http://www.siliconinvestor.com/readmsg.aspx?msgid=20786133 "California builders tell me the Southern California market changed eight months ago in April 2004. Since that time would be buyers often don't show up for appointments with sales staff, are nervous, uncertain they're doing the right thing - and most important of all the credit quality of potential buyers declined markedly after April. The most qualified buyers withdrew from the New Home market at that time. Just anecdotally I know someone who was selling an existing west Los Angeles condo at that time who discovered they could not sell for the previous sales in that building. They eventually settled for $100k less, a 20% haircut."
Here is a link to the leader of the Uranium group that you evidently like right now....Cameco: http://www.ttrader.com/mycharts/display.php?p=28601&u=oldtrader&a=OldTrader's Charts&id=1300 I'd be interested in your explanation of how my investment real estate with considerable income is riskier than this Uranium stock that is up nearly 5 fold, with no income, in the last 2 years. You, and others, seem to view real estate as a "bubble". I'd be interested in what you call Cameco. OldTrader
Old Trader, I respect your opinion and decisions and have no desire to try to change you. I really can't take everyone else's views into account when I decide to do what I think is best. I'm sure you are your own man too. You could look at Peak Oil and the rising price of oil. I'm combining that with increased demand. I think we will need alternatives. I am looking at the future. That's my choice in this free world. Nuclear is the quickest and easiest alternative for the future, IMO. Then later, there will probably be others. But you needn't agree. And I'm not asking you to explain or do anything to justify your choices. Smile, it's a good life.
i had trouble finding prices in line with my valuation criteria. lets face it, few assets appreciate as nicely as a great real estate investment - plus you have control; no Enron, no arthur a, no mine shaft collapse, etc. but having said that, ive seen a number of kinda junky apt projects selling for under 5% cap rates. with a 3% constant ratio change in value & income, that implys a sub-8% yield rate.... some of you guys may be young, but treasuries used to pay more than that, and w/o the risks inherent in r.e. i looked as far east as charlotte, NC - man, that industrial market has some vacancy issues, but the cap rates were really low on REAL numbers! so i took some dough off of the table and will pay mightily for the privilege, the R/R just was not acceptable to me. having said that, we put $22,000 down on $194,000 purchase and sold for $900,000. on another deal i put $2,000 down and its F&C at $700,000. i may be proven wrong, but psychologically i was not prepared to right another down cycle and see the profits evaporate. by selling and exchanging a portion, i increased my income, increased my liquidity, etc. those real estate charts may be right, i may be wrong, but im not as overweight in real estate right now... when it dumps, if it does, ill be in with both feet. i hope you guys do well on CCJ and your real estate - it doesnt have to be either/or
First, let me say that I'm not actively seeking to acquire real estate today, nor have I been for the last few years. I am a holder of numerous investment type properties, mainly houses and small apartment buildings. I've been listening to people talk about the imminent demise of real estate now for the last 5 years or so. Those folks have all been wrong. Perhaps you fellas in this thread will be more correct. I've also been a trader, both on and off the floor, for most of my adult life. (I'm 59 now). It's where I earned the money that bought the real estate. Real estate to me was a source of stability. A steady, and rising income, tax advantages, and although I wasn't counting on it, a growing equity from paying off mortgages and appreciation. Given my perspective, I will say that stocks fluctuate, and if real estate declines by the magnitude that some of you folks seem to believe, I think we can also say that most stocks will be down significantly...to include uranium stocks. By the way, a stock that is up 5 fold in the last 2 years (Cameco) is hardly "undiscovered". By the way, I trade both metal futures, and metal-related stocks actively, and for many years. This isn't the first time they've run the uranium stocks, nor will it be the last. Just remember, they go up, and they go down. OldTrader
My major at the Colorado School of Mines was mineralogy. So I love metals. Didn't want to join my Dad as a Builder. He was too bossy then. But I gave in to $ and now like real estate more than any other field I've been in. I wish we were in a bull real estate market now. Luckily, or not, I understand the uranium field as well as other metals. I can read drill results and understand them. It is an edge. I can tell if an explorer (small geologist company) hits a good prospect or if they don't. Look back at those U tips. They are not out of left field. I'll agree they are ultra high risk. I play them because I know the field. What I've done is given you guys/gals high quality tips on an emerging market that is short supply and will get shorter. Only about 3 places in the world produce U in mineable grades. And i can only find about 6-8 players with good sites. This makes for an explosive situation. I buy a basket of all to spread the risk. If 4 fail and 1 succeeds I will make a bundle. Traders don't usually share tips and secrets do they? Oh well. I've seen that most traders wait too long anyway. Having been in RE I'm not adverse to risk as long as I am early and in the way of progress. I like to get in the way of a trend and let it sweep me up. Then I don't have to be a genius. Just float along for the ride. ATN.T just hit super gold results in Nevada. NV is hot because mining is cheap. ATN hit great grades. Good deposits in Battle Mtn. or Carlin Trends, bring the majors running to buy in. I call these small explorers and talk to the geologists on a regular basis. I buy if I like what I hear. I bought a gob of ATN at C.65 and it will go to C1.25. That is a nice short term ROI. But Old Trader, I agree with you, it's not for everyone.
