[garysears]

CA renter, that was a great post. I agree completely.

[garysears]

It does seem as though the government is backing loans that won’t be repaid through the FHA. I’ve already seen some 2007/2008 FHA financed properties foreclosed. The government is encouraging speculation at this point. The tax credit combined with 3.5% down payment means effective zero down financing is being offered with tax payer backing.

I’m not sure what benefit the FHA really provides and understand it has been expanded greatly from its beginnings. I’m not a finance guy but I expect the added cost of FHA loans is not enough to cover eventual losses.

I guess if loan costs and losses would actually net out then criticism would be muted, provided the tax credit goes away and doesn’t come back. But the purpose of any government program of course is to reward one group of people at the expense of another. If covering losses with loan costs and fees was part of the calculation the government wouldn’t be involved.

I’m going conventional because I am trying to be conservative with how much I borrow and how much it will cost long term. But I am competing with the FHA crowd that doesn’t seem to comprehend that they are drastically overpaying BECAUSE of the tax credit and FHA financing terms. The zero to limited money down crowd is bidding up all available inventory for now.

I’m will be a first time homebuyer and I eagerly await the expiration of the tax credit so prices will go back down. Prices will go down more than 8k since that 8k has is leveraged at a 28:1 ratio with 3.5% down FHA loans.

It is no coincidence that the “sweet spot” for flipper pricing at the low end is $225k to $250k.

[garysears]

It does seem as though the government is backing loans that won’t be repaid through the FHA. I’ve already seen some 2007/2008 FHA financed properties foreclosed. The government is encouraging speculation at this point. The tax credit combined with 3.5% down payment means effective zero down financing is being offered with tax payer backing.

I’m not sure what benefit the FHA really provides and understand it has been expanded greatly from its beginnings. I’m not a finance guy but I expect the added cost of FHA loans is not enough to cover eventual losses.

I guess if loan costs and losses would actually net out then criticism would be muted, provided the tax credit goes away and doesn’t come back. But the purpose of any government program of course is to reward one group of people at the expense of another. If covering losses with loan costs and fees was part of the calculation the government wouldn’t be involved.

I’m going conventional because I am trying to be conservative with how much I borrow and how much it will cost long term. But I am competing with the FHA crowd that doesn’t seem to comprehend that they are drastically overpaying BECAUSE of the tax credit and FHA financing terms. The zero to limited money down crowd is bidding up all available inventory for now.

I’m will be a first time homebuyer and I eagerly await the expiration of the tax credit so prices will go back down. Prices will go down more than 8k since that 8k has is leveraged at a 28:1 ratio with 3.5% down FHA loans.

It is no coincidence that the “sweet spot” for flipper pricing at the low end is $225k to $250k.

[garysears]

It does seem as though the government is backing loans that won’t be repaid through the FHA. I’ve already seen some 2007/2008 FHA financed properties foreclosed. The government is encouraging speculation at this point. The tax credit combined with 3.5% down payment means effective zero down financing is being offered with tax payer backing.

I’m not sure what benefit the FHA really provides and understand it has been expanded greatly from its beginnings. I’m not a finance guy but I expect the added cost of FHA loans is not enough to cover eventual losses.

I guess if loan costs and losses would actually net out then criticism would be muted, provided the tax credit goes away and doesn’t come back. But the purpose of any government program of course is to reward one group of people at the expense of another. If covering losses with loan costs and fees was part of the calculation the government wouldn’t be involved.

I’m going conventional because I am trying to be conservative with how much I borrow and how much it will cost long term. But I am competing with the FHA crowd that doesn’t seem to comprehend that they are drastically overpaying BECAUSE of the tax credit and FHA financing terms. The zero to limited money down crowd is bidding up all available inventory for now.

I’m will be a first time homebuyer and I eagerly await the expiration of the tax credit so prices will go back down. Prices will go down more than 8k since that 8k has is leveraged at a 28:1 ratio with 3.5% down FHA loans.

It is no coincidence that the “sweet spot” for flipper pricing at the low end is $225k to $250k.

[garysears]

It does seem as though the government is backing loans that won’t be repaid through the FHA. I’ve already seen some 2007/2008 FHA financed properties foreclosed. The government is encouraging speculation at this point. The tax credit combined with 3.5% down payment means effective zero down financing is being offered with tax payer backing.

I’m not sure what benefit the FHA really provides and understand it has been expanded greatly from its beginnings. I’m not a finance guy but I expect the added cost of FHA loans is not enough to cover eventual losses.

