just in in-tray re real estate
From: W
Sent: Tuesday, December 20, 2011 11:42 PM
Subject: RE: Comments - Week of Dec. 19
As Yogi Berra said "It ain't over till it's over".Well-it ain't over.Long before the bear mkt in housing ends incredible deals will be reported.This is the nature of an excess-supply driven downleg.Just as homes were being swapped with no-money down at multiples of FV 5 yrs ago the mkt won't clear until this excess supply is absorbed,and the only way that can happen is at significant discounts in many overbuilt areas like Orlando.I can remember buying a painting I wanted in 1987 at a Sotheby's auction in 1991.It had dropped in price 60% and the leveraged owner had to sell due to bankruptcy.There were a dozen bidders higher than me in '87.I was the only bidder in '91-and the only reason I couldn't get it cheaper was the bank that was liquidating it had set a reserve price.
From: R
Sent: Tuesday, December 20, 2011 11:13 PM
Subject: Re: Comments - Week of Dec. 19
A,
a follow up on housing.
All the builders are up today, presumably due to the increase in housing starts. Think about how illogical that is. There is no disagreement on excess supply. So we are building more and that is good? Furthermore, if we are building more multifamily and vacancy rate is low, it can only mean that more people are moving from homes and home ownership to rentals.
Until this inventory of excess housing, especially REOs and under water mortgages, the pressure is down. At current rate, it may take a long long time.
That is my 2 cents.
On Tue, Dec 20, 2011 at 4:07 AM, A wrote:
R, is there any validity to stories like these?You Don't Believe My Housing Argument? Here's Proof...Tuesday, December 13, 2011
You don't believe me? Really? OK, I'll prove it...
You probably won't believe my proof, either. But it is absolutely true. Let me explain...
Yesterday, I wrote, "The U.S. housing bubble is completely over." I said, "Now is time to buy." Houses in America are "the best value they've been in many generations." And I said that you can "pay below-market prices as banks try to unload properties."
Apparently, you don't believe me...
Some readers have told me: "Steve, you keep talking about these real estate deals, but you never show any actual details. Show me some proof."
So today, I'll show you two deals I just heard about. They are incredible...
First up... Grandma's house:
Over the weekend, I got a call from my brother... "Steve, you're not going to believe this... but Grandma's house is up for sale. A bank now owns it. The size of the loan was like $270,000. But the bank is asking just $105,000. So I put an offer in."
"Grandma's house" isn't a code word between my brother and me... He was talking about our actual grandmother's house.
It's a three-bedroom, two-bath house that's a mile from downtown Orlando. It has a huge backyard. It's the house my mom grew up in... I was bathed in the sink at this house. And it's where I spent my first 20 or so Christmases. Years after my grandmother died, when I was grown up, I rented the house from our family.
Five years ago, my mom sold the house for $285,000. The buyer probably spent $60,000 upgrading it... new bathrooms, new kitchen, new deck. And then the buyer lost it to the bank. Now the bank is asking $105,000. My brother just put his offer in.
The realtor told him, "I could rent this place tomorrow for $1,500 a month." Renting it is probably my brother's plan. But he will likely make substantial profits on the house, too, as it goes up in value someday...
The house is roughly 1,500 square feet, with a great lot. So if you assume $100-a-foot building costs, plus a $50,000 lot – that gets you to $200,000. In a good real estate market, it should be worth a lot more than that. So my brother doubling his money is not out of the question.
Stepping back and looking at the big picture, you can see it's finally happening in America. You knew it would someday. The real estate market is clearing. Banks are finally getting their real estate off their books... at any price.
Right now is the moment to make your deal. The time for extraordinary deals like this will pass... quicker than you think.
Here's another example...
"You're not going to believe the deal I just got," a friend here on the Florida coast told me yesterday. "I bought a three-bedroom/two-bath house close to the beach for exactly $100,000. It was a bank-owned property. The bank's original loan on it was something like $270,000."
The story gets crazier... He told me, "The guy who defaulted on the loan still lives in the house. He's paying me rent. I offered to sell the house back to him for $125,000 next year, and higher the next, and so on."
My friend got a great deal. And as he pointed out to me, "The guy who defaulted wins, too... He'll be able to buy his house back from me someday if he wants, for half of what he owed the bank – and it's a nice profit for me. It's crazy."
This is it. This moment, right now, is the bottom in U.S. real estate.
Deals like these only happen at the "V" bottom – the quick dip down and quick recovery at the very bottom. If you want one of these deals, now is the time.
They will NOT be advertised in your local newspaper. You have to seek them out. You have to make the offers on properties. You have to roll up your sleeves and dirty your boots. But it will be worth the effort... if you can swing it.
These are real deals I've described to you. They are happening, right now. I heard about these two in the last 48 hours, and I wasn't even asking these guys what they were up to.
In Florida, some banks are selling houses with $270,000 loans for $100,000. These two stories are proof. But trust me... You will not be able to buy houses for half of replacement cost much longer.
