I post on the board sometime, but I've created a new name because I don't have Shelly's backbone and I don't want to be harrassed.
Most everything I here are real estate horror stories. Foreclosures, dropping housing prices, huge inventories, but by far most of the posts in the forum are positive - with the exception of Shelly who gets pounded by most everyone for being, in my opinion, too much of a realists.
My thing is that it seems to me most everyone who posts regularly in this section, most often, most positive, etc. have stake in the real estate game, either investors, realtors, developers, business owners all of which have strong personal interests in a strong real estate market or at least of the perception of an improving market.
I am leary these days of asking investing advice of anyone who makes a living in the real estate market. Car salesmen will always tell you its a great time to buy.
Hey. The market is AWFUL. It's the worst real estate market since the great depression, and how could anyone with straight face say it's a great time to invest in real estate unless you have the money and intention of holding on to it for many years.
So, my question is this, by a show of hands, and in the interest of full self disclosure, how many of the frequent posters on here, including the webmaster, have a personal interest, whether through themselves or there spouses, in real estate to include realtors, developers, homeowners with property currently on the market, marketers that advertise real estate through print or the web so that those of us who are have no interest can know who is being completely unbiased and who may have other motivations for constantly wearing their rose colored sunglasses at night.
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Beach Fanatic
I'm against the government bailing out any businesses or individuals who risked it all. Too many of the mortgages are...shall we say...garbage at worst and "questionable" at best.
All this talk of "buyouts" and "handouts" and "rate increases" are only postponing the pain and unfairly dumping more debt on future generations.
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But you also know they are not going to let it happen this year.
SoWal Insider
But you also know they are not going to let it happen this year.
No, they'll just pass the bill along to that cute little tike in your avatar.
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Beach Fanatic
Prices are down or are heading down towards 2001 levels. People that have to sell will sell, lenders will write off losses, property taxes and insurance costs get slashed in line with the decreased property values, some go belly up and some don't, the government does whatever the government is want to do, people buy because the holding costs are more in line with rental rates and personal income and the market will have resolved itself. As for China .... I believe it is preparing to host the Olympics. BTW, a study came out today saying global warming will diminish the number of U.S. landfalling hurricanes. I kid you not.
SoWal Insider
I'm against the government bailing out any businesses or individuals who risked it all. Too many of the mortgages are...shall we say...garbage at worst and "questionable" at best.
All this talk of "buyouts" and "handouts" and "rate increases" are only postponing the pain and unfairly dumping more debt on future generations.
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I was speaking only of bailout of mortgage insurers. The insurers on the whole followed Fannie/Freddie guidelines. The Banks underwrite the loans, (sold on secondary to Fannie) subject to MI approval. Matter of fact, most Banks had MI companies underwrite the entire loans on their behalf.
If MI companies fold, it trickles right down to Fannie and Freddie, and it becomes the gov'ts problem anyway. Without mortgage insurance, you step back in time to the Depression era. IF, and I say IF with great hesitancy, MI companies folded, they would have to intervene anyway.
I don't agree with Kramers plan to sell shares to Warren Buffett, but it is entirely possible to sell MI back securities. Also, lower the LTV to 75% instead of 80% and increase rates in 5% increments as they are done now. Mortgage interest rates are at historic lows, housing prices are down. An increase in MI rates shouldn't impact someone's payment that significantly.
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Beach Fanatic
I don't see 2001 housing prices happening again because that would put them significantly under current rental rates. And the BRACiness is going to spill over to Freeport and west of Sandestin to some degree- there's a decrease in the amount of base housing at a time when they're increasing personnel, and not everyone is going to want to go to Midway or north Cresview to find a place to live.
So while prices may still have a little to drop, the under $350K segment stabilizes somewhere around early 2004 prices.
I can't see insurance costs going down. Replacement costs don't always have much to do with market prices, especially when market has so much to do with land costs.
So while prices may still have a little to drop, the under $350K segment stabilizes somewhere around early 2004 prices.
I can't see insurance costs going down. Replacement costs don't always have much to do with market prices, especially when market has so much to do with land costs.
SoWal Insider
I don't agree with Kramers plan to sell shares to Warren Buffett, but it is entirely possible to sell MI back securities.
The way I heard Cramer explain it yesterday Buffett would pick up the Muni's only--the U.S. taxpayers would be stuck with the toxic mortgage crap.
