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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: HairBall who wrote (71)	7/5/2001 3:46:32 PM
From: C.K. Houston	Respond to of 306849

Here’s an interesting time-line. I picked some selected headlines from Real Estate Investor's Monthly, which started in Feb ‘86. The chronological order of articles makes this sort of a historical overview of the real estate investment scene since 1986. I included annual +/- Houston residential building permits against time-line. I also put some other comments in brackets. 1983: S&L deregulation fuels real estate speculation & building boom [Houston +31%] 1984: Collapse in energy prices ends real estate boom in "oil patch". [Houston –18%] 1985: [Houston –20%] Outside of TX ... Ohio “bank holiday” and Maryland S&L failures. State deposit insurance funds depleted in both states. *1986 REAL ESTATE INVESTOR’S MONTHLY:* [Houston –13%] -- Decline in interest rates has raised property values (single-family) -- ARMs at lowest market share since April '83 -- Current "sellers' market" in some areas is really a buyers' market -- “Real Estate Crash” authors kill their newsletter <--[They were right, but too early] -- The "silent crash" in office building market values -- "Quality" apartment prices down 7% -- FSLIC [S&Ls] is a time bomb -- Rates of return on real estate about half of '84 levels -- Apartment vacancies up almost everywhere (overbuilding) ______________________________________________________________ [WALL STREET IN 1987: Corporations issuing debt like it is going out of style ... Junk Bonds ... DOW breaks 2000 for 1st time ... Trading volume swells ... Optimism abounds ... 1st Qtr ends with a bang ... Dollar starts to fall ... Insider trading scandals rampant throughout year ... Drexel Burnham Lambert: Boesky/Milken probe ... Former director of a Federal Reserve bank becomes embroiled in insider trading mess ... 15 employees of various Wall Street firms arrested by Federal agents and charged with selling cocaine - trading drugs for information, stock, and lists of preferred clients ... Speculative companies with little more to offer than interesting stories account for many of the year's best performing stocks ... Gulf War ... Oct 19 DOW drops 508 points(22.6%)... Worst one-day beating since hostilities were initiated in World War I.] fool.com [FSLIC fund insolvent. Losses at Texas S&Ls comprise more than one-half of all S&L losses nationwide. Texas economy in major recession. Crude oil prices fall further, office vacancy over 30%, and real estate prices collapse.] 1987 REAL ESTATE INVESTOR’S MONTHLY: [Houston –26%] -- The National Association of Formerly Wealthy Persons -- Apartment starts finally down -- Home equity loan binge will backfire -- Commercial mortgage market dead -- Moody's now issuing market/property type ratings -- Texas condos to be deliberately burned (overbuilding) -- Oversupply "perpetual" (overbuilding) -- Properties, properties everywhere but not a deal worth doing -- Can't make mortgage payments -- You should get more co-signers -- Real estate guru bankruptcies of the month -- Early warning of the bankruptcies -- Will FSLIC depress the market by forcing S&Ls to sell foreclosed properties? Yep! -- Recession is overdue -- Bill would allow deduction of cash losses -- THE STOCK MARKET PLUNGE AND REAL ESTATE -- Book review: Great Depression of 1990 -- "Off a cliff" in 2010? (demographics – Baby Boomers) -- Vultures, you are cleared for takeoff -- Real estate in the Depression -- Commercial sales down 50% -- FASB: "Tell the truth" - Lenders: "Are you crazy?" -- Huge regional differences in returns -- S&Ls' horde of distressed property -- New fixed-rate mortgage with cheap refinancing -- CA companies tell delinquent tenants how to delay evictions -- Institutional investors suddenly interested in apartments -- IRS issues retroactive regs on passive losses *1988 REAL ESTATE INVESTOR’S MONTHLY:* [Houston –18%] -- Dallas landlords neglecting properties -- Is the worst over? -- What if values don't always go up? -- Investing by flashlight (FHA repo's) -- The siren song of speculation -- Autopsy of a disaster [FIRREA abolishes Federal Home Loan Bank Board and FSLIC, switches S&L regulation to newly created Office of Thrift Supervision. Deposit insurance function shifted to FDIC. A new entity, the Resolution Trust Corporation is created to resolve the insolvent S&Ls.