Those Fools... The Housing Bust is OVERMonday, December 12, 2011
"The bursting of the global housing bubble is only halfway through," The Economist magazine wrote recently.
I disagree...
Here in the U.S. at least, the housing bubble is completely over.
It drives me nuts when I hear commentators say, "We're halfway through," and, "We have more pain to come."
Here's the FACT: Right now, houses in America are the best value they've been in many generations. It's not hard to understand...
The Economist showed a chart of home prices relative to incomes in that article. Instead of showing that home prices are expensive, the chart shows that U.S. houses are the best deal in history (going back four decades), relative to U.S. incomes.
Now, how can The Economist have an article about the continuing global housing bust... and then show a chart showing U.S. homes are the cheapest in four decades?
To attempt to explain this, The Economist says, "Prices [in America] may have reached a floor, but this is no guarantee of an imminent bounce." Yes, that's correct. We can't know the future. We can't know if another 5% dip is in the cards. But c'mon...
We CAN know that extraordinary value exists right now in U.S. housing. You have the chance to buy fantastic properties at possibly once-in-a-lifetime prices.
So what if there's "no guarantee of an imminent bounce"? When do you get a guarantee like that in investing anyway?
Another gripe I have is that the housing price-to-income ratio – The Economist's measure of value – is actually understating the opportunity. People don't buy homes based on the price of the house relative to their income. People buy homes based on the mortgage payment of that house, relative to their incomes.
And right now, mortgage rates are off-the-charts low...
In 1980, mortgage rates were 15%. In 1990, they were 10%. In 2000, they were 8%. Today, they are BELOW 4%. It is the greatest deal in U.S. history.
Anyone who's ever bought a house knows that a 15% interest rate in 1980 is dramatically different than today's rates below 4%. Any measure of housing affordability over time that doesn't consider the mortgage payment is simply not that useful.
Housing prices are the best value in history, according to The Economist's own chart... And if you include mortgage payments in your calculation instead of house prices, U.S. houses are actually a dramatically better deal.
In short, now is the time to buy a house in America.
Look, I get it... Times are tough. Most people either can't or won't take my advice to buy a house. But it is the right advice...
The reasons to buy now are incredibly simple:
U.S. home prices are more affordable than ever – by far. (Here in my home state of Florida, prices in many cases are down by half.) Mortgage rates are down to record-low levels, below 4%.You can often pay below-market prices (as banks try to unload properties, for example).Of course, as The Economist says, there is "no guarantee of an imminent bounce."
But with prices this low and with very few other great places to put your money in our zero-percent world... if you can swing it, you need to consider buying a house.
If you can buy right, and hang on for a couple years, it could be the lowest-risk, highest-reward investment you ever make...
In America, the bursting of the housing bubble isn't halfway over. It's COMPLETELY over.
From: r
Sent: Wednesday, December 21, 2011 12:13 AM
Subject: Re: Comments - Week of Dec. 19
hard to chart neighbor-but was purchased for one mill in 2000, torn down, rebuilt bigger and better with 400K into a garage alone, and another million for the rest-
sales attempts started in 2007. My old place is a better graph-built in 1904 for 5K...sold in 96 for 650K, sold for 1.1 mill in 1999 (me), offered 2mill for it in 2004 and finally sold for cash at 1.45 in 2011-
the huge difference being the tear down/rebuild at the wrong time-many of these high end properties in Marin have sat for a long time.
On Dec 19, 2011, at 8:08 PM, mf wrote:
How many years ago was the price still at 2.1 million???
An interesting data point from my old neighborhood in Sausalito-my neighbor put home for sale at 3,350,000 three years ago, gradually whittled down in price-off market -on market, again and again. Last -to asking 2,350,000 and now just accepted 2,100,000.
MF
From: R
Sent: 19 December 2011 17:26
Subject: Re: Comments - Week of Dec. 19
here is some nice real estate for sale in china.
washingtonpost.com
On Mon, Dec 19, 2011 at 7:57 AM, Il wrote:
China's Real Estate Bubble May Have Just Popped
A Host of Factors Are Set to Undermine the Country's Economic Growth
Patrick Chovanec
December 18, 2011
foreignaffairs.com
On 12/19/2011 6:37 AM, r wrote:
An interesting data point from my old neighborhood in Sausalito-my neighbor put home for sale at 3,350,000 three years ago, gradually whittled down in price-off market -on market, again and again. Last -to asking 2,350,000 and now just accepted 2,100,000.
Looks brutal- I took all cash asking offer at 1.450,000 (made some $ despite and felt extremely lucky to have exited the market in July)
On Dec 18, 2011, at 8:22 PM, M wrote:
Checking the Knoxville Real Estate stats as I usually do.
Historically, about 10% to 12% of all homes are sold for cash.
But in November, a whopping 27.8% of all homes and condos sold for cash.
My data goes back to January 2000 - and this is a new record.
I don't know if this reflects conservatism or inability to get a mortgage to buy a home...
Avg. home prices have been relatively stable for the past 2.5 years at $172,000 plus or minus $3,000...
More later....
M
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