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??? Forget about the banks, who is the investor? They are the ones who make the decisions on the loan, most banks are merely servicers who act at the desires of the investors. The vast majority of loans are owed by Fannie/Freddie who have essentially a unlimited line of credit from the US Govt. Not a whole lot of time pressure there. Right or wrong, I don't see any flood of homes hitting the market, rather just continuation of what is already being done. The "flood" has been predicted to hit the market for years now.
The reality is right now foreclosures are WAY down YoY (-40%), probably due to the new law, but the reality is it is still down and is creating new supply/demand dynamics.
Foreclosures may be way down 40% but are homeowners who have stopped paying their mortgages way down 40% as well? That's the question you have to ask yourself. In fact, as prices continue to fall, the number of homeowners who stop paying their mortgages actually accelerates. How many underwater homeowners will keep paying their mortgages? At some point they all wise up and stop paying. Thus, there will indeed be a flood of foreclosures coming. The banks cannot keep non-performing loans on their books forever.
When you close off the dam, what happens? The water level rises and the pressure builds up. When you finally do open that dam back up, there will be a huge increase in the volume of water flowing through.
I agree with what you're saying, but the majority of the price drop has come 2+ years ago. Do you think a person who is already 100k underwater (and was 2+ years ago) really cares if it increases to 110k underwater, since those are the types of numbers we're talking.
Some people will stay and pay their mortgage even if it underwater for a variety of reasons. One of my coworkers is probably 150k+ underwater and he just did a HARP 2.0 refi down to 4% or so and he's not going anywhere.
I don't think there is any additional pressure then there already has been on foreclosure and people not paying their mortgages. HARP 2.0 will allow people to refi who couldn't before and that may stop some people from choosing to default. Also, 2012 is the last year you'll be able to walk away free from taxes on your short sale or foreclosure, unless they extend the law, which with the way partisan politics has been going so far, is up in the air if that will happen. That may cause short sales to increase this year, but if the law abatement does expire, that may cause more people to stay in their home.
Fundamentally I agree that less foreclosure != people started paying their mortgage. That said, people choosing to start short sale or foreclosure are a little late to the game. I expect we're closer to the end of pipeline than the beginning.
With foreclosure rates falling like a rock, that's constricting supply. I'm already seeing it in my neighborhood, homes are under contract in days. I'm sure many people will disagree, but I think it could cause prices to prop up or slightly increase, at least temporarily.
Also, I don't think when "flow behind the dam" does continue, it's not going to be a huge dump, regardless of that being every homebuyer's desire and every home seller's worse nightmare. The investors have already well learned to ration out the supply. The govt is backing most of these loans, so having them on their books longer isn't nearly as big of an issue as people seem to think it is.
I agree with what you're saying, but the majority of the price drop has come 2+ years ago. Do you think a person who is already 100k underwater (and was 2+ years ago) really cares if it increases to 110k underwater, since those are the types of numbers we're talking.
Some people will stay and pay their mortgage even if it underwater for a variety of reasons. One of my coworkers is probably 150k+ underwater and he just did a HARP 2.0 refi down to 4% or so and he's not going anywhere.
I don't think there is any additional pressure then there already has been on foreclosure and people not paying their mortgages. HARP 2.0 will allow people to refi who couldn't before and that may stop some people from choosing to default. Also, 2012 is the last year you'll be able to walk away free from taxes on your short sale or foreclosure, unless they extend the law, which with the way partisan politics has been going so far, is up in the air if that will happen. That may cause short sales to increase this year, but if the law abatement does expire, that may cause more people to stay in their home.
Fundamentally I agree that less foreclosure != people started paying their mortgage. That said, people choosing to start short sale or foreclosure are a little late to the game. I expect we're closer to the end of pipeline than the beginning.
With foreclosure rates falling like a rock, that's constricting supply. I'm already seeing it in my neighborhood, homes are under contract in days. I'm sure many people will disagree, but I think it could cause prices to prop up or slightly increase, at least temporarily.
Also, I don't think when "flow behind the dam" does continue, it's not going to be a huge dump, regardless of that being every homebuyer's desire and every home seller's worse nightmare. The investors have already well learned to ration out the supply. The govt is backing most of these loans, so having them on their books longer isn't nearly as big of an issue as people seem to think it is.
