Hi Mike,
Your comment re on line cheating at the tables--that you made some days ago, has been kind of cycling in and out of my thoughts. A scenario that seems like it could be devastating for players on the outside would be sitting down at a table populated 60% by players all conference call hooked up on SKYPE whilst playing with the fish. Anyway, you mentioned cell phones possible hook ups and I was just carrying that thought on to a different format (one much easier to use).
Here's an interesting post that came of the CWEI Board on IV.
FWIW:
OT: Ugly mortgage market anecdotal: Miami, FL
I am renting a property in an area called Pinecrest, FL, about 12 miles due south of Miami proper. I chose to rent this house after seeing many properties in the area which were massively overpriced, and frankly were demo jobs. This is an 'estate' area with most properties of 1/2 acre or larger, and houses of 2400sq ft or more, mostly built in the 60's and 70's with plenty of fresh new mcmansions on the larger squares of land. Prices for these properties for sale in March and April were between $800K and $1.2M depending on how close to the water they were situated.
So, I engaged a one-year lease for 3K a month as of May. A few Saturdays ago, I was served notice that the owner of this house was being foreclosed upon because he had not made a single payment against his mortgage on this property since commencement of the note in Feb. Truth be told, I wasn't surprised, as a quick check of the local property records had revealed that the house had sold to my land lord in the $700's, so the guy had to be completely upside-down, not including taxes and insurance, which would add another $1K to the monthly overhead on the property.
The server was a young guy, and more than happy to talk with me, as he put it "Many people are so pissed they want to rip my face off." He had a buddy who was running the beat with him, and was carrying in case things got out of hand. Turns out he had been running summons for the court for civil mortgage actions for over 18 months, and had seen his business pick up from 40-50 per month to over 300, and on this Saturday he had a sheaf that filled a few bulk paper boxes. He had already served 4 houses within 4 blocks of mine, and was working across the neighborhood with 2 more. So, in less than a 1/2 mile square, he had 7 notices of Lis Pendens to deliver.
I take long runs all over the area, and by August it was more obvious that ominous changes were occurring in the local real estate market. Some properties were vacant and falling into disrepair with long grass and citations jammed in the doorframe. There have been a few house fires, and minimal or no efforts have been made to recover those properties. Some properties have auction invitations on signs or clearly denote "Foreclosed". A few Sundays ago I ran by a corner property with a painted sheet of plywood stating: "We must be out by tomorrow, everything is for sale!" as they packed their U-Haul.
One house that I have been watching for some time is 7272 SW 132St on an acre which is just a few blocks away. By late summer 2006 it was clear something had gone wrong and it had gone vacant, and in Jan07 the foreclosure sale signs were on the property. Now, Miami is a pretty neat place in that all real estate property records are on line, so it is pretty easy to get the scoop on the house: Property info at Miami-dade.gov as there is no tax exemption, this house was not used as a principle domicile, so in all likelihood it was purchased as an investment. Gotta love those taxes on a $2M property eh? Notice that Countrywide is the holder here. Poke around a little more in the property information and do a search on the owner, and voila, it looks like that hub&wife team own the first five properties on the list, and not cheap ones either.
Well, the house was attempted to auction this past July. Countrywide set the minimum at $1.6M, a reasonably steep discount. No bids. So I guess the bank owns the house now.... ouch.
I followed up with the plaintiffs' attorney to see how quickly they were preparing action on my rental, and at what point they would accept short sale offers. Now this was interesting, because the paralegal actually told me that they would probably never get there, because the circuit court was so backed up on these actions that in order to shorten the backlog, they were 'arbitrarily' throwing houses to auction if the plaintiff could produce the note. She directed me to the Circuit Court of Miami web site (only plays well on IE), where I found all sorts of interesting foreclosure trend data!
Well, that kicked off an inquiry that I was unable to confirm, but I seem to remember somewhere reading that banks really want all possible contingencies played out before going to auction, because once the property rolls to auction, it must be considered a non-performing loan and thusly treated as such on the books. The article had been one of those consumer advisories talking about how to negotiate with the bank, as even after the 90 days of default they really don't want to claim non-performance because it hurts their book. Anyway, if that is true, with Miami-Dade accelerating the auction process, a whole bunch of inventory is going to be classed non-performing and get the deserved accounting treatment all at once.
