"4 weeks and then all hell breaks loose"

[Geotpf_IHB]

Look at the first comment at this Jim the Realtor post

Also heard today from a well connected realtor…only does foreclosures… 4 weeks is the timeline….then all hell breaks loose.

(apparently Jim turned off comments after getting too many flames recently, or I'd just post there)

I would normally dismiss this as more of the same "the flood of REOs would be here any day now" talk we've been hearing for months, but on Thursday, I happened to pop in to my Realtor's office on a whim just to chat, and he said the exact same thing. The coincidence was stunning.

So my question to you all is-has anybody else heard anything similar in the past few days? Is there really a flood of REOs that will hit in almost exactly a month?

 

[tmare_IHB]

I don't know about that, seems like a lot of wishful thinking on the part of several realtors on the site you linked. I do know that things are weird out there. It seems that something big should be happening soon but there's been so much manipulation of the market by the government that it is hard to say exactly what. It's just really hard for me to imagine how things can possibly get better with the job picture as it is. Will a "flood of foreclosures" bring people out to purchase or will this just be another little "bump" in sales as prices continue to drop. I don't know.

 

[graphrix_IHB]

Mmmm... here are my thoughts from the ears on the ground experience. The banks have a backlog of about 8000 homes in OC that are REO (over 10 months of inventory at the average of the last six month sales pace), or have become REO in the last three months. The REO sale to foreclosure ration proves this. REO inventory on the MLS is super low, and while demand has waned a bit, it could absorb a small flood. Here is the rub, the banks that are well capitalized can dump these properties at market value since they have marked to market their value already, but the banks that can't afford to mark to market their REO portfolio will be reluctant to do so (think Corus bank). Now... the banks have a huge backlog of NTSs, and the ones that are well capitalized will dump them to investors at the auction, the under-capitalized banks will hold them on their books for "their" mark to market value (think sh*tty Citi Bank) to maintain their tier 1 capital ratio. Now... there are several vultures circling around this mess, and while they may help absorb the REOs, they will flood the rental market. There is going to be a serious increase in foreclosures in the next six months, and investors at the auction will be fighting for the good deals, because the under-capitalized banks will not be willing to mark to market their properties. However, this will provide further opportunity in the future for investors at the auction and the vultures of bulk properties.

 

[awgee_IHB]

I watch the Coto de Caza market fairly closely

There are approx. 140 homes for sale in Coto.

There are approx. 100 homes either in some stage of the foreclosure process or already REO, but not on the market.

By looking at the amounts owed on the NOD and the LTV, it is fairly easy to determine which properties will go all the way to auction and which will pay off the amount in default and be rescinded.

All of the homes which have received a NTS will go to auction eventually, and presently the average number of postponements is 4. When I say all, I mean 100%. The inevitable is being postponed with payments not being made and folks living in homes for free.

85% or more of the homes with a NOD will eventually go to auction.

It does not matter if it is one month or one year or two years, the number of foreclosures in Coto will overwhelm the real estate for sale market.

It cracks me up when I read posts saying how IR, Graphrix, and others are exaggerating the number of foreclosures coming because prices in Irvine are holding up or the coming wave has been talked about for so long, or whatever. If they took an hour or two and looked up the numbers for themselves, they would know rather than speculate.

Anecdotally, what I see happening is way worse than the numbers. We talk with folks, regular folks just like us, who are telling us they have not made a house payment in seven or eight months, and although they receive phone calls and letters, they have not received any official foreclosure notice such as a Notice of Default. None of them qualify for a loan mod, nor do they want one except to maybe stay in the home longer without paying anything. I do not know or have good evidence on how many homes are more than 90 days late on payments, but have received a NOD, but I will estimate it is four times the number of NODs.

 

[no_vaseline_IHB]

While we are on the topic of "things are a-changin' round here"....I've been following this one VERY closely because its in my neighborhood (and I knew the folks who lived there).

http://www.redfin.com/CA/Orange/365-N-Park-Ln-92867/home/4398507

365 N Park Ln

Orange, CA 92867

Price: $435,000

Beds: 3

Baths: 2

Sq. Ft.: 1,730

$/Sq. Ft.: $251

Lot Size: 6,000 Sq. Ft.