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Beach Fanatic
After name and address, replacement cost is the first inquiry of every property insurance agent with whom I've done business. I've never been asked the cost of the dirt. During the height of the frenzy, building costs were probably 20 to 30% higher than today. Rates are determined by risk assessment ... the cheaper to replace the lower the risk. If you pay $800,000.00 for a 2400 sf house, you probably don't need a million bucks worth of insurance. Call your agent and see what your rates are if you lower your replacement costs by a third. You'll also have more carriers willing to underwrite more policies because of the reduced risk of loss, creating competition. It may take some time for people to reduce the amount of their coverage, but it will happen as housing prices and construction costs fall.
Beach Fanatic
The homes below $300,000 are already selling pretty well. I showed property today to a couple from Virginia and they were shocked at how much the prices had fallen. They said that homes where they were from in Virginia were pricier than many they saw today. They are wanting to get a place here and both of their sons are looking to buy also.
SoWal Insider
The homes below $300,000 are already selling pretty well. I showed property today to a couple from Virginia and they were shocked at how much the prices had fallen. They said that homes where they were from in Virginia were pricier than many they saw today. They are wanting to get a place here and both of their sons are looking to buy also.
Why do you think there's no interest in homes above $300K? And what were those presently-priced < $300K homes selling for in '05?
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Beach Fanatic
I would have to check those prices in 2005 Shelly. Obviously people in that price range have been needing to be able to get into a home and now they can. The $500,000+ range is not moving too well. Obviously most people are trying to time the market and don't think it's bottomed yet. Gotta run. I will touch on it again when I get back.
SoWal Expert
I would have to check those prices in 2005 Shelly. Obviously people in that price range have been needing to be able to get into a home and now they can. The $500,000+ range is not moving too well. Obviously most people are trying to time the market and don't think it's bottomed yet. Gotta run. I will touch on it again when I get back.
Your posts suggests that those homes priced below $500K, are outperforming those price greater than $500K. However, during the last six months of sales of single family detached homes in SoWal, not including the area from Sandestin to Okaloosa County, 43% of the 77 sales were priced less than $500K. The remaining 57% of the homes sold in that area sold for more than $500. I do note that the $300K-350K range has been one of the hotter ranges for sales price, but to get a true feel, we need to look at the whole picture.
SoWal Insider
The way I heard Cramer explain it yesterday Buffett would pick up the Muni's only--the U.S. taxpayers would be stuck with the toxic mortgage crap.
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I wasn't including the mortgage backed securities firms or Banks, just discussing a possible scenario if mortgage insurance companies like MGIC keeled over. The MBS and Banks need to take their licks. BTW, what a lot of people don't know is that Banks profited substantially off of mortgage insurers peeling off more than 40% off premiums without any recourse.
I was suggesting a Mango plan IF say MGIC folded, because if they did, you know the rest are all in line. Use part of the $145 billion or so from economic stimulus plan to buy mortgage insurers, then resell shares as a federally backed security like mortgage bonds. Of course, like I said, I don't suspect MGIC to fold, but we can't go back to the depression era ways of 50% down payment and 5 year loans if this did happen. There wouldn't be a home market at all.
Cramer likes Trump, no wonder I keep calling him Kramer. Must be thinking of Seinfeld because I don't take him seriously. At least he entertains me with his loony pro Wall Street rants.
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Beach Fanatic
No, they'll just pass the bill along to that cute little tike in your avatar.
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That is too bad but seems to be the way life goes. Our government has been passing the buck since I was his age. We are eventually all going to have to pay but it will not happen this year. Election too close.
SoWal Insider
Use part of the $145 billion or so from economic stimulus plan to buy mortgage insurers, then resell shares as a federally backed security like mortgage bonds.
I don't agree with US Taxpayers buying out shareholders of these homeowers mortgage insurance companies.
I don't get it, the US taxpayers would essentially be buying a big bunch of RISK....what "shares" are they going to sell? The revenue stream from the homeowers insurance premium? And if the homeower defaults, that means that the taxpayer not only (1) paid out for the company; but also must (2) pay out to the holders of the defaulted mortgage insurance bond; (3) pay the lender for the missed payments.
Fannie & Freddie have their own shareholders...let them deal with it themselves.Let the company go bankrupt, let the shareholders take it in the shorts; and sell off any assets to Abu Dhabi for 2 fils on the dollar.
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SoWal Expert
Insurance... that brings up another good subject. When someone defaults on their payments, they are likely to also cancel their insurance for that property. Does the lender then buy insurance for the home until they can get if off their books? That could be dangerous if they don't, and hurricane season is harsh.
SoWal Insider
I don't agree with US Taxpayers buying out shareholders of these homeowers mortgage insurance companies.