I guess if loan costs and losses would actually net out then criticism would be muted, provided the tax credit goes away and doesn’t come back. But the purpose of any government program of course is to reward one group of people at the expense of another. If covering losses with loan costs and fees was part of the calculation the government wouldn’t be involved.

I’m going conventional because I am trying to be conservative with how much I borrow and how much it will cost long term. But I am competing with the FHA crowd that doesn’t seem to comprehend that they are drastically overpaying BECAUSE of the tax credit and FHA financing terms. The zero to limited money down crowd is bidding up all available inventory for now.

I’m will be a first time homebuyer and I eagerly await the expiration of the tax credit so prices will go back down. Prices will go down more than 8k since that 8k has is leveraged at a 28:1 ratio with 3.5% down FHA loans.

It is no coincidence that the “sweet spot” for flipper pricing at the low end is $225k to $250k.

[garysears]

It does seem as though the government is backing loans that won’t be repaid through the FHA. I’ve already seen some 2007/2008 FHA financed properties foreclosed. The government is encouraging speculation at this point. The tax credit combined with 3.5% down payment means effective zero down financing is being offered with tax payer backing.

I’m not sure what benefit the FHA really provides and understand it has been expanded greatly from its beginnings. I’m not a finance guy but I expect the added cost of FHA loans is not enough to cover eventual losses.

I guess if loan costs and losses would actually net out then criticism would be muted, provided the tax credit goes away and doesn’t come back. But the purpose of any government program of course is to reward one group of people at the expense of another. If covering losses with loan costs and fees was part of the calculation the government wouldn’t be involved.

I’m going conventional because I am trying to be conservative with how much I borrow and how much it will cost long term. But I am competing with the FHA crowd that doesn’t seem to comprehend that they are drastically overpaying BECAUSE of the tax credit and FHA financing terms. The zero to limited money down crowd is bidding up all available inventory for now.

I’m will be a first time homebuyer and I eagerly await the expiration of the tax credit so prices will go back down. Prices will go down more than 8k since that 8k has is leveraged at a 28:1 ratio with 3.5% down FHA loans.

It is no coincidence that the “sweet spot” for flipper pricing at the low end is $225k to $250k.

[garysears]

I agree patientrenter. FHA standards are too loose with regard to down payment. In the recent shadow inventory article I commented that the flipping market wouldn’t exist without the FHA. FHA buyers ARE the market at the low end. FHA standards are why low end prices have exploded this past year. I think many of the houses bought last year with FHA backing will be foreclosed, as I am expecting low end prices to trend downward again.

I’ve been wrong before. The key for prices is in how the delinquent loans are handled. Either money is handed out to big money vultures under the table via discounted off market bulk sales, or prices are allowed to come down for normal buyers by putting the inventory on the open market.

I just can’t reconcile price strength with loan distress. It seems like nothing is better than 2 years ago, and maybe things are worse. Getting tired of waiting for it to play out though…

[garysears]

I agree patientrenter. FHA standards are too loose with regard to down payment. In the recent shadow inventory article I commented that the flipping market wouldn’t exist without the FHA. FHA buyers ARE the market at the low end. FHA standards are why low end prices have exploded this past year. I think many of the houses bought last year with FHA backing will be foreclosed, as I am expecting low end prices to trend downward again.

I’ve been wrong before. The key for prices is in how the delinquent loans are handled. Either money is handed out to big money vultures under the table via discounted off market bulk sales, or prices are allowed to come down for normal buyers by putting the inventory on the open market.

I just can’t reconcile price strength with loan distress. It seems like nothing is better than 2 years ago, and maybe things are worse. Getting tired of waiting for it to play out though…

[garysears]

I agree patientrenter. FHA standards are too loose with regard to down payment. In the recent shadow inventory article I commented that the flipping market wouldn’t exist without the FHA. FHA buyers ARE the market at the low end. FHA standards are why low end prices have exploded this past year. I think many of the houses bought last year with FHA backing will be foreclosed, as I am expecting low end prices to trend downward again.

I’ve been wrong before. The key for prices is in how the delinquent loans are handled. Either money is handed out to big money vultures under the table via discounted off market bulk sales, or prices are allowed to come down for normal buyers by putting the inventory on the open market.

