Here's what's going to underestimate what's going on, and make this far, far worse than anybody now imagines. Take this Pt. St. Lucie story which is now epidemic in Bubble markets.
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You see these speculators sitting on vacant or marginally rented
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new construction/older housing and bleeding, and more speculators who need to get off the pot and close on their contracts, still more who need to pay for nonrefundable deposits on more new pre-construction contracts.
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So the early guys who already have title are trying to flip to the next waves, most of whom are debating whether to close on pre-construction because that's what the seminar taught them.
dynamicinvestmentsolutions.com
Why would any speculator in their right mind buy finished construction, when the game has been pre-construction option flipping? Do the seminars who teach this crap, recommend that speculators buy finished construction? Repeat after me "I DON'T THINK SO", meaning this important leg, a sucker to buy already finsihed construction is the first to break, and that's now evident. Plus you have, many people doing this, that really don't have deep pockets, or are leveraging off of something else. Meanwhile the new suckers are debating whether to write out deposit checks in what is clearly a stagnating, if not rapidly weakening market. In otherwords, a classic Ponzi scheme coming unravelled.
Meanwhile as we go into August we see a very large reset on more ARMs cohorts. Now the slightly less deluded of this crowd, adds two and two together and realizes he may very well be holding these Old Maid Cards when his teaser rates reset, after failing his full price flip. Meanwhile he can't find renters to generate cash flow, and the speculative rationale falls apart very rapidly.
You are about right on July, but August will be even more shocking as purchases slip, and more speculators get caught with Old Maid Cards, or more vacant new construction housing comes on the market, at lower prices.
(*) Portland, Oregon anectodol note on big Williamette River condo conversion, the Riverside (of rather shoddy looking 80's Section 8 housing in a good, or should I say interesting, or funky location, or something? (industrial riverside). The for rent banners and signs are now out, Plan B in effect, mixed rentals and condo sales goes in play. Only problem? PDX has a double digit rental vacancy rate. They all look pretty empty, although you see individual (speculator) units with for rent signs. This has the look of an unmitigated disaster. |
