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Saturday, February 19, 2011
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25 comments:
A tale of two houses
http://franklymls.com/AR7534057
http://franklymls.com/AR7534057
one U/C at 325 List in a week,
one bought during the bubble for 426K
in 2006.
so, the second has been underwater for at least 3 years, and even if you believe the boosters, will be underwater for another 6-7 years.
what happens to all that underwater inventory?
pat,
A couple of points here.
1. That house was not underwater in 2003 or, maybe even, 2004. So you are talking about a limited number of properties that changed hands at peak.
Further, you have to reduce that figure by the number of people who can afford their 2006 payment and/or put $$ down (possibly from a trade-up sale).
2. The vast majority of people will not "walk" strategically from an underwater house, particularly if it is their home and they are happy about everything except the price decline. The decline is unfortunate, but won't bankrupt anyone unless their financial situation changes dramatically.
Those who bought at peak don't have the buffer provided in the 2000-2006 period where we saw huge yoy price increases. Many who had no downpayment and don't want to (or can't) bring cash to the table are stuck.
If it takes another 5 yrs to get back to 2005 (with princ. paydown playing a part) then so be it.
You also have to acknowledge that most of the bad loans have already gone south. Foreclosure filings were down yoy for the 4th qtr of 2010. That is nationally. I'd guess our local region (nova) is far further along.
Yes, contrarian, I meant to mention heloc's, etc. but forgot.
How many people, regionally, do you believe are going to default in the next 2 or 3 yrs.? In terms of percentage of outstanding loans (and then we can factor in homes w/o loans or with enough equity to sell)?
If you want to you can give your prediction by County or "area".
ownedbythebanks.com
seems to have up to date info on nova reo's. Of course this doesn't include shorts or "in-default" property, but the numbers are strikingly small; particularly when you click on an area and see what is actually available.
I'm not sure how up to the minute this is. I know of an reo that was listed a couple days ago in Reston that is not coming up on this site.
realtytrac.com/trendcenter/
allows you to search foreclosures by state, city or zip.
Good info.
how good is the data, I don't know.
I am renting in south Arlington, I was
doing the laundry at the laundromat and was talking to a nice gal who was doing her quilts and duvets in the big machines.
She and her husband owned a townhouse in Arlington Village. She bought in 2003, and they just got priced out of a moveup during the bubble.
she said Arlington village was littered with foreclosures, all sitting empty, none sold.
i've never seen a one moved through.
What is the truth, I don't know.
I wish there was a good methodology, such as checking Dominion power records or city water records.
pat,
When I am considering a purchase I talk to the hoa/condo assoc. and ask about delinquencies. I think this gives a decent idea about what may be in the pipeline.
Of course, not all properties are located in PUD's and this includes most older neighborhood.
contrarian,
I've looked at both sites and perhaps the agent's site is so low because it only captures mls listed properties and not the "so-called" shadow inventory. Perhaps the realtytrac site is more comprehensive as it listed 24 foreclosures in my zip versus (iirc) a smaller figure for all of reston on the agent's site.
Now here's an interesting one
"TRUSTEE'S SALE OF 2409 S 9th Street, Arlington, VA 22204. In execution of a certain deed of trust dated June 29, 2006, in the original principal amount of $600,000.00 recorded in the Clerk's Office, Circuit Court for Arlington County, Virginia, in Deed Book 3998 Page 918, default having occurred in the payment of the Note "
according to county records it was bought for 429K in 2002, but the note says 600K, so I'm guessing in 06, they took out a cash out Refi.
i swung by the property, the people inside didn't want to come to the door.
i will try and attend the auction, if i'm breathing.
let's try this again
A Tale of Two Houses
http://franklymls.com/AR7534057
U/C at 325K
house two
house 2 sold in 2006 for 426K, the bubble peaked in 07 and began losing air in 08.
so the second has been underwater for 3 years and may be underwater for 6 years more.
What happens to that underwater inventory?
Sure Owner 2 can probably afford the mortgage, but, paying to be underwater for 12 years sucks.
that's 12 years without building equity, that's 12 years lashed to the mortgage. And to get out without writing a check, it could be 13-14 years.
What is the behaviour for Owner 2 when he sees House 1 sells now for 25% less then he paid 5 years ago?
( I totally screwed up the URLs before, and Apologize. Maybe it's better now)
"pat said...what happens to all that underwater inventory?"
Probably the same thing that has been happening for the past 2 years (when the underwater inventory peaked) -- some people will sell, others will wait, some will bail, some will not. Banks continue to dribble out shadow inventory. Prices continue to slowly rise.
What makes you think any of that is going to change?
Agree with Anon.
Also; did they trade up into that place, selling prior home at peak?
Also; sell low, buy low. Are they trading up to something that has dropped 200K?
Also; Is it a relo where employer is picking up the loss?
Also; For some people 100K is not that big of a deal. You have no idea what has happened to their financials in the past 5 yrs.
Anon
I have no Idea what the future holds but what is the feeling when you have been slaving away 9-5 paying on a mortgage on a starter house, only to discover that you are not only still house poor, but you are negative broke. That some MF has just paid for a remodeled version of your same house, the equivalent of 10 years less payments.
what happens to every other person in that same problem?
Do they "Strategically default"?
Do they hang on aother 5 years until the market gets better enough that they can move out at zero?
pat,
Did you not comprehend what anon said or I said? Give a reason why you disagree.
IMO prices are past bottom and increasing. Did you bail at the bottom of the stock market? Did you consider the points made by anon and me?
I believe that you are making a mistake thinking better deals are coming unless the doomer contrarian is correct, in which case most people will be in a terrible place.
"Did you bail at the bottom of the stock market?"
i got out in 07
liquidated then mostly
until HFT ends dont see any reason to return to stocks.
I found this quote in the Prechter interview amusing:
"MR. PRECHTER proudly marches to a different drummer. He says he is sorry that people who have listened to his advice over the last six months have had to watch from the sidelines while others prosper. 'Being bearish in recent months was wrong, but I think it was prudent,' he says."
Let's see, how would "wrong but prudent" play out in other professions?
Your doctor: "I know I told you that you had a dread disease and needed to have a kidney removed, and now we've learned your kidney was perfectly healthy, but I still think I was being prudent."
Meteorologist: "I know I predicted the hurricane wouldn't hit here, and sorry those of you who listened to me had your property destroyed because you didn't take precautions, but I was prudent."
Dan Snyder: "Suing the City Paper for telling the truth about me is wrong, but it's prudent."
etc.
negative equity by state
DC shows 20% and 29% of mortgages in NoVa are in negative equity.
90% of the mortgages are all from the Feds.
Bernanke is trying to goose the market and economy.
I'm cool with my $1000 rent.
Ace
the stock market is corrupt.
Pat,
I don't think that chart has data for NOVA. It is for the entire state of VA, which skews the numbers in the wrong direction.
Just saying.
Yes, we had the whole "underwater" discussion on the 15th. And I thought my memory was bad.
Corelogic has the data. 22.7% for the entire State; only 15% for DC.
Neither figure takes into account the 30+% of homes owned free and clear.
This number is dropping fast as reo's and shorts clear.
jaime
the chart has one for DC
pat,
This data is FROM corelogic and is the same that I quoted 2/15.
15% for DC
22.7% for the entire state of VA.
So, what is your point?
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