Property Type: Single Family Residence

Style: Other

Stories: 1

Year Built: 1956

Community: Orange & Garden Grove, East of Harbor, North of 22 Freeway

County: Orange

MLS#: S583762

Source: SoCalMLS

Status: Active

On Redfin: 2 days

Jul 30, 2009 Listed $435,000 -- SoCalMLS #S583762

Jul 07, 2009 Sold $360,253 6.7%/yr Public Records

Oct 14, 1998 Sold $180,000 -- Public Records

This home actually sold at auction in May 7 for the July 7 price (thanks Graph) but this is a lighting fast turn around. Why somebody thinks its worth $65K more for the trouble of cleaning the toilets (the PO didn't trash it, and even cleaned on the way out) I don't know.

 

[laderarenter_IHB]

I too have studied the coto housing market, as I am looking to buy a home in the 1 to 1.5m range. Its interesting to see the denial (mostly by Realtors) on the amount of distressed homes out there (people not making mortgage payments, not paying their real estate taxes - you can see this on oc tax collector site, or having an NOD or NTS) - The number of trustee sales getting postponed every 2-4 weeks is interesting if not disturbing. I would assume that most people on this forum would tell me to wait another 6-9 months, as there should be a flood of REOs coming into the market, which is what I plan on doing.

However, I do have this fear that some govt stimulus money would be used to write-down/modify many of these +1m debt holders, and allow banks to remodify loans to 2% interest or writing down hundreds of thousands of debt. The reason I fear this is why do the banks keep post-poning the inevitable? What are they waiting for - another gov't infusion of money to help write it off?

Well - at least the consensus that there is way more distressed homes out there confirms my beliefs as well. Its still crazy to see how many home owners are trying to list homes at the $400 sq ft range, and to be honest, I do see on occasional foolish buyer grab up a home at that price range about - one a month. I have a brokers license on the side, so I do my own searches on the MLS. The amount of B.S. that brokers spew would make a used car salesperson blush. How can they talk about stabilization on the mid to high end when unemployment and business revenue continues to get worse, and is beyond what anything Californai saw in the early 90s.

People really think that this market will 'bounce' back to its 10-20% appreciation levels in the next year or so. (Why else but to explain the rush of investors at the auctions for the low end)

just my thoughts, but if anyone has further insights on Coto de Caza, I would appreciate it, as we would like to move there, but want to get the most for our $$ at the $1m to $1.5m range.

Thanks

 

[Anonymous_IHB]

Ever notice that the short foreclosure supply and the banks paying back govt money by raising capital just happened to occur around the same time?

 

[awgee_IHB]

I too have studied the coto housing market, as I am looking to buy a home in the 1 to 1.5m range. Its interesting to see the denial (mostly by Realtors) on the amount of distressed homes out there (people not making mortgage payments, not paying their real estate taxes - you can see this on oc tax collector site, or having an NOD or NTS) - The number of trustee sales getting postponed every 2-4 weeks is interesting if not disturbing. I would assume that most people on this forum would tell me to wait another 6-9 months, as there should be a flood of REOs coming into the market, which is what I plan on doing.

However, I do have this fear that some govt stimulus money would be used to write-down/modify many of these +1m debt holders, and allow banks to remodify loans to 2% interest or writing down hundreds of thousands of debt. The reason I fear this is why do the banks keep post-poning the inevitable? What are they waiting for - another gov't infusion of money to help write it off?

Well - at least the consensus that there is way more distressed homes out there confirms my beliefs as well. Its still crazy to see how many home owners are trying to list homes at the $400 sq ft range, and to be honest, I do see on occasional foolish buyer grab up a home at that price range about - one a month. I have a brokers license on the side, so I do my own searches on the MLS. The amount of B.S. that brokers spew would make a used car salesperson blush. How can they talk about stabilization on the mid to high end when unemployment and business revenue continues to get worse, and is beyond what anything Californai saw in the early 90s.

People really think that this market will 'bounce' back to its 10-20% appreciation levels in the next year or so. (Why else but to explain the rush of investors at the auctions for the low end)

just my thoughts, but if anyone has further insights on Coto de Caza, I would appreciate it, as we would like to move there, but want to get the most for our $$ at the $1m to $1.5m range.

