[picpoule]

They are caused by job loss and ARM resets. When there’s no robust appreciation, people aren’t using their homes as ATM’s. That isn’t that common out here. Also, the article you cite about Denver foreclosures suggests that these foreclosures are particularl widespread in the bottom part of the market, so probably low quality loans and easy money to people who wouldn’t ordinarily qualify is another reason.

Don’t forget, the Denver market seems to have appreciated, but it is due to the number of sales of higher end properties, not those in the middle or bottom. This fact has been repeated in the real estate section of the Rocky Mountain News for at least three years, with realtors having to explain to sellers expecting to jack up their listing prices that there has been no real estate bubble in our area, so sellers must lower their expectations. The Denver market only looks overvalued because of the number of higher priced homes sold, not the mix of homes sold. I hope this clairfies matters.

[picpoule]

I beg to differ — I don’t think the Denver market is comparable at all to the coastal markets. The Denver area experienced no bubble or over-heated housing market like the coasts have enjoyed. If Denver is 10% overvalued, it is because there have been a lot of higher priced homes sold in the last three years. It’s not exactly because other segments of the market have been appreciating with gusto. So, I don’t know if “overvalued” is the correct term for what’s happened here.

As Gone to Colorado noted, the Denver area has a lot of government employment (me included!) and this area was hard hit by the internet bust, due to the over emphasis here on tech and financial services employment. Of course, those jobs evaporated very quickly. According to Gov. Owens, we lost 30,000 jobs when that happened, and, with the double whammy of 9/11, we just never recovered. I’ve heard some areas of the country have emerged from recession, but we still haven’t really recovered. As long as those good paying jobs are gone, I don’t see us really making a strong comeback, and our housing woes won’t be going away any time soon.

[picpoule]

I’m only aware of three ways that government gets the money to spend on social programs, economic stimulus or wars: it must either tax, borrow or print the money.

[picpoule]

Would China, Japan and all our other debt holders encourage — no — accept — Iran selling oil in euros? I doubt it. I suspect these countries have an (in)vested interest in refusing to pay Iran for oil in euros and to continue to pay for their oil with petrodollars.

[picpoule]

This might be of interest to those here:

FED, BOJ, ECB, FB’s, BUBBLE at:

http://socalbubble.blogspot.com/

[picpoule]

I love Governor Arnold! I hate it when people say mean things about him!

[picpoule]

When you get behind on your mortgage payments, in California, the lender will file a notice of default. After this, it takes a few months for the auction notice to go out. At this point, some owners may list the property for sale. Many owners are in denial about what’s happening to them, however, and/or want to try to try to save their property, get loans from their family, take out a second or try other measures. I’m sure that there are realtors who go after the properties in the notice of default stage, too. But there’s a short window of time (4-5 months) between when the notice of default is filed and the auction notice is filed and the seller may not be able to sell his house in time.

A seller may not have equity for several reasons. We all know why this could be. Also, the property may be mortgaged to the hilt, and/or it may have IRS, property tax, mechanics’ or judgment liens, filed on it. For the owner in this situation, he may be able to get out from under with a short sale, if the lender approves. But a preforeclosure investor will stay away from anyone with their equity swallowed up by encumbrances. The property will then be put on the auction block, or if no one bids on it, becomes a REO.

There’s so much hype about foreclosure auctions and buying REO because people make a lot of money hawking their seminars and books on the subject. If you’re interested in finding out more about the preforeclosure process, you can read a book by Thomas Lucier. I can’t recall the name. It’s very thorough, does not promise instant riches, and informs the reader of all the hard work required for this type of investing.

[picpoule]

You don’t buy at an auction. There’s no bargains there. You have to buy before the auction, negotiating with the bank to take on any loan payments in arrears, interest, penalties, etc. to reinstate the loan and negotiate with the seller to pay him for his equity. Preforeclosure dealing like this is complicated, full of headachees, requires a LOT of work AND a seller who still has some equity and hopefully no liens, etc. on the notice of default property. Sellers in this position are hard to find. I think if an investor is interested in preforeclosures, though, now is a good time to do it before there are too many foreclosures hitting the market — and too much competition from other investors looking for the same type of deal.

[picpoule]

I like Bob Casagrand’s monthly analysis, too. For a realtor, he seems to be pretty candid about what’s going on. A few months back, he wrote about the dearth of buyers for the $400k and under properties. He predicted this would have a ripple effect on the properties in the next higher tiers as $400K and unders would not be buying up, leaving $450-$500K buyers unable to sell their properties and move up, making it hard for sellers of $600K properties to unload, etc.

The higher end properties have been skewing our median prices in the Denver area for a year or so now. But as the Rocky Mountain News reported today, home sale prices in the Denver area took a larger than expected drop in February, prompting some experts to wonder if the upper-end housing market is starting to cool. Maybe that’s about to happen out there, too?

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