Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post your local house search updates, MLS finds, on-topic ideas, and links here.
TBW: "I'm sure there is some pain but I doubt it's worse than a day at most. So your Warwick opportunities are not harmed."I am thinking along those lines.The reserves at the FDIC are shrinking. They asked the banks to prepay the next 3 years.Here's the Contrarian-esque scenario:In some near-term apocalyptic future, the FDIC goes bust temporarily, the bank merger goes through but without immediate additional cash.Customer funds beyond some low threshold are not available for weeks or months. This happened during the S&L crisis, but maybe it is different now.The bank failure in Reston is VERY close.Simultaneous with that, I stumble onto a Courthouse sale. My bank has a new name on the front. Can I get $20K EM? Very likely. What about the 30% down? Maybe.What about the remaining cash? Suddenly, I am looking at a bank of strangers.I've never been the thick of the fray. I've been the silent partner on deals, everything's handled.But no, I'm not worried about not being able to get cash, my concern is deal money.
I see this place every time i drive out Rt. 7...9106 Leesburg Pike10/5/2007 - Regular sale, $4.5 Mil11/6/2008 - Bank takes it for $2.3 Mil$2 Mil+ downpayment lost in a year?8/13/2009 - Bank sells to regular buyer for $1.6 Mil ($3 Mil off bubble price).Now listed for $2.5 Mil. Could be a good flip if it sells soon for close to list.
novahog-That looks like a strange deal. For the bank to take the property in a year the person probably paid at most 1 or 2 mortgage payments. Banks take a very long time to get through the whole foreclosure process. How did the person have a large down payment but wasn't able to make any monthly payments?
HB,Dunno. Seems like too much down payment for a scam. Maybe just really bad luck and timing?
novahog-I don't think it is a scam, I am just wondering if the DP wasn't nearly as big as you think it was. My guess is no bank wanted to take on the $4MM loan, so instead he got 2 loans that were each $2MM or something like that. Either way its amazing what tight credit can do. That house lost 2/3rds! in an area where most homes are down ~20%
@J@,That is why the bulk of my cash is in a very safe local bank. The oldest bank in virginia.NoVa,Interesting numbers on that Rt 7 property. I might have looked at that. Very little competition in that range. I'm sorta glad I didn't know about it.
It's in desperate need of some trees in the front lawn to block the view of Rte 7, but other than that, I actually quite like it. I'm confused by the one diamond that's a different color from all the rest in the master bath, and I wouldn't have chosen quite that large of a portion of tile flooring, and I think it has at least one too many chandeliers but if I were to buy an oppulent house, this is closer to my taste than most.I think for their potential $900k profit, the current owner should invest in some full grown trees. Japanese maples, perhaps? I know, full grown trees are incredibly expensive, and I don't know when the right time to move them is, but for $900k you could have paid someone to baby them....
Cara,Japanese maples are incredibly small. I'd start with some large evergreens (holly or pine?) and then in-fill. I didn't see the pictures, do they have a wall?
Oh, and for those looking for a realistic view of buying at the courthouse steps, check out Jim the Realtor's series on how SDRealtor Adam Rappoporthas been doing out in San Diego. He's doing one strategy, and getting pretty lucky so far. But he's extremely honest and open in the comments section on how to go about it, and how much work it really is. Are Trustee Sales for you? and links therein.Jim himself is trying to organize things for high end buyers to facilitate buying at trustee sales for owner-occupants. That's how tight the well-priced high end inventory is out there. I don't know of anyone here trying it for their clients. Jim's always a little bit cutting edge. His vids are also a great resource for what to look for for signs of water damage and other problems in REOs. I get the feeling that with the San Diego climate there are fewer potential problems with REOs than there are here in the D.C. area....
Va_investor,If you pay enough money you can get a 12 foot Japanese maple...(someone offered my boss $8k for his).They just have a metal fence with spaced column-thingies. I prefer trees to a wall though, but again, that's just me.What's the tree with year-round purple leaves? That'd be nice. They grow tall.