People who first went underwater 2-3 years ago kept paying their mortgages because they hoped that prices would turn around sometime soon and go up again, and they also thought it was the moral thing to continue to pay. As prices kept falling over the past 2-3 years, these people are now realizing what fools they've been to have continued paying their mortgages all this time and that prices will not recover anytime soon. Thus, after holding out for years and continuing to pay, they're finally fed-up and deciding to do the financially wise thing and stop paying their mortgages. They also see how other people have been able to stay in their houses for years rent free, so they decide that's not a bad deal. Eventually, almost no one who's underwater will continue to pay their mortgages. So even though the banks have been slow to foreclose (partly due to the new AB284 law), they will eventually come.
BTW, I wouldn't hold my breath waiting for these new re-fi's and principle reductions. All of the previous programs to do the same things have failed so why should this one succeed? It's not in the bank's interest to do re-fi's or give principle reductions. They'd much rather foreclose, sell the house, and get it off of their books. Especially since there are rumblings about new legislation that will force banks to mark to market value the assets on their books.
"As a Realtor in LV and a researcher into the biggest bank ponzi scheme ever perpetrated in world history I have an opinion on this topic. I completely agree w Dr Housing Bubble! The rents will have to come down. I have been advising my cash buyers to wait a little because the 80 k house of today will be the 65 k house this year. I also am not trying to get 1000 a month for a rental. don’t chase the market down and pay on the way. "
read the rest & other comments....very interesting
I agree. I read everything. Per the comments the consensus is that things will not improve anytime soon in Las Vegas regarding the RE/rental market.
People who first went underwater 2-3 years ago kept paying their mortgages because they hoped that prices would turn around sometime soon and go up again, and they also thought it was the moral thing to continue to pay. As prices kept falling over the past 2-3 years, these people are now realizing what fools they've been to have continued paying their mortgages all this time and that prices will not recover anytime soon. Thus, after holding out for years and continuing to pay, they're finally fed-up and deciding to do the financially wise thing and stop paying their mortgages. They also see how other people have been able to stay in their houses for years rent free, so they decide that's not a bad deal. Eventually, almost no one who's underwater will continue to pay their mortgages. So even though the banks have been slow to foreclose (partly due to the new AB284 law), they will eventually come.
BTW, I wouldn't hold my breath waiting for these new re-fi's and principle reductions. All of the previous programs to do the same things have failed so why should this one succeed? It's not in the bank's interest to do re-fi's or give principle reductions. They'd much rather foreclose, sell the house, and get it off of their books. Especially since there are rumblings about new legislation that will force banks to mark to market value the assets on their books.
Your analysis is spot on! If you bought a home for $360,000 in 2006 and it is now worth $180,000 (at best) and it is in a master planned HOA community that won't even allow you to grow spices on your windowsill the temptation to purchase a 1-acre ranch for $120K cash is mighty tempting. They'll never see their down payment again so it makes much more sense to start from scratch. Real Estate industry people saw this from the git-go. In case you didn't notice they were some of the first to bail. You will see a lot more people walk, meanwhile the inventory is languishing, all the government has done is added inches to the fuse.
"Tiger got to hunt, bird got to fly; Man got to sit and wonder, 'Why, why, why?' Tiger got to sleep, bird got to land; Man got to tell himself he understand."
I'm reviving this. Really enjoyed this tread. My guess, though I can't attest to the exact numbers. More foreclosures today are from people who can easily afford their mortgage payment, but are just walking away because of the devaluation. They are willing to take the ding on their credit to save $150,000.
I see it here in Fl, as I am on board of HOA. Not an income issue, just an investment issue. If this is the majority of the short sales and foreclosures, it seems we might have a long way to go on the supply end. But sales do seem to be moving now there in LV, as they are in Phoenix. But if there is a large supply holding back. It will end it. Anyone have actual credible numbers on this?
I only wish it were the Banks actually holding the loans and losing their shirts. It would be poetic justice at it's finest. As it stands now, the only losers are the people who did nothing wrong. The banks don't really pay a price, and the people who walk and turn around and rent or re-purchase for cash don't pay, except for a credit ding. It's the rest of us who have paid dearly for other people's folly.
I'm reviving this. Really enjoyed this tread. My guess, though I can't attest to the exact numbers. More foreclosures today are from people who can easily afford their mortgage payment, but are just walking away because of the devaluation. They are willing to take the ding on their credit to save $150,000.
