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October 19, 2007 at 6:04 PM in reply to: Ground Floor Observations on Construction and Local Banks #90258October 19, 2007 at 3:05 PM in reply to: Ground Floor Observations on Construction and Local Banks #90209
patientlywaiting
ParticipantGreat post. Thanks for sharing.
I guess the easy money permeated all sectors of the real estate industry (and the economy as a whole). It’ll be interesting to see how this unfolds.
October 19, 2007 at 3:05 PM in reply to: Ground Floor Observations on Construction and Local Banks #90220ParticipantGreat post. Thanks for sharing.
I guess the easy money permeated all sectors of the real estate industry (and the economy as a whole). It’ll be interesting to see how this unfolds.
ParticipantIt’s hard for me to comprehend how people think that certain areas will decline more than others.
Things are all relative and desirability of one neighborhood is relative and proportionate to the other ones’.
I think that all of San Diego neighborhoods will decline about the same percentage but at different times. We are just getting started so, sure, the wealthier owners are more solvent. But as the market declines in earnest, buyers will look at relative value for the money when choosing among neighborhoods.
ParticipantIt’s hard for me to comprehend how people think that certain areas will decline more than others.
Things are all relative and desirability of one neighborhood is relative and proportionate to the other ones’.
I think that all of San Diego neighborhoods will decline about the same percentage but at different times. We are just getting started so, sure, the wealthier owners are more solvent. But as the market declines in earnest, buyers will look at relative value for the money when choosing among neighborhoods.
October 19, 2007 at 2:11 PM in reply to: Ground Floor Observations on Construction and Local Banks #90193ParticipantHeads the developer wins; tails the bank (and non-developer equity investors) loses.
1) Why doesn't the bank ask for a personal guarantee?
2) Are there usually loan requirements such as pre-construction sales targets, and periodic principal paydown, that, if not met, would allow the bank to call the loan.
3) What are the criteria for lending to the local developers? Reputation? Net-worth of the principal? I heard that, in Florida, one developer borrowered several hundred million dollars and failed without building much. He had limited experience but was a good talker.
October 19, 2007 at 2:11 PM in reply to: Ground Floor Observations on Construction and Local Banks #90204ParticipantHeads the developer wins; tails the bank (and non-developer equity investors) loses.
1) Why doesn't the bank ask for a personal guarantee?
2) Are there usually loan requirements such as pre-construction sales targets, and periodic principal paydown, that, if not met, would allow the bank to call the loan.
3) What are the criteria for lending to the local developers? Reputation? Net-worth of the principal? I heard that, in Florida, one developer borrowered several hundred million dollars and failed without building much. He had limited experience but was a good talker.
October 18, 2007 at 4:31 PM in reply to: Ground Floor Observations on Construction and Local Banks #90000ParticipantExcellent post, davelj. That’s pretty much how i see as well.
Local banks like to look the other way. In the 1990s I was involved with an electronics manufacturer that was in trouble. As long as the interest payments are made, the banks would bend backwards to make accomodations.
It will be interesting indeed. Time will tell.
October 18, 2007 at 4:31 PM in reply to: Ground Floor Observations on Construction and Local Banks #90009ParticipantExcellent post, davelj. That’s pretty much how i see as well.
Local banks like to look the other way. In the 1990s I was involved with an electronics manufacturer that was in trouble. As long as the interest payments are made, the banks would bend backwards to make accomodations.
It will be interesting indeed. Time will tell.
ParticipantNorthstar townhouse – low $300
Crestview SFR – upper $600
Stoneridge – low $800
Eaglepoint – low $1 millionParticipantNorthstar townhouse – low $300
Crestview SFR – upper $600
Stoneridge – low $800
Eaglepoint – low $1 millionParticipantWhen you visit, why not book a room at L’Auberge while you wait for the trough?
I like the co-op concept in NYC. It’s easier to keep out the riff-raffs.
ParticipantWhen you visit, why not book a room at L’Auberge while you wait for the trough?
I like the co-op concept in NYC. It’s easier to keep out the riff-raffs.
ParticipantMy feelings (no expert, just my gut) somewhere around 2003 prices would meet bargain status.
Don't think that 2003 was anywhere near bargain status. When my friends were buying back then, I was shaking my head.
The way I see it, the people who bought in 2003 were far from getting bargains. If you add up all the ownership premiums, they are probably facing a big loss.
Like Patrick said, you can buy at 7% or your can rent at 3%. Take away appreciation and renting is the clear winner. Appreciation has disappeared and some markets are already at 2003 prices.
2000 prices will meet equilibrium and 1998 would be bargain IMH0.
ParticipantMy feelings (no expert, just my gut) somewhere around 2003 prices would meet bargain status.
Don't think that 2003 was anywhere near bargain status. When my friends were buying back then, I was shaking my head.
The way I see it, the people who bought in 2003 were far from getting bargains. If you add up all the ownership premiums, they are probably facing a big loss.
Like Patrick said, you can buy at 7% or your can rent at 3%. Take away appreciation and renting is the clear winner. Appreciation has disappeared and some markets are already at 2003 prices.
2000 prices will meet equilibrium and 1998 would be bargain IMH0.
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