Thanks

Have you tried the Coto Housing Blog as a source of info. It is really quite amazing and the guy running it is brilliant. :cheese:

 

[Sunshine_IHB]

I too have studied the coto housing market, as I am looking to buy a home in the 1 to 1.5m range. Its interesting to see the denial (mostly by Realtors) on the amount of distressed homes out there (people not making mortgage payments, not paying their real estate taxes - you can see this on oc tax collector site, or having an NOD or NTS) - The number of trustee sales getting postponed every 2-4 weeks is interesting if not disturbing. I would assume that most people on this forum would tell me to wait another 6-9 months, as there should be a flood of REOs coming into the market, which is what I plan on doing.

However, I do have this fear that some govt stimulus money would be used to write-down/modify many of these +1m debt holders, and allow banks to remodify loans to 2% interest or writing down hundreds of thousands of debt. The reason I fear this is why do the banks keep post-poning the inevitable? What are they waiting for - another gov't infusion of money to help write it off?

Well - at least the consensus that there is way more distressed homes out there confirms my beliefs as well. Its still crazy to see how many home owners are trying to list homes at the $400 sq ft range, and to be honest, I do see on occasional foolish buyer grab up a home at that price range about - one a month. I have a brokers license on the side, so I do my own searches on the MLS. The amount of B.S. that brokers spew would make a used car salesperson blush. How can they talk about stabilization on the mid to high end when unemployment and business revenue continues to get worse, and is beyond what anything Californai saw in the early 90s.

People really think that this market will 'bounce' back to its 10-20% appreciation levels in the next year or so. (Why else but to explain the rush of investors at the auctions for the low end)

just my thoughts, but if anyone has further insights on Coto de Caza, I would appreciate it, as we would like to move there, but want to get the most for our $$ at the $1m to $1.5m range.

Thanks

Have you tried the Coto Housing Blog as a source of info. It is reallyquite amazing and the guy running it is brilliant. :cheese:

I was just about to promote it for you!

 

[awgee_IHB]

I too have studied the coto housing market, as I am looking to buy a home in the 1 to 1.5m range. Its interesting to see the denial (mostly by Realtors) on the amount of distressed homes out there (people not making mortgage payments, not paying their real estate taxes - you can see this on oc tax collector site, or having an NOD or NTS) - The number of trustee sales getting postponed every 2-4 weeks is interesting if not disturbing. I would assume that most people on this forum would tell me to wait another 6-9 months, as there should be a flood of REOs coming into the market, which is what I plan on doing.

However, I do have this fear that some govt stimulus money would be used to write-down/modify many of these +1m debt holders, and allow banks to remodify loans to 2% interest or writing down hundreds of thousands of debt. The reason I fear this is why do the banks keep post-poning the inevitable? What are they waiting for - another gov't infusion of money to help write it off?

Well - at least the consensus that there is way more distressed homes out there confirms my beliefs as well. Its still crazy to see how many home owners are trying to list homes at the $400 sq ft range, and to be honest, I do see on occasional foolish buyer grab up a home at that price range about - one a month. I have a brokers license on the side, so I do my own searches on the MLS. The amount of B.S. that brokers spew would make a used car salesperson blush. How can they talk about stabilization on the mid to high end when unemployment and business revenue continues to get worse, and is beyond what anything Californai saw in the early 90s.

People really think that this market will 'bounce' back to its 10-20% appreciation levels in the next year or so. (Why else but to explain the rush of investors at the auctions for the low end)

just my thoughts, but if anyone has further insights on Coto de Caza, I would appreciate it, as we would like to move there, but want to get the most for our $$ at the $1m to $1.5m range.

Thanks

Have you tried the Coto Housing Blog as a source of info. It is reallyquite amazing and the guy running it is brilliant. :cheese:

I was just about to promote it for you!

Well, don't stop now,

 

[Sunshine_IHB]

Look at the first comment at this Jim the Realtor post

Also heard today from a well connected realtor…only does foreclosures… 4 weeks is the timeline….then all hell breaks loose.

(apparently Jim turned off comments after getting too many flames recently, or I'd just post there)

I would normally dismiss this as more of the same "the flood of REOs would be here any day now" talk we've been hearing for months, but on Thursday, I happened to pop in to my Realtor's office on a whim just to chat, and he said the exact same thing. The coincidence was stunning.

So my question to you all is-has anybody else heard anything similar in the past few days? Is there really a flood of REOs that will hit in almost exactly a month?

