and nobody is going to subsidize their continued existence by way of social entitlements.
BTW, the reason a 4-plex can qualify for residential financing is because it’s classified as a residence. Unless that 4-plex is your domicile, you will not qualify for a residential loan at the optimum rates; at least, not without committing some mortgage fraud. You’ll be an offsite investor and will be subject to those underwriting criteria.
ParticipantIt’s A LOT cheaper for a bank to take a short sale than it is for them to foreclose. Once they foreclose they have a limited amount of time to dispose that property and whatever they get is all they get.
So in answer to your question – yes, the banks will indeed follow the market down if the trend continues at the current rate. What’s their alternative? They can’t make a home sell for more than it’s worth in the market.
ParticipantRober Bruss is well known as basically hating appraisers. Some appraiser must have come between him and one of his flips at some point. He regularly says some pretty dumb things and gives dumb advice about how to deal with appraisers. His understand of what we do is very superficial.
If a bank wants to reduce their exposure to bad loans, they don’t need to lean on an appraiser to do that – they can simply cut their maximum LTVs – problem solved. What’s more likely happening is that now the lenders are actually doing their jobs and preventing the fraudulent loans from getting booked; and its starting to cut into the champagne wishes and caviar dreams of these RE flippers.
Bottom line here is while Bruss may be knowledgable about a lot of other areas in the RE business, he is an idiot about appraisal issues. I recommend you completely ignore him – I do.
ParticipantThat’s kinda the point I was trying to make. If MPs projects are all at risk – and I think most of them probably are – the lenders should have called all of them. Better to start liquidating now than to have to do it next year under even less favorable conditions.
MP should not survive as a company if it can’t service its debts.
ParticipantThey’ve got enough other projects, I wonder why the lender didn’t make them extract some equity from one of their other projects?
ParticipantIt’s all a matter of time. They can only play those games for so long before they run out of rope. Some of these guys are obviously hoping the market rebounds and takes off again, but that’s not going to happen soon enough to save them.
The irony is that the longer they wait and the more games they play the worse the fallout will be.
ParticipantIt’s the people whose situations were marginal to begin with that will set the market trends. Nobody worries about the RE millionaires because they have enough breathing room to suffer the loss (booked or not) without going under and making it worse. But when a marginal owner has basically no recourse they are compelled to suffer their loss at the worst possible terms.
ParticipantTo put the shoe on the other foot, if enough people realized that buying right now is stupid from an economic standpoint, the pricing structure would quickly adjust itself to the point of equilibrium. That fact that hasn’t happened yet (or more correctly, is happening at a slower pace) is all the validation the renters need. They’re in the minority because the masses are still doing what they’re told.
ParticipantA borrower can’t pull out more money that the property is worth without a crooked appraisal from a crooked appraiser; and no crooked appraisal occurs except at the behest of a crooked loan originator and a stupid/crooked lender.
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