I just can’t reconcile price strength with loan distress. It seems like nothing is better than 2 years ago, and maybe things are worse. Getting tired of waiting for it to play out though…

[garysears]

I agree patientrenter. FHA standards are too loose with regard to down payment. In the recent shadow inventory article I commented that the flipping market wouldn’t exist without the FHA. FHA buyers ARE the market at the low end. FHA standards are why low end prices have exploded this past year. I think many of the houses bought last year with FHA backing will be foreclosed, as I am expecting low end prices to trend downward again.

I’ve been wrong before. The key for prices is in how the delinquent loans are handled. Either money is handed out to big money vultures under the table via discounted off market bulk sales, or prices are allowed to come down for normal buyers by putting the inventory on the open market.

I just can’t reconcile price strength with loan distress. It seems like nothing is better than 2 years ago, and maybe things are worse. Getting tired of waiting for it to play out though…

[garysears]

I agree patientrenter. FHA standards are too loose with regard to down payment. In the recent shadow inventory article I commented that the flipping market wouldn’t exist without the FHA. FHA buyers ARE the market at the low end. FHA standards are why low end prices have exploded this past year. I think many of the houses bought last year with FHA backing will be foreclosed, as I am expecting low end prices to trend downward again.

I’ve been wrong before. The key for prices is in how the delinquent loans are handled. Either money is handed out to big money vultures under the table via discounted off market bulk sales, or prices are allowed to come down for normal buyers by putting the inventory on the open market.

I just can’t reconcile price strength with loan distress. It seems like nothing is better than 2 years ago, and maybe things are worse. Getting tired of waiting for it to play out though…

[garysears]

There is flipping and there is rehabbing. My definition of flipping is minimal addition of value for maximum profit. I consider rehabbing to be reconditioning houses that have been neglected and aren’t in liveable/lendable condition (real value added).

I don’t blame flippers for taking advantage of the market conditions. I do agree there is some minimum profit margin that must exist for rehabbers to risk capital. The flipping/rehabbing scale is really a continuum but the difference between the two is what is an “acceptable” return on investment as judged by me, a potential buyer.

I agree with patb that the problem with flipping is it removes cosmetic fixers from the market, depriving people who look for value of houses at an affordable price. For people looking for a move in ready house, not concerned about cost, this is not a problem. In today’s supply constrained market, there are very few cosmetic fixers, if any, for more conservative buyers.

This current flipper’s paradise would not exist without government/bank support and collusion so that is where the frustration for me lies. I can’t believe a property bought for 130k can be resold for 260k 4 months later with minimal improvement. It seems there continues to be a problem of lending standards and appraisal. How can such a markup be justified without value added?

Flipping is a result of cash being king with distressed sales, and the target flip market being almost entirely FHA buyers. Mortgage purchases cannot compete with cash purchases right now. The prices are all over the map at the low end, especially with short sales, so that is where I see the most potential as a buyer.

I’m making a few offers on short sales because I think the banks are incompetent enough at assessing value and mitigating loss that they might let a property go at a significant discount to current market prices. I simply refuse to pay a flipper 80% return for 3 month of work.

In an ideal world banks would be mitigating losses by lending directly to owner occupants instead of slashing prices to flippers/vultures who will then mark up the price to current market value and pocket the difference.

As long as insane profit margins are out there for flippers I assume prices still have room to fall. Then again, I’m an optimist.

I want to pay the prices the flippers are paying but I can’t due to unlevel playing field and preference for cash deals over financed deals.

[garysears]

There is flipping and there is rehabbing. My definition of flipping is minimal addition of value for maximum profit. I consider rehabbing to be reconditioning houses that have been neglected and aren’t in liveable/lendable condition (real value added).

I don’t blame flippers for taking advantage of the market conditions. I do agree there is some minimum profit margin that must exist for rehabbers to risk capital. The flipping/rehabbing scale is really a continuum but the difference between the two is what is an “acceptable” return on investment as judged by me, a potential buyer.

I agree with patb that the problem with flipping is it removes cosmetic fixers from the market, depriving people who look for value of houses at an affordable price. For people looking for a move in ready house, not concerned about cost, this is not a problem. In today’s supply constrained market, there are very few cosmetic fixers, if any, for more conservative buyers.

This current flipper’s paradise would not exist without government/bank support and collusion so that is where the frustration for me lies. I can’t believe a property bought for 130k can be resold for 260k 4 months later with minimal improvement. It seems there continues to be a problem of lending standards and appraisal. How can such a markup be justified without value added?