I was just told something similar by a friend who is an agent in Orange County (I did not mention this thread). I was having a conversation with her about how slow business has been and she told me that one of her corporate bosses (large company) told her that the banks are getting ready to release the inventory. However, she said it would be closer to the 4th quarter.

 

[bltserv_IHB]

We are going to see a leg down thats part of this correction.

It may hit the stock market as well.

But will hit the OC RE market very hard.

My local regional bank just told me they wont renew my Corporations Retirement account effective Monday.

This is all in multiple CD accounts. They are no longer able to insure my accounts.

USC is aware of this bank and its issues.

This is not a good sign.

 

[graphrix_IHB]

I was just told something similar by a friend who is an agent in Orange County (I did not mention this thread). I was having a conversation with her about how slow business has been and she told me that one of her corporate bosses (large company) told her that the banks are getting ready to release the inventory. However, she said it would be closer to the 4th quarter.

One problem... it is going to be released to institutions that have raised significant capital, because the institutions think that if they buy now and hold/rent them out, there will be a big pop in a few years. Think about this for a few minutes...

Okay, now in 2010 the rental market gets flooded, and rents drop like mad. Now rental parity just got that much further away from coming back. Then the banks still hold a bunch of REO, because they just can't possibly dump it all onto institutions, and they still have been accumulating REOs in the mean time because foreclosures are not abating, and now the institutions have already spent their capital... then the real WTF do we do now flood begins. It will be 95/96 all over again! This is where those in the know rake in the dough.

I just gave everyone a tasty cookie that is only available to those who know the secret recipe. Take advantage of it. Accumulate cash, be ready, and show those infomercial fools how to make some real money in RE. There will be more than plenty to go around.

 

[usctrojanman29_IHB]

We are going to see a leg down thats part of this correction.

It may hit the stock market as well.

But will hit the OC RE market very hard.

My local regional bank just told me they wont renew my Corporations Retirement account effective Monday.

This is all in multiple CD accounts. They are no longer able to insure my accounts.

USC is aware of this bank and its issues.

This is not a good sign.

Wow that's very interesting, they are getting closer and closer to the final "death" blow. One of the consultants that I'm working with got a call from one of the FIDC consulting firms about some possible "work" coming up which may be CNB.

 

[Geotpf_IHB]

Look at the first comment at this Jim the Realtor post

Also heard today from a well connected realtor…only does foreclosures… 4 weeks is the timeline….then all hell breaks loose.

(apparently Jim turned off comments after getting too many flames recently, or I'd just post there)

I would normally dismiss this as more of the same "the flood of REOs would be here any day now" talk we've been hearing for months, but on Thursday, I happened to pop in to my Realtor's office on a whim just to chat, and he said the exact same thing. The coincidence was stunning.

So my question to you all is-has anybody else heard anything similar in the past few days? Is there really a flood of REOs that will hit in almost exactly a month?

I was just told something similar by a friend who is an agent in Orange County (I did not mention this thread). I was having a conversation with her about how slow business has been and she told me that one of her corporate bosses (large company) told her that the banks are getting ready to release the inventory. However, she said it would be closer to the 4th quarter.

4th quarter is a stupid time to release a flood of inventory, due to seasonal factors. Right now (summer) would be a much better time.

 

[freedomCM_IHB]

banks = / smart

 

[no_vaseline_IHB]

Far Far Away from the pristine feifdom of Irvine, all hell is breaking loose. Well, its not that far but Fresno/Tulare county might as well be on the darkside of the Moon if you catch my drift.

http://fresnobeehive.com/news/2009/07/tsunami_coming.html

Tsunami coming?

When real estate broker Terance Frazier is asked about the projected next wave of foreclosures, he points to a chart compiled by his intern, Trent Souza.

Souza matched up scheduled auction dates at the Fresno County courthouse with government-imposed moratoriums and found, not surprisingly, that banks didn't repossess as many homes during those periods.

Then, he tallied up the number of new default notices and discovered that, barring more government intervention, the number of foreclosures could more than double between September, when the last moratorium expires, and year's end.

Frazier, who buys and resells foreclosures, said bank-owned properties have been piling up as lenders, adhering to moratoriums, postponed the auctions. Those could start hitting the marketplace in early 2010, increasing supply and possibly keeping prices down.

