Real estate mess

[fan-of-fans]

I’ve been wanting to buy a house for 10 years. When I started out, prices were super cheap but I had no savings or credit. It seemed like prices were increasing Bd just felt high by 2019.

In 2020-21 they just increased to rediculous heights. Looking back the prices in 2019 were great. A house in 2019 that was $150k is now around $280-300k.

I don’t know how I’ll ever catch up. When the interest rates doubled last summer people thought prices would have to come down but it hasn’t made much difference here in Florida. Prices seem to be selling for about the same as last year.

If I didn’t have family here I’d consider moving to NC, SC, GA or TN. I’ve seen some nice old homes there with quite a bit of land for under $200k. Of course there’s the old rule of location, location, location.

I just fear FL is the new CA as far as prices. And now insurance is going to jump, and I’m hearing flood insurance will be a requirement in all areas if the state in the next few years.

I remember people saying the market would crash in 2020, but I’ve seen no evidence of that coming. Some say this is like 2006-08 and prices are going to crash in the next few years. I just don’t see that being allowed to happen again.

 

[sudsmaster]

Your housing prices in Florida are still less than they are here in California.

 

The value of my home has gone up about four times what I paid for it 26 years ago.

 

Good luck.

 

 

[qsd-dan]

I remember people saying the market would crash in 2020

It did, but the Federal Reserve pumped trillions of dollars into the economy which shot the market up, along with housing prices.

 

 

 

[sudsmaster]

Well, the stock market crashed in, I think, 2021, not 2020. Home values here in California slumped a little last year as well, but not a lot. Maybe 10%.

 

[qsd-dan]

the stock market crashed in, I think, 2021, not 2020

Your memory is slipping. It peaked in 2/12/2020 and bottomed out in 3/23/2020.

 

https://finance.yahoo.com/chart/^DJ...lIjoiY2hhcnQiLCJwYW5lbE5hbWUiOiJjaGFydCJ9fX19

 

 

 

[polkanut]

There’s the old rule of location, location, location!

When my parents sold their home last year the initial asking price was $149,900. By the time they accepted an offer 6 days later the selling price was $160,000. They could've maybe gotten a little more, but they were shocked at how fast and how much they received for it. It's a 2 story 4 bdrm home w/ a full dry basement, and a 2-car garage. The only negative is that it only has one bathroom.

 

[sudsmaster]

Polkanut,

 

A house like that would probably go for at least $1 million in San Francisco.

 

 

[sudsmaster]

Dan,

 

Yup, you're probably right. At least according to the DOW averages. However as I recall, the Nasdaq and SP500 averages also went down with the recession. The economic slump was likely a major factor in Trump's defeat in the 2020 election.

 

[good-shepherd]

Prices seem to be selling for about the same as last year.

With millions of illegal aliens pouring into the country outstripping the supply of new construction it doesn't look like prices aren't going to drop much in desirable areas.

https://www.breitbart.com/economy/2021/10/13/nytimes-suburban-de-zoning-doubles-housing-prices/

Here in N.J. the democrats are in the process of breaking the suburbs after getting rid of the Mt. Laurel housing commission in 2015 forcing them to accept massive multi-story rental apartment buildings with 400-500+ units plopped down in the middle of single family areas or face a builders remedy lawsuit.

There are thousands of these packed and stacked units under construction in my county right now with more planned.

Affordable single family houses or even townhouses/condos are out and soviet style apartment buildings with concrete parking garages are in and the rents are sky high.

 

[qsd-dan]

Oh, I remember it well since I made fortune on TVIX when the market started to fall, then bought a ton of Haliburton stock that fell to 20 year lows the day WTI crude prices went -50  

 

[givemehotwater]

One thing that is vastly different, is back in 2007/2008, if you defaulted on your Mortgage... the servicing company (acting on behalf of a faceless/nameless Investor) would just send your file immediately to a attorney to pursue foreclosure.

A friend of mine defaulted on his Rising Payments in Mid-2008, and Wells Fargo could not have cared less. Eventually, he filed for bankruptcy protection, and just walked away. The investor lost over $340,000 on that Mortgage, alone, after liquidation.

The difference now... is, these servicing companies, banks, and investors have wised up. They do not want to be in the business of owning any sort of real estate, and will aggressively offer repayment plans, loan modifications, and relief to anyone in default.

You are never going to see a repeat of what happened, because... the banks do NOT want to lose money like that again, and for the homeowner involved... their modification payments, will be lower than a comparable rental in the area.

People don't realize this. It's why though, you won't see a endless tide of foreclosures, ever again.

