patrick.net

Rents Are Down
Forclosures Skyrocket
Casey's Life Imploding

Times are getting better.

Some weeks ago, I shared with this crowd that my L/L raised our rent a seemingly arbitrary 5%. With this news, also came their offer to extend the lease 6 months, at the end of which, they would re-evaluate the situation. Many of you offered some "spirited" advice, which I truely appreciated. However, caught unprepared to move on short notice, we opted to stay and pay. 31 Oct 07 is the end of this extension.

Update:
I just received their letter indicating that they will be placing the house on the market at the end of our lease extension. In a magnanimous tone they also gave us first opportunity to place an offer on the house. (Am I wrong for not feeling grateful?) I politely declined their offer and wish them well with the sale.

Now, while I could have predicted this letter, I did not expect them to give me this much advanced notice. If I can end this lease extension early, I’m gone. Rentals are popping up as fast as For Sale signs, and we’re looking for a rental that comes with some choice amenities, for a reasonable (much lower) price. As we peruse rental adds, we are seeing much more house offered for much less rent, everyday.

But we have found definite signs of distress. One rental listing we drove by had a For Sale sign planted in the lawn, a lock box on the door knob and packing tape over the front door windows. Rent desired is $1850, for sale asking price $510,000, (price reduced.)

I guess the new paradigm at this stage of the bubble deflation is
"Renter beware!"

Since Patrick's away today, try this story on for size:
http://biz.yahoo.com/ap/070717/housing_outlook.html?.v=2

"The National Association of Home Builders/Wells Fargo housing market index, which tracks builders' perceptions of current market conditions and expectations for home sales over the next six months, fell to 24 this month, the lowest reading since January 1991, the NAHB said.

Wall Street economists had expected a reading of 27..."

So indicators are still coming in substantially below what wallystreeters think.

Rents in Boise have actually stabilized over the past year. When I moved here in April 06, there was something like a 20% vacancy rate. It's now down to more like 8%. The high vacancy rate was due to out-of-state flippers buying up all the new homes: 1/3 of all 2005 home sales here were to out-of-state investors.

In this new world of F'd owners and cash-heavy renters, maybe it makes sense for renters to change the way they think about real estate.

I will gladly enter into a 5 year lease to rent a home (if I can find one in my area which is way below the cost of ownership) IF I can get the lender to subordinate their deed of trust to my lease. Might be worth it for a lender who is looking at a pending foreclosure...especially if I pay my rent checks directly to the lender. THe FB will continue paying the difference between the rent and the mortgage cost until they are completely tapped out. Then, wHen the FB inevitably goes into foreclosure, the bank would have a stream of income in place until the property can be sold off to another investor (at a much lower price)--with a tenant already in place.

Okay, Bears Sterns just said their two funds are basically worthless. The highly leveraged fund is worth ZERO cents on the dollar, and the less leveraged one worth 9% of its april valuation. Since the large one was valued at $920 million, it's now worth less than 90 million. At least 830 million lost there, and that's the fund Bear Sterns loaned 1.6 BILLION to less than a month ago. Link : http://tinyurl.com/2czm4x

The amount of money vaporized by these two funds has got to be several billion.

So... as a hedge fund manager, what if you're holding similar products in your portfolio? Good thing you're not required to disclose what you've bought, right?

Idea for Hollywood remake-

"It's a Wonderful Life Again!"

A company named BS is busy foreclosing on homes in Rylandville. Meanwhile, word gets out that the BS companies everyone invested in have little or no net liquidating value so they line up at the local office demanding repayment of their investment. Alas, there are no funds in the vault only promises to pay by people with no jobs or assets.

BS begins to rent out all of the properties in their portfolio at below market rates just to get some sort of income.

Meanwhile, our friend George is seen shopping these many wonderful choice properties for rent and decides on a beautiful house at a nominal rent. When George reflects on selling his house a couple of years ago and putting the proceeds into CDs of which the interest is now more than paying his rent, he exclaims "it truely is a wonderful life, again!"

Glen, I'm not sure what you concern is? If it's simple worry over being evicted by a new owner, I though that any lease must be honored by next owners? Not really sure though.