Frazier says the moratoriums delayed the recovery of the housing market and also fuzzy predictions. "We don't know what the government will do," he said. "Until that inventory hits the market, we won't recover."

It remains to be seen if real estate agents will be able to sell the foreclosures as quickly as they are now. Lower-priced foreclosures get multiple offers and many realty agents want more to sell.

But, experts predict more moderate and higher-end families to lose their houses during this recession, which is the worst in decades. At least 1 of every 10 home loans in Fresno County was at least 90 days delinquent in June, according to market tracker First American CoreLogic.

Banks say they are modifying more loans and doing more short sales, where they negotiate negotiate a sale with the owner before it goes to foreclosure.

But Frazier thinks lenders should reappraise properties, issue a new loan at a reduced interest rate for the true value and then either issue a no-interest mortgage for the remainder of the old loan, or arrange to be paid a cut of any profit from the sale of the house.

That would cut payments enough to keep the homeowner from defaulting and put money into their pockets - money that could be used to buy cars, appliances, eat in restaurants and otherwise stimulate the economy.

Two full years into the correction, and 1 -10 are 90 days +. Lookout below!

 

[usctrojanman29_IHB]

Far Far Away from the pristine feifdom of Irvine, all hell is breaking loose. Well, its not that far but Fresno/Tulare county might as well be on the darkside of the Moon if you catch my drift.

http://fresnobeehive.com/news/2009/07/tsunami_coming.html

Tsunami coming?

When real estate broker Terance Frazier is asked about the projected next wave of foreclosures, he points to a chart compiled by his intern, Trent Souza.

Souza matched up scheduled auction dates at the Fresno County courthouse with government-imposed moratoriums and found, not surprisingly, that banks didn't repossess as many homes during those periods.

Then, he tallied up the number of new default notices and discovered that, barring more government intervention, the number of foreclosures could more than double between September, when the last moratorium expires, and year's end.

Frazier, who buys and resells foreclosures, said bank-owned properties have been piling up as lenders, adhering to moratoriums, postponed the auctions. Those could start hitting the marketplace in early 2010, increasing supply and possibly keeping prices down.

Frazier says the moratoriums delayed the recovery of the housing market and also fuzzy predictions. "We don't know what the government will do," he said. "Until that inventory hits the market, we won't recover."

It remains to be seen if real estate agents will be able to sell the foreclosures as quickly as they are now. Lower-priced foreclosures get multiple offers and many realty agents want more to sell.

But, experts predict more moderate and higher-end families to lose their houses during this recession, which is the worst in decades. At least 1 of every 10 home loans in Fresno County was at least 90 days delinquent in June, according to market tracker First American CoreLogic.

Banks say they are modifying more loans and doing more short sales, where they negotiate negotiate a sale with the owner before it goes to foreclosure.

But Frazier thinks lenders should reappraise properties, issue a new loan at a reduced interest rate for the true value and then either issue a no-interest mortgage for the remainder of the old loan, or arrange to be paid a cut of any profit from the sale of the house.

That would cut payments enough to keep the homeowner from defaulting and put money into their pockets - money that could be used to buy cars, appliances, eat in restaurants and otherwise stimulate the economy.

Two full years into the correction, and 1 -10 are 90 days +. Lookout below!

I'm thinking that Orange County and Irvine prices have most held up fairly well is because the unemployment rate is significantly lower than that of other parts of California, such as the IE, Fresneck and Stockton. If the OC and Irvine reach the "official" mid-teen unemployment rate that those areas are experiencing they will begin to experience further price declines....at this point it is all about employment.

 

[Geotpf_IHB]

Far Far Away from the pristine feifdom of Irvine, all hell is breaking loose. Well, its not that far but Fresno/Tulare county might as well be on the darkside of the Moon if you catch my drift.

http://fresnobeehive.com/news/2009/07/tsunami_coming.html

Tsunami coming?

When real estate broker Terance Frazier is asked about the projected next wave of foreclosures, he points to a chart compiled by his intern, Trent Souza.

Souza matched up scheduled auction dates at the Fresno County courthouse with government-imposed moratoriums and found, not surprisingly, that banks didn't repossess as many homes during those periods.

Then, he tallied up the number of new default notices and discovered that, barring more government intervention, the number of foreclosures could more than double between September, when the last moratorium expires, and year's end.

