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Why the Housing Recovery is Nearly Homeowner-Less


By Patrick   Follow   Mon, 14 Jan 2013, 9:59am PST   2,107 views   23 comments   Watch (1)   Share   Quote   Permalink   Like (2)   Dislike  

http://truth-out.org/news/item/13883-why-the-housing-recovery-is-inequitable

The financial crisis of 2008 was terrible for homeowners saddled with heavy mortgage payments, especially the millions of low-income, first-time buyers who were tempted to buy in with deceptive loans during the height of the housing bubble. About 4 million foreclosures have been completed since the financial crisis of 2008, according to CoreLogic, a data provider to the real estate industry. Since 2006, when subprime loans first began to default in large numbers, there have been 9.

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David9   befriend   ignore   Mon, 14 Jan 2013, 12:54pm PST   Share   Quote   Like (1)   Dislike     Comment 1

How convenient ! An existing pool/market of recently foreclosed upon renters for these recently foreclosed homes !

http://www.waypointhomes.com/

JodyChunder   befriend   ignore   Mon, 14 Jan 2013, 12:57pm PST   Share   Quote   Like (1)   Dislike     Comment 2

David9 says

How convenient ! An existing pool/market of recently foreclosed upon renters for these recently foreclosed homes !

That's the big "secret" bub...landlords are enjoying a once-in-a-lifetime barrel of desperate fish thanks to the housing bubble.

JodyChunder   befriend   ignore   Mon, 14 Jan 2013, 2:12pm PST   Share   Quote   Like   Dislike     Comment 3

robertoaribas says

At no point have normal home buyers not been the majority, and this city got hit as hard as any.

Well, I wouldn't buy-'n'-hold in a what is pretty clearly a market rally. I think to buy as a landlord is okay. Sell side or rent side is where I'd want to be - not shopping for a primary, unless I planned on dying there.

fedwatcher   befriend   ignore   Mon, 14 Jan 2013, 2:57pm PST   Share   Quote   Like   Dislike     Comment 4

The key to the rental investor is to be "local" in the right area. That is why robertoaribas wins.

Else you have to invest in the right area with the right property manager. That is difficult as you can fail by being in the wrong area or by having the wrong property manager.

The greater Phoenix area has a lot of bad property managers.

varmint   befriend   ignore   Mon, 14 Jan 2013, 4:16pm PST   Share   Quote   Like (1)   Dislike     Comment 5

The problem with this is that all cash offers trump mortgage offers.

Sellers know all cash will close quickly and it won't fall out. That has value, typically 3-5%.

Not only does the investment class (people with a lot of cash) have the advantage of picking off auction foreclosure properties, they can also out compete standard buyers in the MLS marketplace.

FortWayne   befriend   ignore   Tue, 15 Jan 2013, 8:04am PST   Share   Quote   Like   Dislike     Comment 6

donjumpsuit says

Every home is beige with white trim.

They all have the same pergo floors, black budget appliances, cheap cabinets and laminate counters.

I give each home about 5 years before it wears like a cardboard suit.

Most buyers aren't aware of things like that. It's really a shame, when people choose to be ignorant when it comes to life changing expenses.

lostand confused   befriend   ignore   Tue, 15 Jan 2013, 8:26am PST   Share   Quote   Like (1)   Dislike     Comment 7

Oh not to mention Made in China drywall.

pkennedy   befriend   ignore   Tue, 15 Jan 2013, 9:03am PST   Share   Quote   Like   Dislike     Comment 8

varmint says

The problem with this is that all cash offers trump mortgage offers.

Sellers know all cash will close quickly and it won't fall out. That has value, typically 3-5%.

Not only does the investment class (people with a lot of cash) have the advantage of picking off auction foreclosure properties, they can also out compete standard buyers in the MLS marketplace.

The thing is, for cash investors to make the numbers work, they offer 20% under full market value for a place. But in todays market, FMV works, so cash investors are offering at or above FMV because the numbers work for them. To make matters worse, they can offer OVER FMV, at which point typical consumers can't offer any more, because the mortgage won't be accepted by the banks.

The Professor   befriend   ignore   Tue, 15 Jan 2013, 9:59am PST   Share   Quote   Like (1)   Dislike     Comment 9

pkennedy says

The thing is, for cash investors to make the numbers work, they offer 20% under full market value for a place. But in todays market, FMV works, so cash investors are offering at or above FMV because the numbers work for them. To make matters worse, they can offer OVER FMV, at which point typical consumers can't offer any more, because the mortgage won't be accepted by the banks.

The Investers are exchanging their funny money for REAL property. The days of double the PITI are probably gone but they can still rent out and make a better return than most other investments, if they can stomach being a landlord.

errc   befriend   ignore   Tue, 15 Jan 2013, 10:06am PST   Share   Quote   Like (2)   Dislike     Comment 10

I wonder what this countrys housing stock will look like in ten years. Another decade of aging for the cheap materials and shoddy craftsmanship that has become the norm over the past decade plus. With all these renters being the same financial miscreants that got rubed during the bubble, and factor in the glorious track record of The American Investors proclivity to putting in the long term hard work that it takes to maintain a rental property.

Let's just hope the government churns out some serious job programs to get some people working, and that the economy can regain some kind of momentum, lest the dire nature of our situation plays our on the housing stock in slow motion

Philistine   befriend   ignore   Tue, 15 Jan 2013, 10:12am PST   Share   Quote   Like   Dislike     Comment 11

JodyChunder says

Sell side or rent side is where I'd want to be - not shopping for a primary,
unless I planned on dying there

Jody, we feel LA is pretty lackluster as far as places to die, so we are close to giving up the hunt and just keep renting. Our downpayment money will pay cash on a nice rental property in Claremont, though ;)

APOCALYPSEFUCKisShostikovitch   befriend   ignore   Tue, 15 Jan 2013, 11:07am PST   Share   Quote   Like (6)   Dislike (1)     Comment 12

errc says

Let's just hope the government churns out some serious job programs to get some people working

Not going to happen. If you're over the age of 29 and unemployed, you'll never work again in the US, unless you're cooking meth, hustling worthless investments to pensioners in boiler rooms or flipping properties.