Flipping is a result of cash being king with distressed sales, and the target flip market being almost entirely FHA buyers. Mortgage purchases cannot compete with cash purchases right now. The prices are all over the map at the low end, especially with short sales, so that is where I see the most potential as a buyer.

I’m making a few offers on short sales because I think the banks are incompetent enough at assessing value and mitigating loss that they might let a property go at a significant discount to current market prices. I simply refuse to pay a flipper 80% return for 3 month of work.

In an ideal world banks would be mitigating losses by lending directly to owner occupants instead of slashing prices to flippers/vultures who will then mark up the price to current market value and pocket the difference.

As long as insane profit margins are out there for flippers I assume prices still have room to fall. Then again, I’m an optimist.

I want to pay the prices the flippers are paying but I can’t due to unlevel playing field and preference for cash deals over financed deals.

[garysears]

There is flipping and there is rehabbing. My definition of flipping is minimal addition of value for maximum profit. I consider rehabbing to be reconditioning houses that have been neglected and aren’t in liveable/lendable condition (real value added).

I don’t blame flippers for taking advantage of the market conditions. I do agree there is some minimum profit margin that must exist for rehabbers to risk capital. The flipping/rehabbing scale is really a continuum but the difference between the two is what is an “acceptable” return on investment as judged by me, a potential buyer.

I agree with patb that the problem with flipping is it removes cosmetic fixers from the market, depriving people who look for value of houses at an affordable price. For people looking for a move in ready house, not concerned about cost, this is not a problem. In today’s supply constrained market, there are very few cosmetic fixers, if any, for more conservative buyers.

This current flipper’s paradise would not exist without government/bank support and collusion so that is where the frustration for me lies. I can’t believe a property bought for 130k can be resold for 260k 4 months later with minimal improvement. It seems there continues to be a problem of lending standards and appraisal. How can such a markup be justified without value added?

Flipping is a result of cash being king with distressed sales, and the target flip market being almost entirely FHA buyers. Mortgage purchases cannot compete with cash purchases right now. The prices are all over the map at the low end, especially with short sales, so that is where I see the most potential as a buyer.

I’m making a few offers on short sales because I think the banks are incompetent enough at assessing value and mitigating loss that they might let a property go at a significant discount to current market prices. I simply refuse to pay a flipper 80% return for 3 month of work.

In an ideal world banks would be mitigating losses by lending directly to owner occupants instead of slashing prices to flippers/vultures who will then mark up the price to current market value and pocket the difference.

As long as insane profit margins are out there for flippers I assume prices still have room to fall. Then again, I’m an optimist.

I want to pay the prices the flippers are paying but I can’t due to unlevel playing field and preference for cash deals over financed deals.

[garysears]

There is flipping and there is rehabbing. My definition of flipping is minimal addition of value for maximum profit. I consider rehabbing to be reconditioning houses that have been neglected and aren’t in liveable/lendable condition (real value added).

I don’t blame flippers for taking advantage of the market conditions. I do agree there is some minimum profit margin that must exist for rehabbers to risk capital. The flipping/rehabbing scale is really a continuum but the difference between the two is what is an “acceptable” return on investment as judged by me, a potential buyer.

I agree with patb that the problem with flipping is it removes cosmetic fixers from the market, depriving people who look for value of houses at an affordable price. For people looking for a move in ready house, not concerned about cost, this is not a problem. In today’s supply constrained market, there are very few cosmetic fixers, if any, for more conservative buyers.

This current flipper’s paradise would not exist without government/bank support and collusion so that is where the frustration for me lies. I can’t believe a property bought for 130k can be resold for 260k 4 months later with minimal improvement. It seems there continues to be a problem of lending standards and appraisal. How can such a markup be justified without value added?

Flipping is a result of cash being king with distressed sales, and the target flip market being almost entirely FHA buyers. Mortgage purchases cannot compete with cash purchases right now. The prices are all over the map at the low end, especially with short sales, so that is where I see the most potential as a buyer.

I’m making a few offers on short sales because I think the banks are incompetent enough at assessing value and mitigating loss that they might let a property go at a significant discount to current market prices. I simply refuse to pay a flipper 80% return for 3 month of work.

In an ideal world banks would be mitigating losses by lending directly to owner occupants instead of slashing prices to flippers/vultures who will then mark up the price to current market value and pocket the difference.

As long as insane profit margins are out there for flippers I assume prices still have room to fall. Then again, I’m an optimist.

I want to pay the prices the flippers are paying but I can’t due to unlevel playing field and preference for cash deals over financed deals.

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