I don't get it, the US taxpayers would essentially be buying a big bunch of RISK....what "shares" are they going to sell? The revenue stream from the homeowers insurance premium? And if the homeower defaults, that means that the taxpayer not only (1) paid out for the company; but also must (2) pay out to the holders of the defaulted mortgage insurance bond; (3) pay the lender for the missed payments.
Let the company go bankrupt, let the shareholders take it in the shorts; and sell off any assets to Abu Dhabi for 2 fils on the dollar.
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OK, but then who would insure mortgages? Were not investors who bought shares of the enterprises taking risks? or when you buy a bond, there is a risk of losing yield due to inflation etc. Fannie and freddie would in essence then have to set up their own self insured programs if mortgage insurers failed.
Yes, they have their own shareholders, but remember, they are also government sponsored. They're neither fish nor fowl. You buy risk when you buy one of the enterprises, however people feel since the agencies have special priviledges, that that risk is limited figuring the govt. would intervene. Serious consequences domestically and globally could arise if these agencies start taking it in the pants too deeply. They account for a majority of the loans purchased. They were designed to encourage home ownership and it is part of their charter.
If the Office of Federal Housing Enterprise Oversight (OFHEO) established 14 years ago to ensure taxpayers would never have to pick up the tab in the event of failure at Fannie Mae or Freddie Mac, did their jobs, they would have intervened prior to this fiasco and restricted some of the risk Fannie was taking, ie, buying subprime mortgages, doing these risky ALT-A loans. Freddie is poised to handle a 10 yr. meltdown, but Fannie isn't.
The housing sector could be crushed without these agencies and add to an already economic mess. Agencies or mortgage insurers go south, believe me the government is going to have to intervene someway, somehow and who is going to pay? taxpayers one way or another.
You asked for comments above regarding MGIC. My ascertations may be wrong, but you got it. Be careful what you ask for.
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SoWal Insider
Insurance... that brings up another good subject. When someone defaults on their payments, they are likely to also cancel their insurance for that property. Does the lender then buy insurance for the home until they can get if off their books? That could be dangerous if they don't, and hurricane season is harsh.
Yes they do at a hefty premium too I might add. :shock:
That's for a private home. Condos and townhomes that buy commercial policies have their HOA get stuck with covering defaulted dues.
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SoWal Insider
The housing sector could be crushed without these agencies and add to an already economic mess. Agencies or mortgage insurers go south, believe me the government is going to have to intervene someway, somehow and who is going to pay? taxpayers one way or another.
The mortgage industry plunged the knife in with their "magic" 80/20 piggybacks, which abolished the need (and resulting revenues) for traditional mortgage insurance companies.......and the non-existent underwriting standards of the lenders twisted the knife--and now they're both surprised and concerned that the agency is bleeding out??
But all these problems with credit and mortgage and insurance will be fixed by this Spring's RE Blowout....right?
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SoWal Insider
The mortgage industry plunged the knife in with their "magic" 80/20 piggybacks, which abolished the need (and resulting revenues) for traditional mortgage insurance companies.......and the non-existent underwriting standards of the lenders twisted the knife--and now they're both surprised and concerned that the agency is bleeding out??
But all these problems with credit and mortgage and insurance will be fixed by this Spring's RE Blowout....right?.YES! :lie:
Fannie and Freddie got greedy. I remember when they did not charge a premium for a 1st mortgage that had a piggyback up to 90%. Eventually they wanted these revenues to offset risk, and charged premiums for combos, ie: 75% first/ 15 seconds etc.; Statistics show that if someone starts to deteriorate financially, they may stop payments on the equity line first vs. the first mortgage.
Then with low HELOC rates in place, people wanted piggys in lieu of MI because 1) MI WAS not tax deductible, 2) getting MI removed at a later point could prove to be difficult. Banks could ask that the LTV be 75% for removal vs. not being required to purchase it if you put 20% down. Further, quite a few LO's didn't utilize some of the MI programs that were available like refundable policies because they didn't grasp it. Instead they did straight monthly premiums with no initial outlay of cash.
People were betting their houses would appreciate significantly enough, and MI companies have caveats that you can not remove it for a certain time period regardless of LTV.
***Now more than ever MI is making a comeback and finally going to be tax deductible up to 100K in earnings with it lessoning gradually to 0 deduction up to 110K income (insert it's about dang time smilie)
Homeowners will not be subject to payment swings vs. a HELOC.
http://www.privatemi.com/news/media/20070417.cfm
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