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  #1  
Old 02-14-2014, 03:55 PM
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Real estate on the rebound

Or rather ... foreclosures are rising up, rising up, rising up (my fair lady)...

Foreclosures Rise Sharply? | timiacono.com

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Old 02-15-2014, 03:40 AM
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Uh oh
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Old 02-15-2014, 07:26 AM
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Quote:
Originally Posted by spdrun View Post
Or rather ... foreclosures are rising up, rising up, rising up (my fair lady)...

Foreclosures Rise Sharply? | timiacono.com
title to thread is misleading.
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Old 02-15-2014, 09:36 AM
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Given the vast horror story that the Bush administration jump started, it is not surprising that there will be some months where foreclosures show spikes. Even given that, and according to the questionable graph at the link provided, a 40 month long trend shows a ratio of 37:3 and helps to explain the term "recovering economy."
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Old 02-15-2014, 10:16 AM
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Bush's fault! Problem solved. Or was it Americans who bit off more then they could chew? Or was it bankers packaging crap loans with good ones and selling in bulk? Or was it Congress easing restrictions and looking the other way? No! It was George Bush. Nice and easy solution.

Banks probably accelerated their foreclosures after Christmas was over and the new year began.
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Old 02-15-2014, 10:30 AM
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Very few bank sales or active foreclosures in my area. RE is in fact coming back nicely. I took a piece off the market after a sale fell through 6 months ago and am quite happy I did. Relisted it and am saying no to offers 15% higher than what I'd originally listed it for.
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Old 02-15-2014, 08:38 PM
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Foreclosures can take years to work their way threw the system. I have bought a few that were foreclosed on in 2009/10 and are just now getting to the point of being sold.

Overall at least in my area the RE market is on the upswing, and I expect it to be so on another roughly 7 year cycle. Over the next few years I expect the following forces to impact the market.

1. More buyers will enter the market driving resale prices up.
2. The supply of foreclosures and storm damaged houses is waning, the drying up of this supply will put more upward pressure on lower priced houses.
3. More "investors" are getting back into the market.
4. Interest rates will rise significantly over the next decade.
5. The rental market will continue to be strong and as prices and interest rates start to rise will strengthen.
6. Thanks to the Dodd-Frank act lending is tight. As a result many people will be priced out of the markets, or simply unable to enter them, and this will act as an overall brake on the markets.

2014 is shaping up to be a good year to be in real estate, I'm quite exited about it. I was just talking about it today with my partners, I have not been this excited in a couple of years to be in this business. I beleive their is a narrow window or a perfect storm if you will for people in the right position to greatly increase their rental holdings without much competition, and thanks to the Dodd-Frank act and a raising interest rate environment enjoy fantastic returns for the next decade. On the resale new home construction side; prices of land acquisition are still reasonable for the time being and construction costs are still depressed, but resale is strong and getting better. I'm seeing a slight push on the land acquisition side for increased prices but no real movement as of yet. But on the resale side I'm seeing a 10%-15% increase over last year which is very nice.

My tactic right now is to add inventory as quickly as possible; buy land now before prices increase. I'm also shopping storm damaged tear downs, and foreclosures while those last. I suspect in 12-18 months that market will be pretty much dry.
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Last edited by Hatterasguy; 02-15-2014 at 08:50 PM.
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Old 02-15-2014, 08:45 PM
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Is CT that different from NJ? The supply of foreclosed homes in NJ (both REO auctions and Fannie Mae marketing via HomePath) seems to be at a 3-year high. Basically, we're having foreclosures from 2010-2011 finally show up on the market as REOs, and there are a lot of deals to be had.

My other market of interest, San Diego, went up about 30% in the last year and a half, but is now stuttering and spluttering again. Not that prices have gone down yet, but more short sales and REOs are showing up, banks are starting to foreclose on non-payers once again (this was basically frozen for a year), and any sense of urgency to buy has gone by the wayside.

Last year about this time, you'd have 5-10 offers on a property two days after it came on MLS. Now you have properties sitting for 30-40 days, with several price drops before anyone bites. Hopefully, this will portend a 20% correction in that particular market before it starts rising again.