So, today, after reading more about how Wachovia and Morgan Stanley are eating it, I got to thinking about where these numbers were going and given that some parties keep talking up that financials are trending oversold (!?!), just how close could we be to a bottom? I called my real estate agent today and I might as well have been her therapist, she was letting it all hang out. "Market went terribly this summer, worst I can remember in 30 years! Usually May, June, July pick up, but we slid down into Sep. Nobody wants to buy, nobody is even looking, and those that do can't get a loan without massive collateral!" On her invite, I poked around in Trendgraphix, and summoned up this lovely data matrix:
Date 7/06 8/06 9/06 10/06 11/06 12/06 1/07 2/07 3/07 4/07 5/07 6/07 7/07 8/07 9/07
For Sale 27563 28712 30077 31107 32258 31803 33436 34455 35798 36364 37820 38033 38672 39736 40689
Sold 1817 1753 1733 1617 1528 1596 1284 1355 1638 1460 1572 1474 1246 1112 773
Pended 1881 1962 1816 1951 1680 1397 1602 1727 1853 1519 1522 1420 1163 1142 874
Months of Inventory based on Closed Sales 15.2 16.4 17.4 19.2 21.1 19.9 26.0 25.4 21.9 24.9 24.1 25.8 31.0 35.7 52.6
Months of Inventory based on Pended Sales 14.7 14.6 16.6 15.9 19.2 22.8 20.9 20.0 19.3 23.9 24.8 26.8 33.3 34.8 46.6
Avg. Active Price 634 628 623 620 614 620 612 608 604 598 584 576 565 559 553
Avg. Sld Price 421 431 438 430 430 437 449 457 478 472 507 472 483 480 465
Avg. Sq. Ft. Price 269 280 279 262 267 274 269 279 298 298 320 291 300 275 269
Sold/List Diff. % 95 95 95 95 95 94 95 95 94 94 94 94 93 92 91
Days on Market 75 77 79 81 90 90 94 99 101 100 101 106 109 109 107
Median Price 312 300 307 305 310 322 320 325 315 301 330 320 309 309 310
Months of Inventory based on Closed Sales
7/06 8/06 9/06 10/06 11/06 12/06 1/07 2/07 3/07 4/07 5/07 6/07 7/07 8/07 9/07
15.2 16.4 17.4 19.2 21.1 19.9 26.0 25.4 21.9 24.9 24.1 25.8 31.0 35.7 52.6
Months of Inventory Based on Pended Sales
7/06 8/06 9/06 10/06 11/06 12/06 1/07 2/07 3/07 4/07 5/07 6/07 7/07 8/07 9/07
14.7 14.6 16.6 15.9 19.2 22.8 20.9 20.0 19.3 23.9 24.8 26.8 33.3 34.8 46.6
Well, that's getting pretty damn ugly, and that data doesn't include Lis Pendens properties, either. So ugly as it may be, it is getting worse but it is clear that the blood is not on the streets yet. Not even close. It really starts to look like a death spiral looking at those inventory numbers for Q3.
Final thoughts:
- In sports terms, we are more likely in the top of the second than the bottom of the seventh.
- Renters need to be extra especially careful now, because unscrupulous owners are happy to take that first, last and deposit and run, because it is theoretically impossible to get it back when the banks stop the music and take over the property
- As mortgages go bust so go municipal tax revenues. Services are going to take a hit and some unfortunate places are going to go insolvent (and so go their bonds)
- Banks will be barfing on inventory if they are being forced to auction, and unable to sell because of their own liquidity issues restricting buyers
- Only entities that can self-finance can really come to the table to buy properties, and one would think anybody that savvy is smart enough to use their liquidity to short the banks and brokers: that little extra shove
Sorry to clutter this energy board with this but it seems relevant in the grand scheme of things. Thank you for your time and have a pleasant weekend.
BTW, two gas stations here were out of gas - completely empty. Prices range in the 3.15 - 3.20 for reg, 3.30-3.40 for Super; we are up about .25 week-over-week |