 

[vacerator]

I agree totally

with givemehotwater!! After the 2008 crash, owners who were underwater were just either walking away, or living in the house until forced out. lenders were stuck with property they couldn't move. Often contractors hired to clean out the property damaged it, cutting out copper, etc. to sell as scrap.
Our kids bought a bank owned house in 2010. It was cheap, but needed a furnace, which the inspection revealed. My son in law told the bank if they didn't replace it he was backing out. They did. he got am 1,800 sq. foot quad level for $86,000.
Some of the plumbing had froze, and was repaired with PEX, but the dishwasher line had been cut, and was just open inside the wall. Lucily, the dishwasher didn't work, or would have flooded the kitchen and lower level. The windows weren't very old, but one or two had brokem imside panes, so a year later, he got all new ones. We gutted the bathroom cabinets, and toilets, and basins, replacing with new. Refinished the wood floors, and scraped the ;ousy popcorn cieling texture off. Then there was wallpaper we had to strip. naturally, the walls hadn't been sized, so that was a lot of extra work. They bought new appliances as they were first time buyers, and none were present. They had the kitchen refaced in 2015, new quartz counters, and subway tile backsplash, and got a new roof a few years ago. Area comps. are about $200,000 now.

 

[ea56]

In 2006 neighbors of ours bought their townhouse at the height of the market and overpaid just decided to stop making their mortgage payments in 2010 because their home was underwater. They purchased their home with a 20% down payment that came from a 2nd mortgage, so essentially they had zero skin in the game.

They them filed bankruptcy shortly after they ceased making payments on both the 1st and 2nd mortgages. Well this went on for over 2 years while they attempted to get a modification on their 1st mortgage. The 2nd mortgage was written off in the bankruptcy and they finally received a modification on the1st mortgage, reducing the balance on the principal by about $50,000 and the balance owed on the 2nd was written off entirely.

So after over 2 years of making no mortgage payments they saved nothing, for all intents and purposes living for free in their home, they did make their HOA dues though.

So when they sold their condo in 2018 for $398,000 they made about a $90,000 profit. Somehow this just doesn’t seem right to me at all.

BTW during the height of the mortgage meltdown in 2010 my husband and I paid off our mortgage in full. The neighbors that made out like bandits on their condo and bankruptcy took their profit and bought a home in Oklahoma that they ended up losing just before the pandemic began and they are now living in a mobile home park. So after all the write offs they received by not paying their mortgage payments and filing bankruptcy they are worse off than they were in the beginning.

Eddie

 

[givemehotwater]

Eddie,

Believe it or not, that story pails in comparison to some of the stuff I've heard. There is someone in our subdivision, that bought their house in April 2007, stopped paying in June 2007, and IS STILL IN THE HOUSE. They got a similar deal too, with one mortgage for 80% of the house, and a second loan for 20%, so all they had to pay was closing costs (which may have been paid by the home seller). Our Association Attorneys are in absolute shock about the whole thing, and the homeowners finally just started paying us, 3 years ago... after I & the rest of the HOA Board threatened foreclosure. They owed almost $35,000 in assessments to us, at that point. I was Livid.

I myself... bought my home in 2005, and put down a little over $200,000 in Actual Cash as a Downpayment. I was beyond pi$$ed when I realized, I was stuck paying 6.6% Interest until the value of my house recovered. I was stuck paying that rate, well into 2015 before I could finally refinance. Everyone else mostly had been able to get rates in the 3s and 4s as early as 2011/2012. But... my loan was owned by Private Bank, in New York. So... no options were available until the ground beneath me dried up.

My friend, who walked away... got very lucky, and bought his house in 2002. He then used the Equity from a Cash Out to start a business. His problem was, he borrowed way too much, and couldn't refinance -- before his loan payments were adjusted. Probably because values were falling here.

Like I said... The Banks back then just didn't care. We had one home in our subdivision, that sat empty after Bank of America took it back, for almost 3 years. Bear in mind... this was a very high-end home, almost 5,500 SQ Feet. I'm not sure why they ignored it. Our HOA was responsible for the upkeep of the exterior... because the grass was overgrown, and the pool had become a snake & mosquito pit.

We never recovered a single $1... from BofA for the cost of draining that pool, keeping the grass cut, the Association Assessments, or anything. Instead, everyone else had to shoulder the responsibility of the Banks. Which I still am mad about.

I am glad... to hear those homeowners, at least paid their HOA Dues. Rarely do people understand the importance of everyone paying those on time, or keeping up the community.

 

[ea56]

Re: #13

The only reason that our neighbor kept the dues paid was because she was a member of our HOA BOD, along with myself. I know ALL about the people that do skate by not paying their dues. We had one several years ago that still owes our HOA over $6,000. She got $3,700.00 cash for keys from her lien holder after well over a year of non payment of the mortgage. We won in small claims and there is a judgement that the collection agency monitors for any assets. And there never are any found.

Eddie

 

[qsd-dan]

The repeal of the Glass Steagall Act caused a big portion of that mess with a 90-8 majority vote in favor by CONgress in 1999. It's funny to look back and watch both sides point fingers at each other for the blame while everything was collapsing but just look at the votes, they speak for themselves. I'm sure they knew way back then that this would eventually destroy the economy and a bailout would give their crooked friends a golden parachute to softly land on. 

 

Look at the wording and how it was pandered: [COLOR=#222222; font-family: 'Source Sans Pro', sans-serif; font-size: 14.4px; font-weight: 400]An Act to enhance competition in the financial services industry by providing a prudential framework for the affiliation of banks, securities firms, and other financial service providers, and for other purposes.[/COLOR]

 

U.S. Senate: U.S. Senate Roll Call Votes 106th Congress - 1st Session

roll_call_vote.xml

www.senate.gov

 

Watch The Big Short for a more in-depth review. It's one of the few follywood movies that's somewhat accurate.