Frazier, who buys and resells foreclosures, said bank-owned properties have been piling up as lenders, adhering to moratoriums, postponed the auctions. Those could start hitting the marketplace in early 2010, increasing supply and possibly keeping prices down.

Frazier says the moratoriums delayed the recovery of the housing market and also fuzzy predictions. "We don't know what the government will do," he said. "Until that inventory hits the market, we won't recover."

It remains to be seen if real estate agents will be able to sell the foreclosures as quickly as they are now. Lower-priced foreclosures get multiple offers and many realty agents want more to sell.

But, experts predict more moderate and higher-end families to lose their houses during this recession, which is the worst in decades. At least 1 of every 10 home loans in Fresno County was at least 90 days delinquent in June, according to market tracker First American CoreLogic.

Banks say they are modifying more loans and doing more short sales, where they negotiate negotiate a sale with the owner before it goes to foreclosure.

But Frazier thinks lenders should reappraise properties, issue a new loan at a reduced interest rate for the true value and then either issue a no-interest mortgage for the remainder of the old loan, or arrange to be paid a cut of any profit from the sale of the house.

That would cut payments enough to keep the homeowner from defaulting and put money into their pockets - money that could be used to buy cars, appliances, eat in restaurants and otherwise stimulate the economy.

Two full years into the correction, and 1 -10 are 90 days +. Lookout below!

I'm thinking that Orange County and Irvine prices have most held up fairly well is because the unemployment rate is significantly lower than that of other parts of California, such as the IE, Fresneck and Stockton. If the OC and Irvine reach the "official" mid-teen unemployment rate that those areas are experiencing they will begin to experience further price declines....at this point it is all about employment.

It's also possible that Irvine and other "prime" areas will fall less than, say, the IE, simply because there's a flight to quality. In today's blog post, there was talk about Florida, where house have fallen a lot-but low end condos are on the way to being nearly worthless. Same type of thing. I think that will apply everywhere as well-condos will (and have) fall further than houses, dollar for dollar, since houses are the superior product. So you might get a situation where a small condo was half the price of a larger house in particular area at the peak, but after the fall, the house will be three times to price. We are seeing similar differences in prices between houses in Irvine vs. the IE-the IE has fallen further faster.

 

[IrvineRenter_IHB]

Investors Buying Low End Foreclosures

From Carolyn Said at the San Francisco Chronicle: Oakland group buying Contra Costa foreclosures (ht Walt, John)

Oakland's McKinley Partners is betting that low-end foreclosed homes in eastern Contra Costa County will double in value in five years.

The real estate development company has formed a $6 million fund to buy bank-owned homes in Antioch, Pittsburg and Bay Point.

It aims to spend about $100,000 per home, including rehab, and rent them out for $1,200 to $1,500 a month. Then it hopes to sell them for $200,000 each in five years.

McKinley is emblematic of a major force currently propelling the real estate market: investors and speculators snapping up foreclosed homes. Along with first-time buyers, they are a primary source of increased sales volume.

I know investor groups doing the same thing, and they pay cash too. As far as these numbers - good luck. The numbers only make sense at the low end, and rents are falling quickly. It is very unlikely the price will double in five years - or even ten years. As the price increases, investors will be selling properties, keeping prices down.

Think of investor owned properties as being in storage, and being removed from storage and sold as the price increases (although this is different than the investors during the bubble because of the positive cash flow).

There are headaches managing low end rental properties too. These will be high maintenance, and finding tenants with decent credit will be difficult.

A few of McKinley's buying guidelines are interesting:

-- It avoids newer homes in cookie-cutter subdivisions. "If they're all around the same vintage of mortgage, then they can all go upside down at the same time," [Gregor Watson, one of four managing partners] said. ...

-- It avoids higher-priced homes. "As the price point gets higher, rents don't cover (costs)," Watson said. ...

-- It's finding that inventory is limited because lenders are sitting on foreclosures. "Banks own 530 homes in this ZIP code (Pittsburg's 94565) but there are only 15 on the market," said [Paul Staley, president of Staley and MacArthur Real Estate Services] "It creates a hyper-competitive situation."

And how about that comment on ZIP code 94565? Only 15 houses on the market, but 530 REOs according to Staley.