Cara,On that size house, I'd consider a 12ft japanese maple an accent tree. I would want the year-round coverage of evergreens along the road.
It needs both. Right now it's just a solid plain grass front lawn, without even a tree in the circle in front of the house. The place is just desperately asking for $20-30k in professional landscaping.(not that I actually have any idea what landscaping costs...so that figure is purely a figment of my imagination)They planted evergreen trees/shrubs along the back side of the fence, but they're not tall enough or dense enough (yet). For $1.6 million or it being your newly built custom home, that's fine. For $2.5 million, it's just cheap looking. Good outdoor spaces can really sell a home.
Cara,I'd put that figure at 60-80K. Landscaping isn't cheap, but I know some people...
May I have your attention please? May I have your attention please?The deflationary spiral the US economy saw (aug-dec) 2008 has been canceled. Thank you, that is all.ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt
Contrarian -- you of course are entitled to ignore this. As you know, Hal Turner has a copy of the REAL CPI measure of inflation/deflationglug, glug, glug, glug, glug, glug, glug.
VA_Investor, I agree with you given that they have done nothing and that is a large front lawn. You can bet that if the flipper believed they would get a good return on the investment, they would have done it. My limited experience has been that while all the TV shows tell you landscaping pays off, in fact, it does so only when the pre-landscape site is a complete mess and is very small, and when you put in only a few small, cheap shrubs and flowers. Otherwise, it's like a lot of other renos - you do it for yourself, not expecting to get back even 80% return.
Cara's november predictions (note that Cara is always wrong, or mostly wrong, but that won't stop me from trying).FFX Cnty only. Anything else and I'm out of my area of "expertise".1000 sales, median price $340k,This would translate into sales volume up 14% YoY, Median price up 6% YoY, mostly due to the mix away from REOs. MoM, sales will be down 20%, prices down 1.5%This prediction is based on absolutely nothing other than my sense of how important the $8k has been as an incentive, and how quickly things were going under contract in October/September. In fact a median of $355k wouldn't surprise me based on how high recent sold comps on Frankly have been relative to this summer. But FFX county as a whole hasn't been doing quite as "well" as the areas I follow, so I'm downgrading my predictions to be a bit more conservative.
ps despite what the media tell you about all those "cheap laborers" in the area, landscaping is hard work, it's time consuming, and you would need a lot of workers to install the landscaping to make much of a difference in how the property looks.
Re: Greater Atlantic BankI could have sworn that they went under earlier this year. Either way, they've been on CR's problem bank list for a long time.
novahog: egads! That place? I always thought it looked like ass.
Cara, I always thought the place looked monstrous, yet cheap. Maybe it was the lack of landscaping.
Ace,I know guys that will work their butts off for 8-10 dollars an hour.
VA_Investor, no doubt, but a place that size will need many hours of work to install a landscape that fits the scale and style of the house. And it will required a designer and manager of the project, and probably heavy equipment, which is costly. That's why I agreed with your estimate.
NoVAWatcher, at least it doesn't suffer from gable-osis.
Not making any predictions for YoY, but I think prices for MoM in November in Fairfax county will be down a percent or two, with sales volume significantly lower. I base this on a) my anecdotal record-keeping of certain zip codes, b) the previously-expiring tax credit (pushing the end rush of buyers in October), and c) seasonality. From here on out we'll see those gains from the tax credit disappear, probably more after the end of the credit expansion in April than before. FHA is tightening up. This will drive prices lower. We'll have to see about REO inventory. Nothing suggests they're going to let us buy them at market price and will probably continue to trickle them out. While mathematically this is neither feasible nor prudent, I haven't heard any recent rumblings to suggest otherwise. As a potential buyer, I think it's unfair to fight the free market just to enslave future owners with higher debt based on a previous bubble. But whatever, some people just jump in without thinking, so who am I to complain?