Housing, Dallas: Home foreclosures up 14 percent http://www.dfw.com/mld/dfw/business/10215846.htm?1c By Andrea Jares Star-Telegram Staff Writer There were nearly 10,000 foreclosure postings on Tarrant County homes in 2004, the highest number of postings since the real estate crash of the late 1980s, according to figures from Foreclosure Listing Service. The 9,944 Tarrant County foreclosure postings this year were 14 percent more than in 2003, according to the service. Dallas, Collin and Denton counties each had increases of 7 percent and 14 percent over last year. The four counties together reached 31,409 foreclosure postings, a 12 percent increase over 2003. Many people seeking help with foreclosures are people who have lost their job, people with mounting medical bills and people living on Social Security checks who have a hard time making ends meet when unexpected expenses come up, said Kervyn Altaffer, attorney in Legal Aid of Dallas' housing department. "It's a pretty broad spectrum," he said. "It's not just one thing." Housing, Colorado: Foreclosure rate 'scary' http://www.rockymountainnews.com/drmn/real_estate/article/0,1299,DRMN_414_3317736,00.html Through October, metro area running 28.4% ahead of 2003 By John Rebchook, Rocky Mountain News November 10, 2004 Almost 10,000 metro-area real estate foreclosures have been filed in the first 10 months of this year, eclipsing last year's tally. And only a technicality prevented that number from exceeding 10,000. That's because at least two counties - Denver and Arapahoe - decided not to hold foreclosure sales during the week before Christmas. Under the law, when a foreclosure is opened, the public trustee office must have a sale within 45 to 50 days. That timing would force counties to have foreclosure sales in the third week of December, just before Christmas. "We thought it would be unseemly to hold a foreclosure sale on Christmas week," said Mary Wenke, Arapahoe County's public trustee. "So that really means we only opened three weeks worth of foreclosures in October," she said. Wenke estimated that 180 or so foreclosures in October weren't opened. Denver also didn't open all of its foreclosures in October. That means in late December an extra 140 or so foreclosures will be sold that normally would have been sold Dec. 21, said Anita Dubas, acting chief public trustee for Denver. But even without every foreclosure being counted, 9,930 foreclosures were opened through October, 28.4 percent more than the 7,731 in the first 10 months of 2003. "That's scary, really scary," Dubas said. In all of 2003, 9,431 foreclosures were filed in Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas and Jefferson counties. That was a 43.5 percent increase from 2002, when 6,574 homes went into foreclosure. Last year's foreclosures were surpassed only by the 17,122 foreclosures filed in 1988. Foreclosures last year accounted for about 1 percent of the homes on the market, compared with 2.3 percent of the housing stock in 1988. "I don't think this is a surprise," said economist Tucker Hart Adams. "People were encouraged by extremely low mortgage rates and extremely innovative mortgage products to buy homes, buy bigger homes and get out of apartments into homes for the first time. Many of these people, if they miss only one or two paychecks, are not being able to make their mortgage payment." If, as expected, interest rates continue to rise, that could accelerate foreclosures, she said. "Traditionally, 75 percent of the mortgages were fixed and 25 percent were floating, but I hear that last year that maybe 60 percent to 70 percent of the loans were floating," she said. And because foreclosures are a lagging indicator, even if the economy picks up next year, foreclosures could continue to rise, she said. Dubas said she has seen homes priced in the $40,000s to small commercial properties with $1 million or more in loans go under. "I would guess the average price is in the $150,000 to $200,000 range," she said. Parts of Denver with large minority populations, such as northwest, northeast and southwest, appear to have the most foreclosures, she said. She estimated 70 percent to 80 percent of the foreclosures are for homes, with the rest being commercial properties. Independent broker Gary Bauer said a client of his recently looked to buy a house that was just heading into foreclosure in the Inspiration Point neighborhood in northwest Denver. The buyer paid about $150,000 for the home two years ago, but then refinanced about every six months, until he had about $210,000 in debt on it. "With a $210,000 mortgage, it is clearly upside down," Bauer said. Bauer's client's offer of $155,000 was rejected. "My guess is the bank is going to end up selling it in the $160,000s," Bauer said.
Let out more rope from which they hang themselves...OWP Home equity loans http://money.cnn.com/2004/11/23/real_estate/financing/home_equity/index.htm Outstanding debt for home equity lines of credit increased nearly 11 percent during the third quarter, according to preliminary numbers released Tuesday by the Federal Deposit Insurance Corporation. The amount of outstanding debt for home equity lines of credit, or HELOCs, was nearly $460 billion at the end of the third quarter, a 46 percent increase from the same time in 2003. "Homeowners have been pretty aggressive in tapping their home equity," said Richard A. Brown, chief economist for the FDIC in an interview with CNN/Money last month. In 2003 alone, they tapped more than $300 billion of home equity via lines of credit and cash out refinancing, he said, or about 4 percent of personal income. "That's a big number." It should come as no surprise that home equity lines continue to grow in popularity. These loans, which allow you to borrow against the equity in your home any time, for any purpose just by writing a check, are cheap, convenient and widely available. Still, the numbers are staggering. The average line of credit available between June 2003 and June 2004 was about $77,500, according to the Consumer Bankers Association, up from about $69,500 the previous year.
most investment purchases are financed - LTVs are 70% or less these days in Socal, although 75% is allowed in most cases. rates now are like 5.25% with 1.2 debt-service-coverage ratio. DSCR is that the NOI has to be 20% higher than the mortgage payment - it covers it with a 20% fudge factor. so $100,000 NOI services $83,000 in mortgage payments - at 5.25% and 30-yr amortization, thats a $1,263,089 mortgage. say 70% LTV and thats a value of $1,800,000 (RD). now figure the IR at 9.5%. that is $832,417 and with 75% LTV the overall property value is +/-$1,100,000. at 9.5% IR, the property value is 13% less than the mortage amount at 5.25%. i will further point out, that with some of the 4% cap rates ive seen; thats sayoing a $1.8M project has NOI of $76,000, which supports mortagge payments of $63,333 and mortgage of $960,000. at 9.5% and 75% LTV, you are talking like $850,000 project value - less than 1/2 current $1.8M "value".