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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (104555)	8/21/2009 4:29:38 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 110194

In Florida you're ahead of us. Not much to do in real estate here in Los Angeles, unless you want to participate in the hinterlands. Not enough REOs are hitting the central core market yet. When they're offered, they remain on the market for a few months and finally sell well below prior sales. Home prices continue to decline with more sales in more affluent areas because the prices are finally falling. This ironically raises the "median sales price" in Los Angeles providing the LA Times with a hopeful headline. Rents are falling fast as people leave town, double-up, move to less expensive areas, and there's that constant stream of new apartment and condo buildings being dumped on the market, although all at above market prices. But the empty projects sort sit there looming with menace. The new apartment buildings have some tenants who almost always turn out to be new arrivals to Los Angeles who saw the flags and signs on the building. After six months they move into nicer and less expensive digs. In the interim the stock market has been amusing and profitable. If you look at a local REIT like Kilroy, KRC, you see we must have had a recovery in real estate prices for three weeks, that ended two weeks ago. .

To: John Vosilla who wrote (104555)	8/21/2009 5:13:26 PM
From: Elroy Jetson	4 Recommendations Read Replies (1) \| Respond to of 110194

We went to a bar-b-que last week at the home of a friend who owns a construction company. He and his wife filed for bankruptcy a few weeks ago and are closing their firm. That's 14 employees filing for unemployment, plus the two of them. He was excited about a deal where some guy owns a lot in Malibu nearly outright, small loan, where they could build an $8 million home. He could live off the construction draw if they can get a bank to pony up for a construction loan on a home that would be ready in a few years - to meet an unknown fate on the other end at the hands of potential home buyers. We tried to dissuade him. But when you're drowning everything looks like a raft. I suppose you could say, what's the downside? You just file bankruptcy again if things don't go your way. That's a tough way to live. But first a bank has to say yes to this scheme. Another couple there had finally finished their home a month ahead of schedule with a Wells Fargo construction loan. Even though they had paid Wells a fee for a take-out commitment, WF refused to give them a mortgage, pointing to a clause which states they reserve the right to change the terms of the agreement at any time. So now they're stuck trying to get a mortgage about $150k over the maximum for conforming loans. So far their best option is a tentative offer from BofA for a conforming mortgage and a very expensive personal line of credit backed by the home, everything they own, and their own credit. In the interim they're continuing the construction loan, now with a monthly penalty. As you can see, things haven't fully gone over the falls here yet. .

To: John Vosilla who wrote (104555)	8/22/2009 4:41:30 AM
From: Skeeter Bug	1 Recommendation Read Replies (2) \| Respond to of 110194

>>and even the savy vultures buying distessed today are fools?<< they are only savvy if interest stay flat or drop lower over the next decade or three. given that the deficit is in the trillions, the printing presses are running very fast and the dollar is getting killed, that's a brave bet. or an insane one. you do know what will happen to the value of home prices if mortgage rates go to 10%, all else being equal, right? so do you see rates staying near 5% forever while we borrow $1 trillion a year and print another $1 trillion?