How much do you think it would cost to furnish that place? $1 million?I can't picture myself sitting in my bean bag chair in the middle of that huge downstairs tiled floor. Nothing to the right of me, nothing to the left of me.
Kevin,You might have missed this post from Va_Investor related to REOs in yesterday's bucket.Va_Investor said...Why we are seeing fewer reo's in the mls:The pro's are buying these places at the Courthouse. Banks are bidding in much lower than the debt.Seems the deals (other than bulk) are going on the courthouse steps.Heard this from a very reliable source.To me this is great news, if true. FWIW...
MM,Great news in what sense?In that investors are sensing a profit opportunity in the NoVa real estate market?In that investors are more likely to market a property promptly and in better condition than a bank would?In that the shadow inventory is getting sopped up, such that it's less likely to hit the market like a hammer?These are the things I can think of but I'm just curious as to what you're thinking.
MM, I saw that, and am skeptical that's the explanation. The reason being that the RE industry has our political leaders' balls in their grips. Selling on the courthouse steps deprives them of revenue. On that end, it's a good thing. But limiting that share of the market to investors is just lining the pockets of greedy flippers rather than providing affordable living to those that deserve it. Nonetheless, they'll likely end up back on the market anyway, at least some of them, driving up inventory.
Cara,i think it's great because investors won't hold properties forever as most banks would. faster turnaround, too.but i admit i don't know what Banks are bidding in much lower than the debt implies.
MM, what I think it implies is this: traditionally, banks have been trying to auction off the houses at the amount that was owed. This was futile, because in most cases the owner could have just sold the house rather than gone through REO and dinged their credit. So a bunch of overpriced REO goes through the auction block and doesn't get picked up. This is why I wrote off buying from an auction a year ago. Will look back into it now...
MM,Agreed, investors buying at the steps are (for the most part) professionals who can turn these properties around in a month, or hold them for three months so that they are available for FHA buyers.Banks accepting less than the mortgage amount at the steps implies that their loss mitigation departments have determined that selling effortlessly at the foreclosure auction for X, will lead to smaller eventual losses than marketing the property themselves for X+Y-Z, where X+Y is the MLS sale value, and Z is the cost of getting it in acceptable shape, and covering the carrying costs and transaction costs.No matter what foreclosures of 2005-2008 era loans with high LTV's and/or negative amoritization, are going to cost the bank money. It's just a matter of how much. Add in the second order effect that more flipper sales at full market value creates more price stability for current mortgage holders, and selling at the steps seems like a win-win for the banks.
Ah, Cara "gets" it.
MRIS data: I would be shocked if inventory was up MOM. We've had 17 consecutive months of declines. I'll go out on a limb and predict it will be 18. Sparse inventory, and I think sparse is the right word, almost always leads to higher prices, whether this month or next month I can't be sure.
I do wonder what contrarian thinks when he sees Bank of America paying back $45B in TARP money to the Treasury, or the information out today, that the Treasury is revising down its estimated cost of TARP to taxpayers by $200B. You're basically loading the gun of the USG in case there is another crisis.
Kevin-I am confused. You said that it is not prudent for banks to move banks to REO slower. I don't get this. Seeing that banks don't own the loan investors do, slowing REOs makes tons of sense. They don't really care about how quickly they get the cash. But the slow trickle makes housing prices move more slowly, which helps the economy and the rest of their loans. It is in their best interest to lengthen the process so they don't have to write down loans as quickly and they have time to have earnings over years help make up for their bad loans.
housebuyer said..."You said that it is not prudent for banks to move banks to REO slower."Correct. How long do they think they can just sit on hundreds of thousands of rotting houses without paying more for it in the end? Depreciation, taxes, etc will cost them more than the 5 or 10 percent they're saving by depriving the market of its due supply, in my opinion.