 

https://theflixer.tv/watch-movie/watch-the-big-short-full-18698.5299189

 

It's why though, you won't see a endless tide of foreclosures, ever again.

 

That could easily happen again. Homes are now going for twice as much, if not more, than they were at the inflated peak before the crash and that was before tens of trillions in QE. Now we are paying for all of that QE through inflation. Another turndown in the economy could easily wipe us out because another round funny money through firing up the printing presses would decimate the system at this point. Manipulation will only limp the system along so far and I think we are at the point of exhausting anymore options in that realm.

 

We haven't even discussed investment firms buying up large portions of real-estate nationwide, some paying 30% or more over the asking price. What are they forecasting/preparing for, another turndown in the economy? A future nation of renters only? One eventually leading to the other? We'll eventually find out...

 

 

[good-shepherd]

A future nation of renters only?

Thats what I'm seeing in my area.

Thousands of ugly yet pricey rental units going up, likely to be filled with a generation of younger people resentful that they will never be able to afford a home of their own.

The new construction single family homes that get do get built are the most expensive, largest square footage house (or houses) the zoning laws will allow on the lot.

 

[givemehotwater]

Dan... the real problem is, unless I significantly downsized my home and life, It would make absolutely no financial sense for me to move, or go into foreclosure. Even if the value of my home dropped again.

The reason is... first, is that my monthly mortgage payment, at 2.4% Interest + my HOA Dues, Property Taxes, and insurance is still almost $2,500 to $2,800 less than a comparable rental in my area.

I am also in a position, where I could actually pay off my Mortgage tomorrow, and be done with it. But it makes no financial sense to me, because... I can get almost twice the amount of interest/return in a savings account, or other investment than I can get paying it off. Plus... It gives me a nice tax deduction, at the end of the year.

Believe it or not, Many Homeowners are in the exact same boat. Their home could drop in value by 10-15-20 or even 25% (we saw almost 35% in my area) but... their monthly obligation is still significantly less now than a rental payment. That's why I'm so convinced of this.

Why would you walk away from your home, and mortgage... if it'd cost you more money to walk down the street to another house or apartment? If it's unemployment, the bank will figure out a way to work out a payment plan with you. But... unless Rents start dropping like Crazy, I just don't understand how you could financially benefit. It seems like a very, very poor choice. You are better off staying in the house and waiting for the downturn to subside.

And even so... In my area, the reason we had a Huge Drop in Prices in the first place, was that Builders had dramatically overbuilt. Today... we have a huge shortage of housing, as Douglas was also referring to. Where is all the inventory going to come from, to create a dramatic pullback?

I know... I may be a little overconfident here, but I truly want to believe that 2007/2008 was a once-in-a-lifetime event. I think we all learned a lot of lessons, about being more honest with ourselves financially speaking, and the Banks learned not to lend money foolishly.

Unless something dramatic happens, I don't see a flood of Foreclosures and Disaster. I honestly hope I am right, too.

 

[henene4]

When your region is just straight up full

My parents extended my grandparents house in the late 80s for back then something between 150k and 200k, had it payed off in the mid 2010s.
They payed a small amount to my mums sisters, and had to warrant a lifelong right to inhabit to my grandparents in return for owning all the house and land.

They took the 2 story plus basement house, extended the 2 existing floors by 40m², added a new top floor and extended the basement aswell.
It's 400m² of floor space, but effectively only 240m² are counted as "living space" by german regulations.

This plot of land was settled in the mid 50s, my grandparents were one of the first houses here.
We live basically right on the border of the district, which by coincidence is the border between Bavaria and Baden-Württemberg aswell - it's like 500m.
So we technically have one of the worst plots of lands location wise if you want your kids to go to school in the "better" city of the 2.

But about 20 years ago, something started to happen.

There wasn't any "space" left in the district.
That was the last time new building areas were created.
And all those plots have been sold by the 2010s.
There was effectively no new construction of houses in this district by 2020.

There is a lot of area left, but most areas that could be settled are in some kind of protected area, and most towns are at just about the size they can accommodate.
So, no expansion.

This leads to such nice situations like with our house.

It's getting on, we are renovating step by step.

But our neighbours start to, well, no longer live. My grandparents are dead aswell, and most of them are their age.
So the house next to ours was sold.
It was build in the 70s, never renovated. No central heating, no insulation what so ever, about half the living space compared to our house, but on about the same plot of land.
It HAD to be renovated - would it have been sold a year later renovation would have been mandated by law.

And the house sold for 300k before renovations.

When my father died in 2016, the house had to be evaluated due to inheritance law.

It was evaluated at 180k by german bureaucracy.

Now, given that houses sell for more in worse condition, our house has doubled in value from before that sale in our street.

This house certainly isn't worth 600k - but if we wanted to, we could probably sell it at that price.
If we were to renovate from the bottom (about 200k), we could potentially sell it in the low 7 digit range.

What a house costs, and what it is worth, isn't the same.

And currently, the gap between assigned value and actual value is just to big.