Facebooksux   befriend   ignore   Tue, 15 Jan 2013, 11:09am PST   Share   Quote   Like (2)   Dislike     Comment 13

Don't forget escort/ stripper if you're female.

APOCALYPSEFUCKisShostikovitch   befriend   ignore   Tue, 15 Jan 2013, 11:14am PST   Share   Quote   Like (3)   Dislike     Comment 14

Right. In a few years they'll be gobbling schlongs for Ramen packets, too.

lostand confused   befriend   ignore   Tue, 15 Jan 2013, 11:17am PST   Share   Quote   Like   Dislike     Comment 15

APOCALYPSEFUCK is Shostakovich says

errc says



Let's just hope the government churns out some serious job programs to get some people working


Not going to happen. If you're over the age of 29 and unemployed, you'll never work again in the US, unless you're cooking meth, hustling worthless investments to pensioners in boiler rooms or flipping properties.

Well, you can always run for congress!!

Facebooksux   befriend   ignore   Tue, 15 Jan 2013, 2:08pm PST   Share   Quote   Like (3)   Dislike     Comment 16

APOCALYPSEFUCK is Shostakovich says

Right. In a few years they'll be gobbling schlongs for Ramen packets, too.

No flavor packs though. They have to swallow to get the flavor packs!

bgamall4   befriend   ignore   Wed, 16 Jan 2013, 1:34am PST   Share   Quote   Like (1)   Dislike     Comment 17

robertoaribas says

cash investors (many of which later refinance anyways) have been around 30% of the phoenix buyers for the past year. At no point have normal home buyers not been the majority, and this city got hit as hard as any.

But the 30 percent are affecting the price, paying cash, in some cases breaking the comps on purpose. The rest are 3.5 percent down people. You cannot have a stable housing market with few 20 percent down mortgages.

The powers that be by screwing the consumer agency to protect borrowers already have easy money in the works to push this up farther, according to Mike Whitney on this board. But it all depends on how confident people think the next bubble, which is starting now in Phoenix, can last.

50 percent of buyers in Las Vegas are cash. And these are mainly investment banks and private equity firms from Wall Street. They are screwing American renters one more time. It is never ending, and they were shown the way by the Square Mile, in the UK.

varmint   befriend   ignore   Wed, 16 Jan 2013, 2:59am PST   Share   Quote   Like   Dislike     Comment 18

pkennedy says

But in todays market, FMV works

It depends on their expected ROI. CD rates are less than inflation so pretty much any rent above taxes/insurance/maintenance is a win.

zzyzzx   befriend   ignore   Wed, 16 Jan 2013, 3:48am PST   Share   Quote   Like   Dislike     Comment 19

Does this mean that there are investment opportunities in WayPoint, Silver Bay Realty Trust, and other similar companies? The other ones in the article seem to be privately held.

Silver Bay Realty Trust
http://www.nasdaq.com/symbol/sby

Seems to have just gone public, and so it hasn't has and dividends yet.

I don't think Waypoint has gone public.

zzyzzx   befriend   ignore   Wed, 16 Jan 2013, 4:03am PST   Share   Quote   Like   Dislike     Comment 20

Found another one:

2 Brand New REITs That Have Strong Dividend Potential

http://seekingalpha.com/article/1109741-2-brand-new-reits-that-have-strong-dividend-potential?source=yahoo

That and I would think that this would be like having a huge apartment complex, where every apartment is different, and spread out over a large area, making it more difficult to maintain.

Or like already existing ticker symbol BX

bgamall4   befriend   ignore   Wed, 16 Jan 2013, 4:54am PST   Share   Quote   Like (2)   Dislike     Comment 21

robertoaribas says

You can't have it both ways: prices will fall, it is too risky to buy, but the corporations investing are screwing everyone and will make all the money! PICK ONE!!!

Robert, the issue is that it is now a gamble, a crapshoot. Prices may go up, they may go down, but they are not based upon fundamental demand. http://www.businessinsider.com/naufal-sanaullah-guide-to-the-us-economy-in-2013-2013-1 and the comments.

The Professor   befriend   ignore   Wed, 16 Jan 2013, 5:32am PST   Share   Quote   Like (2)   Dislike     Comment 22

robertoaribas says

We've had 2 wold wars, major inflation, a depression, a cold war, an energy crisis...

You forgot the plague! You forgot the Black Plague!

David9   befriend   ignore   Wed, 16 Jan 2013, 6:34am PST   Share   Quote   Like (2)   Dislike     Comment 23

bgamall4 says

Prices may go up, they may go down, but they are not based upon fundamental
demand.

Wow. That slideshow was 'interesting'. I didn't read every word, but a repeating theme is 'all bets on housing'.

"This is a vital tailwind in an economy with almost 11 million underwater mortgages around 20% of the total."

"The rise in housing prices..."

"The efficacy of monetary policy is linked to house price performance."

"We believe the housing recovery allows for two important novel dynamics that we forecast."

"The housing market recovery should continue driving residential investment growth higher" (Notice the word 'investment'?)

"A pickup in the residential real estate market would be a boon for property tax revenues..."

Bottom line, with all due respect the APOCALYPSEFUCK guy is correct, it's not about jobs, exploring Mars, the environment, or curing cancer. It's all about house flipping !!

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