Robert,Indeed, I'm almost totally certain we will have lower inventory. Although sadly these are straight MRIS numbers, so no one's worked out how to "seasonally adjust" them. Va_investor,Thanks, but I'm not sure my rosy scenarios are the only possibilities though. It's also possible that banks are getting more aggressive about selling them on the steps, not just because they've learned their lesson but because they can foresee the avalanche of foreclosures coming as HAMP modifications fail, and want to get the current ones off their hands and into being someone else's problem as quickly as possible... Still, flippers getting inventory to the market more quickly has got to be viewed as a plus in any scenario.
"Kevin said - FHA is tightening up. This will drive prices lower. We'll have to see about REO inventory. Nothing suggests they're going to let us buy them at market price and will probably continue to trickle them out. While mathematically this is neither feasible nor prudent, I haven't heard any recent rumblings to suggest otherwise. As a potential buyer, I think it's unfair to fight the free market just to enslave future owners with higher debt based on a previous bubble. But whatever, some people just jump in without thinking, so who am I to complain?"The Trigger:Chicken will come home to roost when they determine that depriving market of inventory won't stop the price declines. Prices will trend where they should - down. Once the trend reverses this winter - banks will queue up to get stuff off their books....
You may find this interesting:2/3 of Borrowers May Lose Mods
Kevin-I think your assumption that they own the houses is bad. Generally the servicer of the loans owns very little of them. Most of these were securitized and sold off too investors. They are also going as quickly as they can based on current staffing levels, and do not want to hire and train enough people to help them deal with this.
spider -Don't banks compete with each other? If BoA is stupid enough to hold inventory, wouldn't JPM dump their REO's? I don't think this comment is going to get far, but it would be illegal for banks to collude to get higher prices for properties.Although FHA is getting more restrictive, overall, I think credit in the aggregate (low tier, mid tier, high tier) will be more available in 2010 than 2009. That will provide additional fuel to the market.
spider-Banks can't get these loans off their books that fast. If they could they would have done it in late 2008, when prices were falling a couple of percent a month and banks needed as much capital as they could get. In many states they need to go through the court system also, which slows the process because the courts are backed up. I am not sure if this is true for this area.
spider,I've been very impressed with Reality Check from CNBC lately. She's totally getting some great inside scoops.What her article actually says is from interviewing"Jack Schakett, of Bank of America. He used to be chief of operations at Countrywide, which B of A inhaled after the crash of the banking system as we know it. Now Mr. Schakett is "credit loss mitigation strategies executive" at B of A. Mr. Schakett told me that of the 65 thousand trial modifications set to expire Dec. 31st with B of A, a full two thirds of the borrowers, while current on their payments, have not submitted the full documentation required to turn a trial mod permanent under the HAMP guidelines. "2/3rds of the modified payments are coming in? That's not bad at all. That means 2 out of 3 trial modifications are for low enough monthly payments that the borrowers can sustain them. That's pretty good. Do we really want them all dropped by virtue of having been liar loans in the first place? How is it that people are making these payments if their income won't actually support them? Or do some of these people have assets their selling to maintain the payments? (why would you do that?) Or do some of them actually have higher documentable income and want to keep their nice small modified payment? At the moment, G-d only knows.Eventually, maybe we'll all know.
Cara -I hear you...what I also found interesting is:"He also told me that Treasury is now considering upping the ante on the trial modifications, requiring much more documentation up front, so that banks won't have all these trial mods going with borrowers who inevitably won't reach permanent modification status." This also means much lower number of mods in the future. Either way, I see more REOs coming back to market - where they should have been in the first place.
spider,Yeah, I keyed in on that sentence too. It would definitely be a relief to reduce the amount of extend and pretend inherent in the system.
"Robert said - Don't banks compete with each other? If BoA is stupid enough to hold inventory, wouldn't JPM dump their REO's?"For one, if they had brains - they would have figured out the bubble many years back. Also, they know very well that only way to save their fat salaries and bonuses is to have everyone again start believing in: Housing prices can only go in one direction...
