Maine Real Estate Sales in January - Not a pretty picture (Lubec: foreclosed, mortgage broker)

[WhoFanMe]

Wow, I was hoping to stimulate some conversation - this is by far the most prolific thread I've ever started. There are lots of good points made and I'm looking forward to more. Thanks everybody.

[rossco17]

Originally Posted by mainebrokerman

you cant just blame the banks,, say a bank approved me for my million dollar dreamhouse,,,THAT DOESNT MEAN I WILL BUY IT,,,(if i couldnt afford it)
especially, on an ARM,,,knowing the rates will go up significantly,,

yes the banks were too lenient in loaning monies,,,but at the same time,,,what responsible person,,,will buy a house,,that they cant afford??
knowing thier payments would increase down the road (on an arm)

personal responsibility does play a part in this..

I consider myself and my wife responsible people when we bought our house 4 years ago. It was our first house and, around here at least (DC), young famliles generally don't live in their first house longer than 4-5 years. We considered that average and bought a house on a 5/1 ARM primary loan, with a HELOC for a major portion of the down payment. Both loans interest-only. We couldn't afford the house we wanted doing it the traditional way.

My thought is that if you're not buying your 'forever' house, why dump a lot of money into the principal?? I'd much rather have that money each month to put towards home improvements or other investments. I'll wait until i buy a house i know i'm going to be in for a long time to really put my money into a down payment and monthly principal payments.

Our plan worked nicely. We are selling now, 1 year before ARM maturity and walking away with a substantial profit for our next down payment (in Portland, ME area), our planned 'forever' house.

NOW, i would never do this in today's market... with home values dropping, it's just too dangerous (even if a bank would approve it). we timed it right and got lucky. i'm happy we did it.

[contented]

hey WFM.........excellent thread u started. may i ask, are there any statistics pertaining to raw land only?

[WhoFanMe]

Originally Posted by contented

hey WFM.........excellent thread u started. may i ask, are there any statistics pertaining to raw land only?

Thanks contented. Unfortunatley no, the Maine Real Estate Information System, Inc. only tracks existing single family homes, much like the retailers publish same store sales. An agent could pull that research together for you, if you had a specific area and time frame that you were looking for.

[Northern Maine Land Man]

rossco17,

You are indeed blessed. about 95% of the people who took that gamble lost a whole lot of money.

-break-

contented,
The value of raw land depends on many things such as access. Is it on a paved year round road or back in the woods on an old logging road? Has it just been harvested or is there mature wood on the property? Is it on high ground with a view or is it a swamp? Can you get high speed DSL there or is it "back of beyond" where you can't even get cellular service? Does it have an attractive feature like waterfalls on the property or is it flat ground? Is it a 3 acre lot or a 23,689 acre lot?

That's why land sales are not often reported. There is an average house, but there is no average land.

[contented]

thx WFM and NMLM...........i see the difficulty of obtaining useful information relating to land sales.

preciate u putting the time into it...........

[Submariner]

Currently in my township I see raw land here going for $350 per acre up to as high as $1700 per acre.

I can think of three places nearby. 350/acre, 950/acre, and 1700/acre.

[Northern Maine Land Man]

When a house goes into foreclosure the neighborhood suffers. Nearby homes decline in value. Nearly all home buyers have mortgages backed by the federal government. When the house is foreclosed upon the bank takes possession. Then the bank has two options; sell it themselves or go to the feds and get their mortgage insurance. In this market the banks are going to the feds more often. The government pays off the bank and takes possession of the house. The bank goes merrily along loaning more people money to buy houses.

When government takes a house in Maine the property becomes a "HUD house". The government posts no trespassing signs on the house which further reduces the value or "curb appeal". Then they try to list it with a broker. Eventuallythey find a broker who is not too busy and bury the broker with paperwork and reports. The price of the house will drop on a regular basis until somebody eventually buys it or the town condemns the building.

The former owner does not get away free. He still owes what he owed when he lost it. The feds never quit. This will haunt him for life or until he pays the government. Filing bankruptcy will not make the government go away. This debt is like a student loan. It is there until paid in full.

Five years ago, mortgage brokers and unscrupulous lenders were passing out NINJA loans like candy. A NINJA loan is "No INcome No Job. The feds have cracked down on that practice. They also cracked down on the "no money down and lend 125% of home value" scams. I think we are headed back to the time when banks are going to want a home buyer to have 20% down before he could buy. That's the way it used to be.

[maine4.us]

Thanks NMLM. I have a house next door to be that I think will soon be in foreclosure. The guy bought it and intended to flip it. He bought too late in the current slump to do so. I hope your description doesn't follow here, but in Florida, all bets are off right now on real estate. They had an ad in today's paper about 25 riverfront condominiums being sold, highest bidder wins, and no reserve. That's how bad it is down here.

With the cost of housing, I doubt if the banks will ever get back to the 20% rule, most people I know don't have 40K to put down on a house. The cost of living and relatively flat wage increases have stripped away a lot of buying power here. The only people who will bail Florida out now are the people from away, who are cash buyers. The locals are tapped out so to speak. Our school was just donated all the office equipment and supplies from a large recently successful mortgage company. They gave us everything. They even gave us the phones, which we can use in our system.
It is a sad time here in Florida in the housing market. It's what's keeping me here in Florida rather than being in Maine.

[Northern Maine Land Man]

The situation that exists presently in Florida is going to become nation-wide in May. That's the month when the greatest number of variable rate mortgages reset. I'm not talking about a rate adjustment. I'm talking about a complete refinance. Millions of homeowners are upside down on their mortgages. That means they owe more today than the property is worth.

The chickens come home to roost in May. That's when the banks will take a hard look at the job, income, present debts and debt equity ratios of homeowners when they apply for a new loan. The days of the NINJA loans are over. That was the "No Income No Job" loan.