As to speculators who were banking on a rise in prices to 2006-7 levels and a quick flip rather than steady income from rental, I'm not feeling terribly sorry for them.

BTW - here's an article about CT. Doesn't look great either, though if you play at the high end rather than the lower-middle-class end, things might be better off there...
http://articles.courant.com/2014-02-13/business/hc-foreclosure-january-realty-trac-20140213_1_foreclosure-numbers-foreclosure-filings-foreclosure-documents

As to your #5 -- why would prices rise if interest rates go up?
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Old 02-15-2014, 08:53 PM
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Foreclosure activity in CT is concentrated in certain areas, Fair Haven for example.

These are not new foreclosures either, these are houses that have been in process for years, the banks are finally working them out. I'm tracking a number of properties that I have been trying to buy from banks for years with no luck. Eventually they get listed and sold.

Since new years I have been bidding on oh probably 6 or 8 houses that were tear downs but bank owned. I was outbid on all of them but one. Multiple offers, above asking is normal. Last year that was not the case, I could come in with an insulting offer and get it for that.

As for 5 rising interest rates and the cost of housing will force more people to rent. This will be good for us.
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Old 02-15-2014, 08:55 PM
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Originally Posted by Hatterasguy View Post
Foreclosure activity in CT is concentrated in certain areas, Fair Haven for example.

These are not new foreclosures either, these are houses that have been in process for years. The banks are finally working them out.
How long does it take in CT on average from notice of default to the house showing up as an REO?

As to #5, higher interest rates will price owner-occupants out of the market, so competition from them would be reduced. Also, higher interest rates make real-estate less lucrative as compared to other investment vehicles. Therefore, some investors would move to other vehicles, again reducing competition. Why earn 6% from a rental if you can do the same in a money-market account without lifting a pinkie?

High rates plus tight credit (Dodd-Frank) do not portend higher prices in future. This isn't to say investors shouldn't buy. But they should seek at least an 7.5% pro forma cap rate, if not closer to 9%. Also, lock in a rate for at least 7-10 years, 30 if possible. No two year or five year resets if you can avoid that.
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Old 02-15-2014, 09:00 PM
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Not sure I don't follow foreclosures that closely. All I know is from title search's its not unusual for me to see the bank serve them in say 2007/8, take ownership in 2010, and finally sell it in 2013, or latter...

The banks are so screwed up and back logged its silly, also a lot of times the mortgages were sold so many times its confusing to follow the trail. I suspect some companies have houses they don't know they own.
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Old 02-15-2014, 09:04 PM
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(!) 6 years -- that must be a new record.
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  #13  
Old 02-15-2014, 11:15 PM
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That's how much of a mess the system was/is. I can't even begin to imagine how bad it is in FL or AZ where they really had a big problem.

I have one house now I have been following for two years. I still don't know who actually owns it. I know a couple of guys in the midwest who rehab and rent them before they close on them with the bank. The bank is so screwed up they never catch on.

On the other extreme you have healthy banks who don't have many or any foreclosures on their books and they are choking on cash. Thanks do the new regulations they have to make their money threw new fees or stuff money into companies that work.

The gov has made a mess of the system.
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Old 02-15-2014, 11:21 PM
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Originally Posted by Hatterasguy View Post
I have one house now I have been following for two years. I still don't know who actually owns it. I know a couple of guys in the midwest who rehab and rent them before they close on them with the bank. The bank is so screwed up they never catch on.
Interesting model -- though it seems like a hell of a risk if ownership is screwed up and the bank can't/won't sell it. They might be out a lot of money for work if they can't recoup it with a few years' rent.
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Old 02-15-2014, 11:25 PM
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Its the risk they take, but according to them they haven't got burned yet and make a killing so whatever they keep doing it. I wouldn't.

Were talking about $25k houses that are worth $80k+/- when done, and I think the rent is a bit over $1k a month, so the returns are pretty good. $25k to buy, $25kish to rehab, $1k rent and $30k equity for the company. Sound deal really.

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