Robert, housebuyer - I also don't know what role government is playing in colluding with banks (for obvious reasons) back-door to ensure REOs trickle in...
So what is everyone's take on the likelihood of inflation?I thought I read once that you cannot pump as much money into a financial system as the US Gov is currently doing, without it resulting, eventually, in higher prices.Also, wouldn't a falling dollar on the world stage also exacerbate inflation?Finally, isn't inflation the best way for the US Gov to get itself out of all of its long term debt?With all of this, seemingly to me, pressure for inflation, won't that eventually help lift the floor on nominal prices (if not inflation adjusted prices)?My $0.02
If the loan is not performing you have to get through the foreclosure process as fast as possible --- if this is in investor's interests (most of the time it is, they want to get their cashflows asap). Currently the huge amount of sdq loans not in foreclosure yet is just due to the limitations to the capacity and government intervention (mods). In Florida, for example, there are only 10 judges allowed to approve foreclosures, so it limits the maximum number of foreclosures in that state to something like 10,000 a month.
Spider-The problem with the banks is there was tons of money to be made during the bubble years and if CEOs didn't make huge profits they were fired. So they took on silly amounts of risk because it increased their pay and let them keep their jobs.Konstantin-I am not saying they are intentionally dragging their feet, but rather they are not going to spend millions to hire tons of people to speed up the process. They will make due with what they have. As you said the legal system also slows the process down dramatically. It is now taking only almost 2 years from the first missed payment before a loan is liquidated. As more people default they have the number of loans in REO has stayed pretty constant although the number in foreclosure has increased by ~70%
mytwocents-I think there will likely be inflation. The more important question is how much, because 1-2%/year inflation takes a long time to bring correct housing prices. I personally think inflation will not be that bad, because there is so much slack in the labor forces that will help keep a lid on it. I would guess in the next year oil and rents will come in a little keeping inflation near 0% and then it will be up 2-3% a year. Who knows though, I am sure contrarian thinks there will be massive deflation.Markets are currently predicting just under 2%/year over the next 5 years
"Spider said...The Trigger:Chicken will come home to roost when they determine that depriving market of inventory won't stop the price declines. Prices will trend where they should - down. Once the trend reverses this winter - banks will queue up to get stuff off their books...."YAAAAAAAHOOOOOOO I don reckon thar is a STAMPEDE A COMIN! Get ready DC housing market, we ar a comin for you!!!
spider -You should understand the skepticism on this board for a flood of REO's. A little less than a year ago there was a foreclosure moratorium self-imposed by the banks. TRUE. Posters were hysterical on this board forecasting a tsunami of REO's. Well, it didn't happen. The foreclosure moratorium did end, but with a whimper. Not even a single uptick in inventory. Not even flat, just lower and lower and lower. This one of yours smells a lot like the last one. My prediction is that you will be right to some extent - there will be a few more REO's. But, what is going to shock you is the massive demand for housing in NOVA. The REO's will get absorbed more quickly than the banks can release them - just like last time.