I see it here in Fl, as I am on board of HOA. Not an income issue, just an investment issue. If this is the majority of the short sales and foreclosures, it seems we might have a long way to go on the supply end. But sales do seem to be moving now there in LV, as they are in Phoenix. But if there is a large supply holding back. It will end it. Anyone have actual credible numbers on this?
I only wish it were the Banks actually holding the loans and losing their shirts. It would be poetic justice at it's finest. As it stands now, the only losers are the people who did nothing wrong. The banks don't really pay a price, and the people who walk and turn around and rent or re-purchase for cash don't pay, except for a credit ding. It's the rest of us who have paid dearly for other people's folly.
I dont think you can say the banks didnt pay a price. They took astounding writedowns and their shareholders lost a ton of money. Many of the people involved lost their jobs. Did they all? Of course not, but they are a lot of people who helped inflate the bubble who were kicked out of the industry. And this applies to every corner of the housing industry in every corner of the country.
People may want blood and death to pay for past sins, but that isnt going to happen. It does no good really to say a B of A should have been destroyed over this. Their shareholders took a huge bath in share value and dilution, the constructive thing to do now is to find logical ways forward. Despite the hand wringing over this I think mostly the right things are being done.
Sure the foreclosure "overhang" could have been solved faster if the market had crashed faster and in bigger amounts, but that would have caused way too many distortions to others not even in the housing market. The way forward is clear now, its just a matter of when enough of the marketplace comes on board with this thinking and stops comparing today to the past. Much like homeowners need to stop thinking in terms of what their house was worth in 2006, everyone needs to stop thinking about what the housing market was for the economy in 2006 as well. The incessant chiding about what we have now isnt what we had back then does no good. If people started thinking 2010 was the beginning of time we would actually be on a path to a better place and quite frankly it would be closer to our current reality.
People may want blood and death to pay for past sins, but that isnt going to happen. It does no good really to say a B of A should have been destroyed over this.
Financial reforms? (...and I'm not referring to jacked up credit card interest rates).
I dont think you can say the banks didnt pay a price. They took astounding writedowns and their shareholders lost a ton of money. Many of the people involved lost their jobs. Did they all? Of course not, but they are a lot of people who helped inflate the bubble who were kicked out of the industry. And this applies to every corner of the housing industry in every corner of the country.
People may want blood and death to pay for past sins, but that isnt going to happen. It does no good really to say a B of A should have been destroyed over this. Their shareholders took a huge bath in share value and dilution, the constructive thing to do now is to find logical ways forward. Despite the hand wringing over this I think mostly the right things are being done.
Sure the foreclosure "overhang" could have been solved faster if the market had crashed faster and in bigger amounts, but that would have caused way too many distortions to others not even in the housing market. The way forward is clear now, its just a matter of when enough of the marketplace comes on board with this thinking and stops comparing today to the past. Much like homeowners need to stop thinking in terms of what their house was worth in 2006, everyone needs to stop thinking about what the housing market was for the economy in 2006 as well. The incessant chiding about what we have now isnt what we had back then does no good. If people started thinking 2010 was the beginning of time we would actually be on a path to a better place and quite frankly it would be closer to our current reality.
Though my post was more interested in the statement made on this thread about the banks withholding large numbers of foreclosures that were going to turn banks into landlords and in turn sell shares for this income. (Reits)
I will address your point. Though I do feel it is good for people to move on and not play the self pity game, I don't entirely agree with your thinking. First I need to correct you that "Many people lost their jobs". No, only a few lost their jobs. Most kept their job. Yes they had write downs, and got money back at tax time to prove it. The truth is they were gambling with other peoples money, and betting the house the junk they were selling would fail and go up in flames because it was garbage. They knew it and they didn't care who would suffer from it.
I think that turning the other cheek, and accepting the unacceptable is bad for our society. I do not think people should forget about what happened. Such complacency only allows for these banks and Wall Street to do it all over again. (which they are)
Yes, I agree with you, the shareholders suffered. The shareholders suffered, and the rest of our society suffered. Were not talking about a correction here. Were talking about losses well in excess of gains during those last four or five years in real estate, and peoples livelihood taken from them and some families literally being put out into the streets. I think it would be very wrong to forget that. We should be outraged. No accountability only leads to more bad behavior and gives companies further license to continue their unethical behavior.
Saying move on to a better place is well and fine, but not without wanting and demanding serious reform to insure it never happens again.
I really only wanted to know about the other posters claims as to what will be done with the inventory back log. Got a little off topic.
Last edited by modhatter; 03-26-2012 at 09:50 PM..
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