The point I was trying to make is this. Foreclosure wise in a state like Kentucky you can find houses for 20 cents on the dollar all day long! A place like South FL it is still hard to get a house 80 cents on the dollar. As long as there is demand prices go up. But just as quickly in areas that have a slow down they fall. As for the stock market there is a big difference. Real Estate is a very slow moving market. There are no program traders and because most people need financing, banks do there homework on there lending policies to protect themselves and the consumer. And unlike the stock market that is there to raise capital for future business development (at any cost to the investor) people will always need a place to live. It is just a local business. If I remember correctly San Francisco was a bubble back in the day when housing slowed and prices just held up fine while most of the country suffered. On the investment end of foreclosures there is another problem, liquidity! You can find better deals out side of the cities but in order to get rid of the property it may take years. So turn around time is a big factor. This is another reason strong markets stay strong. So it comes down to one place may have a high foreclosure rate or it may even get so bad that people may give houses away to get rid of the burden. Other places there is always someone to step up and buy the houses before someone else does. I just took a class that spoke about the Real Estate market. The NAR stats are showing a future population shift from the northern states to the Sun Belt states. They expect the baby boomer generation to increase the Sun Belt population by 20 something percent in the next ten years and a loss of that population coming from the northern states. This is another factor for foreclosures in the north. These people are also at the peak of there earning cycle.
http://warrenreports.tpmcafe.com/bl...asons_that_the_real_estate_bubble_is_bursting Well, if George Soros is correct, we might see the mother of it starting 2007.
Interesting posts. I have a friend who has been lending his funds out as bridge loans to individuals who have short term credit issues. The loans are used to purchase primary residences for these individuals. The terms of the loan are 18 months @ 15%. The agreements are drawn up through an attorney and he is listed as a secured creditor on the property. He can force a sale if the borrower defaults. He only goes into a deal if there is alot of equity. There is a $10k prepayment penalty and a typical loan ranges from 15-50k. I wonder if we will soon see pools of this type of lending, considering what may happen in the RE market.
When it does happen, 2006, 2007, 2008,..... It possibly be more devastating that the last time in the 80's. Besides the 100% financing on the Arms, a lot of individuals are getting in to negative amatorization loans to keep up tih their life styles that don't fit their budgets. Good luck to the fools that bought 500k houses on incomes of 50k.....
I've heard of this strategy done with "Rent to own" strategies. What you are basically doing is a credit swap. This beats renting outright because the 'renters' act like owners and never call u up to fix a plumbing problem.
I've seen ads for these in the Review-Journal (las Vegas). If you lend on these you better make sure the appraisal isn't bogus. That equity may just be an illussion.
I'm in the mortgage biz and I agree it's not when but where. Georgia certainly seems to be having problems. Another spot I've noticed is Michigan. There are lots of people who got into loans they can't afford, and home values are actually delining there. I live in upstate NY and while I agree that there is plenty of land...there does seem to be some job growth. So I don't know if there's going to be much of a problem here.
uptik, there was a big slow down in Florida. Just not the major cities. I while back I was working for a hedge fund that starting flipping land in the Florida sticks. Lotâs were going through the roof and you could not buy them fast enough. Now you can not give them away. Banks are foreclosing on a lot of investors who were gambling and could not afford them. The only way to get a rid of them is to build a house on the lot. I grew up in the Real Estate business up north around where you are and I have seen a few boom bust cycles. I actually got burned in 1. What I know is this, jobs, limited amount of land, and a population growth will always drive the market higher. Take one of those away and you have a great foreclosure market. The catch is if someone decides to invest in a place where there are too many good deals. They will get burned! Real Estate is one of those investments where everyone watches what everyone else is doing and there is a lot of time to think about your decision. I remember when the state was giving away old houses and farms just so someone would fix them up and take the burden off of the state. On top of that there were grants to give you money to do this. Free home and money to fix it up! How much more of a bargain do you want? The way I see it from the places I am familiar is this. Manhattan is always good but would not trust the suburbs (Brooklyn has lowed a lot and prices have fell). Just too many people want to live in Manhattan, the limited amount of land, the place attract the best and brightest people in the world, the job market is driven by some of the biggest corporations in the world that pay anything for talent executives. South Florida these days because of the baby boomers retiring and the Gulf Stream weather that is not found any where else in the US. On top of that the job market is growing, there is a very limited amount of land to build on (weather wise), no state tax, homestead laws, a expanding infrastructure, and the rich love it here. The only thing is the snowboarding really sucks here!
Bricks... Where in Georgia do you see problems? Atlanta? Savannah? Any foreclosures in Buckhead (Atlanta) I imagine would be a good starting point to do some due diligence on a possible purchase.