Robert,I know you respect kiplingers.com. Here is an op-ed from it:Don't Buy a House YetBy Steven Goldberg, Contributing Columnist, Kiplinger.comDec 3rd, 2009When housing prices hit bottom, they will languish near those low levels for years to come. So don’t be in a rush to buy.Mortgage interest rates are at a 50-year low. Last month, Congress extended a tax credit for home buyers through April. The economy is beginning to crawl out of what by some measures is the deepest recession since the 1930s. One survey already shows house prices beginning to rise.So isn't it time to buy a home? Kiplinger's certainly thinks so. But if I were in the market for a new home, I would wait. Housing prices typically don't rebound quickly after a bust; instead, they level out and stay near that low base line for years.I don't see why this time should be different. True, prices seem as though they can't drop further, and in some areas they even show signs of an upturn. But if prices won't be taking off and might well resume their decline, you lose nothing but a little time by waiting to buy....Most (but not all) of the regional busts tended to be painfully protracted affairs. Why? Because unless you're forced out, most of us would rather stay in a house, pay the mortgage and hope for an eventual upturn rather than sell and realize our losses quickly. That means home prices don't go down all at once; they tend to slide agonizingly slowly on infrequent sales.True, the tax credits and low mortgage rates make buying a house tempting today. But if you buy into a slumping housing market, those incentives won't add up to much. So while the worst of the real estate decline is surely behind us, the odds are strong that you'll be able to buy later at the same price — or a lower one.Article
@J@,I posted an article a while back. After the FDIC's reserve there is a line of money it has with the Treasury (funded in some other manner I forget) that is quite substantial.And even if the worst comes and they totally deplete both of those resources...they will just be bailed out. How can anyone honestly believe the FDIC would not be bailed out after everything that has happened over the past year? The FDIC is too important to fail. Way, way, way, way, way more important than JPMorgan or Goldman Sachs etc to the health of our national economy. Way more important to Main Street. You should only worry about two things: (1) is this bank FDIC insured? (2) am I keeping less than $250,000 in the bank? If it's yes to both that's as low risk as it gets.
TBW, not sure what you think my reaction will be to that article. Of course, I'm going to say that housing will be much more of a regional story going forward. That NOVA fundamentals are different that Vegas, Phoenix, and Miami. Add it all up, and yes, the national number could go down and limp along for a while. I guess each buyer has to ask the same question in the article, what do the odds favor for NOVA?
Re FX7210404 -More bubble era nonsense. The washer and dryer are on top of pergo. Horrible idea. There will be occasional dripping as you move the clothes. I just don't understand you pergo-mad people. ;)08/13/2009 $1,615,000 JPMORGAN CHASE BANK NATIONAL ASSOCIATION SINGH SATINDER PAL08/13/2009 $0 WASHINGTON MUTUAL BANK JPMORGAN CHASE BANK NATIONAL ASSOCIATION11/06/2008 $2,340,000 RAZA AHMAD WASHINGTON MUTUAL BANKJPMorgan Chase acquired Washington Mutual a while back. Perhaps it got this home below cost and thus sold it below market price? Something does not make sense with that $1.6M price. I could see a home like this go for $1.6M in 1998.
Robert,But no regional housing bust has ever been followed by a boom as long as they've been studying these. Why would this be different from a pretty well established trend?
TBW: that doesn't look like pergo, as the grain is too 3d.
But no regional housing bust has ever been followed by a boom as long as they've been studying these. Why would this be different from a pretty well established trend?I think this is probably true. We won't have a boom.
Washington, DC, Region Poised For Quick Rebound - MoodysBoom TownWashington is awash in money.Washington Beats U.S. Housing Slump on Obama Budget
From the Atlantic. $200B more gov't spending (funded from TARP repayments). Breaking: Obama To Use $200 Billion from TARP for JobsJust hours after the Treasury revised downward its estimate of taxpayers' loss on the bank bailout by a whopping $200 billion, the word is that Obama is set to announce that he's using the money for job stimulus. Hooray! But wait. The means here are a little devious even if the ends are worthy. That money was supposed to go to bank bailouts and this is a clever way to "pass" a job stimulus without, you know, passing any sort of thing through Congress. Can't wait for the Republican reax. Here's the latest from Slatest: Soon after the news was announced, White House officials confirmed that Obama will propose funneling the money into a jobs creation program during a speech at the Brookings Institute tomorrow. According to officials, Obama will argue that the money would be best spent on infrastructure programs--such as building bridges and weatherizing homes--and assisting small businesses. At the Wall Street Journal, Deborah Solomon notes that the new estimates will bring down the federal deficit, and could "smooth the way for the introduction of a new jobs program." Congress initially authorized $700 billion for the Troubled Asset Relief Program, but banks have paid back their loans at a faster pace than expected, leaving the government with an extra $200 billion in its pocket.More analysis tomorrow as the details come out.