--FDIC] Over 500 S&Ls were forced to close during the 1980s. *1989 REAL ESTATE INVESTOR’S MONTHLY:* [Houston +2%] -- FHA has first loss ever -- Margin calls for home loans -- Lease-option defaults, walk aways, etc. -- FHA reverse equity loans -- The meaning of Houston (overbuilding) -- Lenders finally taking a hit on OREO's [Other RE Owned] -- *Signs of nationwide* decline in house values** 1990 REAL ESTATE INVESTOR’S MONTHLY: [Houston +4%] -- High default rate on private mortgages -- Housing starts at '82 levels -- How to buy profitably at foreclosure auctions -- Recession signs -- Lack of real estate credit (refinance) -- Office building value drops -- Black Watch (bankruptcy, home equity) *1991 REAL ESTATE INVESTOR’S MONTHLY:* [Houston +21%] -- [Nationwide] Foreclosures up -- IRS sales -- Can't finance income properties -- Delinquent tax sales -- Can't refinance (renegotiation) -- Fewest housing starts since WWII -- More delinquent tax sales -- More RTC horror stories -- Distressed builder auctions -- Texas now even better for bankrupts -- Trapped (refinance, negative cash flow, negative equity, exchange, renegotiation) -- Lucrative apartment market coming -- Homeless Christmas *1992 REAL ESTATE INVESTOR’S MONTHLY:* [Houston +29%] -- Bad to worse (office vacancy) -- 'More carnage ahead' in hotel business -- We may lose the word 'investment' -- FDIC backs down on real estate loan rules -- FHA rules eased -- Bush vetoes tax bill *1993 REAL ESTATE INVESTOR’S MONTHLY:* [Houston +18%] -- It's the deficit, stupid -- Clinton’s economic program and real estate -- Hyperinflation and real estate -- Baby boomers numerous but poor -- Clinton plan to ease real estate credit crunch -- Builders turning to pension funds for development money -- Real estate and the information superhighway -- Apartment starts down, down, down -- Information superhighway & Wall Street real estate -- Office tenants doubling up -- Refinancing–again (FHLMC) -- NAFTA and real estate [Largest bank failure & reorganization in the history of U.S. – Continental Illinois.] *1994 REAL ESTATE INVESTOR’S MONTHLY:* [Houston +1%] -- Buying judgments -- FHLMC back in apartment mortgage market -- Hedging against dropping property values -- Bargain lots at lenders' auctions -- Upside-down mortgage sales -- Young leaving home later -- 25% of landlords distressed -- First Pension bankrupt -- No-$-limit homestead [bankruptcy] exemptions may end -- Net worth dropped – home prices -- No-points loans widespread -- Big RTC [Resolution Trust Corp] profits reported [Selling all those S&L properties] -- Should you be on the Internet? -- Orange County [Junk Bond] lessons -- More foreclosures, fewer opportunities *1995 REAL ESTATE INVESTOR’S MONTHLY:* [Houston 0% - no change] -- Mortgage approval in less than a half hour (Fannie Mae) -- Owning cheaper than renting in half of markets -- House approves telecommunications deregulation bill -- New developments in mortgages (100%+ loans) -- Mortgages forgiven -- Baby Boomer time bomb (reverse mortgages, pre-foreclosure) -- 'Silent second' mortgage -- Built for $85 million, sold for $525,000 (Wang Towers) -- RTC [Resolution Trust Corporation] closing shop -- Web sites everywhere -- Invest in software areas? (Microsoft Word, George Gilder) 1996 REAL ESTATE INVESTOR’S MONTHLY: [Houston +18%] -- More Baby Boomer time bomb -- Telecom bill signed -- Gearing up for the millennium (Internet, fiber optics, cable) -- Financial markets show real estate's future. *1999 REAL ESTATE INVESTOR’S MONTHLY:* -- Putting real estate into a pension plan (IRA, SEP, fidelity risk, asset protection) -- Vacation homes new Boomer status symbol -- Stock options? Heck, landlords won’t even take rent now (warrants, dot.com, letters of credit, Silicon Alley) 2000 REAL ESTATE INVESTOR’S MONTHLY: -- FDIC says 13 cities at risk to be overbuilt -- Bill to limit consumer bankruptcies 2001 REAL ESTATE INVESTOR’S MONTHLY: -- Another warning from FDIC (overbuilding) -- 1/3 of mortgage applications fraudulent Real Estate Investor’s Monthly: johntreed.com Besides high-tech hot spots, wonder which 13 cities FDIC is warning about? It would be interesting to compare building permits in certain markets against some of the above time-lines. recenter.tamu.edu Would be nice if homebuilding could keep us out of recession. I just don't see it happening. -- Mortgage Payment Delinquencies on the Rise -- Avg Homeowner Refinancing Homes at Higher Rates to help pay off Other Debt -- US Card Loan Write-offs Highest in over 4-Years -- Consumer Debt 101% of Incomes -- Spike in Bankruptcy Filings -- Unemployment on Rise: First-time claims highest level in almost nine years -- Junk bond defaults hit $50 bln and rising-Moody's Cheryl

To: HairBall who wrote (71)	7/8/2001 8:20:44 PM
From: Jim Willie CB	Read Replies (2) \| Respond to of 306849

a note on residential market I continue to hear more and more stories about sprawling suburbs of Boston my personal interest pertains to residential market not to investments such as REITs town after town is imposing roadblocks for further development and thus expansion of supply the issues are water and sewage (public or private) schools are not an issue town treasurers want the wider tax base but services are strained the other roadblock has been minimum zoned lot sizes the whole trend has essentially pushed the sprawl further and further out every couple years I asked a well-informed SanFran friend about the last economic downturn in 1989-91 was told SanFran simply leveled off, treaded water values were constant until 1993, then resumed their rise it is going to take an outright recession to hurt property prices on residential side supply is limited with rental market so tight, nothing short of a 5% unemploymt rate will be required to bring down residential prices imho any opinions would be appreciated thanks, Jim