Robert,You still are not getting that a constant variable does not explain much. When was the unemployment rate for the region ever not the envy of the country? When was federal gov't money not flowing through the region via fed gov't jobs and contractors? You still have not pointed to any fundamental variable that explains why the housing value rate went up in such a humongous manner between 2000-06 while going up at a much smaller rate between 1976-2000. Everything you point to has been a constant in this region since at least the Carter years if not since the FDR years.
In Shift, Wall Street Goes to WashingtonDistrict Rises as New Financial CenterHow a medical revolution may transform Northern VirginiaData center projects planned for Santa Clara, Calif. are now taking a back seat to the red-hot northern Virginia market, where the Obama administration’s stimulus funding and focus on cloud computing are expected to boost data center construction.But, my set is incomplete. I still need:Energy?Education?
TBW,Compounding man. WDC grew faster than the national economy every year for the last 14 years.If we both have $1,000. You put it in a bank account earning 3%. I put it in an account earning 4%.After 14 years, you have $1,513. I have $1,732. I have 14.5% more money than you do.
Robert said..."Don't banks compete with each other? If BoA is stupid enough to hold inventory, wouldn't JPM dump their REO's? I don't think this comment is going to get far, but it would be illegal for banks to collude to get higher prices for properties."Technically, collusion is illegal, yes. They would have to be given implicit permission from the govt to do it. Now, I'm not saying that's what's going on, but....
Robert: "Compounding man. WDC grew faster than the national economy every year for the last 14 years."Sorry, but the regional household GDP numbers do not even come close to matching the regional housing prices. "Compounding" has already shown itself in those job and GDP numbers. It's not another mysterious bubble-reinacting phenomenon that will sustain this market.TBW is right and this is exactly what I was talking about this weekend: all things being equal. A net zero change in unemployment is not even close to enough to erase the inevitable housing bubble correction that's taking place.
TBW: "(1) is this bank FDIC insured? (2) am I keeping less than $250,000 in the bank? If it's yes to both that's as low risk as it gets."You're still not "tracking" the problem and looking to past to predict the future.The FDIC is busted. This is novel situation. While they have "plans" such as ordering banks to prepay their fees 3 years ahead of time and going begging to Treasury, the fact is, they are broke.The problem isn't that my money won't be available eventually, the problem is that my credit line won't be available. During the 1990's S&L crisis, which admittedly was different, customer money was not available over a weekend. Some people were never repaid fully. When Silverado, Old Court, and Lincoln went down, they went down hard. I expect that even in a Contrarian worse case scenario, I will have access to my money, which would be enough for EM and 30% down. The problem is the other 70% to complete the deal will vanish.I don't want run around liquidating equities just to make a deal work at the courthouse. (I've mentioned AMD, did you check the action today?)If there is a risk of housing ratcheting down because of Alt-A's, underwater homeowners, that creates an opportunity for investors. This game isn't for Joe and Jane Retail Homebuyer, they get 15% off assessment. Put down their $140K on a SFH that was offered at $600K down from an assessment of $850K but then bid back up by other wannabe owner-occupants. This run up has been reported by others here.I'm looking for the screaming deal, such as VA_Investor and Frankly have described.50% off assessment, battle it out with Dentists, "You don't want that place, Demonic possession. Root planted in the front yard" leveraged right, make 5X. It might be too much work though.
robert says:"When Silverado, Old Court, and Lincoln went down, they went down hard."Old court was insured by the marylandsavings fund, Lincoln was an Ohiosavings fund as i recall. Silverado knocked down texas.
@J@,Do you remember when the MD S&L's had a run in the early '80's? They were not FDIC, but MSSIC (IIRC). Withdrawls were limited to 1K per month for awhile at my then S&L.I anticipated my heloc's being cancelled and tapped several of them last winter. It's costing me in interest but worth it to have the cash available. In the 90's, my banker arranged a "blanket trust" encumbering several properties to provide me a line to use as needed.
Sorry, but the regional household GDP numbers do not even come close to matching the regional housing prices. I didn't say this. I only said regional GDP has grown faster than the national average. I don't know what level of GDP/capita would support current home prices.TBW is right and this is exactly what I was talking about this weekend: all things being equal. A net zero change in unemployment is not even close to enough to erase the inevitable housing bubble correction that's taking place.First of all, we both agree we are having a housing correction. My contention is that it will be muted compared to other cities because we have stronger fundamentals.We know about unemployment, but how did WDC do wrt gross metropolitan product (GMP) compared to the US GDP?US GDP shrank 3.9% between 2Q08 through 2Q09. At the same time the WDC GMP posted a slight increase.Four points above the the national number! That is huge.So, kevin, I don't see how you can continue to keep your head in the sand with respect to what is happening in the regional economy. If you think home prices are going to collapse like they have in Vegas, or Miami, you are out of your mind.
@J@- Why do you bring up AMD so much, there are plenty of stocks that make AMDs move look pitiful. http://finance.yahoo.com/echarts?s=PGPDQ.PK#chart2:symbol=pgpdq.pk;range=20081202,20091207;compare=amd;indicator=dividend+split+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefinedAMD is a really poorly run company that usually is way behind Intel on product development and always has a huge cost disadvantage to making their product. They were basically saved due to the $1.2 Billion from the law suit they won.
Robert: "So, kevin, I don't see how you can continue to keep your head in the sand with respect to what is happening in the regional economy. If you think home prices are going to collapse like they have in Vegas, or Miami, you are out of your mind."I never said they would, but they certainly aren't going to remain flat like Texas as you've so erroneously compared them to. You keep harping about a constant factor. Prices started tanking in this country long before jobs were being lost. It's an element that nobody has argued with you (to my knowledge) in these threads. Get off it already. You're showing how ignorant you are about every other aspect of the housing market by clinging to this.
"Why do you bring up AMD so much, there are plenty of stocks that make AMDs move look pitiful. "The same reason she brings up her home zipcode continually...
"Why do you bring up AMD so much, there are plenty of stocks that make AMDs move look pitiful."If you identify a stock before it rises and it does, that counts for more than cherry picking history.This is similar to saying a while back that 22305 wasn't going to plunge. It didn't.Otherwise, it's just vapid Internet opinion. This isn't about a well twisted troll. It's about taking risks and achieving the risk-benefit ratio that is right for you in your situation.I read VA_Investor's comments carefully. I can learn from VA. I might learn that I don't want to pursue sales at the Courthouse.
VA_Investor "I anticipated ..."So far, the Contrarian's have not been right. I expect adequate notice before the pendulum swings over to their side, if ever. I have no present plans that would be affected by a bank system lockup lasting weeks or months. If a deal begins to come together, then, yes, I will do what you did and establish contingencies, extract my and their money.I'm not saying that a Contrarian total economic failure will or will not happen. It might. It might not.I expect it won't happen.If it does, someone with the right capital could end up owning the game. In any scenario, there are opportunities. Ya gotta listen to the wind and make your best guess. Walk lightly, buy when it suits you. Take appropriate risks for yourself and your situation. I was the poor member of my circle 3 years ago. I am ahead of my peers, not because I have done well but because I have not lost millions.Former millionaires are working at any job they can find. Their wives clean houses to buy food. Most here have no idea how bad and uneven the economic mess is. Recall the stories in the Post about people pretending to go to work or who have not paid their mortgage in 6 months. They drive to the food bank in a leased Lincoln Navigator. Those stories are true. I apologize for introducing an unpleasant reality. Most of you will do fine. VA_Investor will make another fortune. I might sit this one out. I haven't decided.
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