Posted on 08/09/2006 10:05:34 AM PDT by ex-Texan
Mortgage trouble is creating some of the biggest bargains this side of eBay, allowing buyers to snap up homes for tens of thousands of dollars less than what they might have paid just a few months ago.
"People are doing whatever they can to sell" in order to avoid foreclosure, said Brad Geisen, president and chief executive of Boca Raton-based Foreclosure.com. Notices of pending foreclosures are piling up, in what many believe to be the first wave of a trillion-dollar tsunami: The dollar volume of home loans with interest rates that will be ratcheted upward over the next several months.
New Palm Beach County foreclosure filings rose by 34 percent in June compared with June of last year, according to figures compiled by RealeSTAT.com, a commercial data service. Foreclosure.com's July numbers show a similar upward trend, not just for Palm Beach County, but for the state as a whole.
"It's just going to get worse and worse," said Jeff Pashkow, president and chief executive of Foreclosure Clinic, a Loxahatchee investment firm that buys homes before they are auctioned by the lender, and resells them.
Clients these days are from such well-to-do areas as The Acreage and Wellington, he said. "They're mostly (middle class) people who have financed it to the hilt, and there's really not much you can do for them."
However, Foreclosure.com's numbers also pinpoint the emergence of unlikely rescuers: bargain hunters. Nationally, almost one in every three homes at risk of foreclosure was bought in July, according to Foreclosure.com.
RealeSTAT.com's local figures show that even as larger numbers of mortgages slip into default, the number of homes actually going to auction is decreasing.
Unlike Texas, where a foreclosure can be final in as little as three weeks after the homeowner gets his or her first notice of a mortgage default, Florida homeowners get about six months between the time they are first notified they are facing foreclosure and the time the lender actually auctions off the property, said Geisen. "Longer if they play their cards right," he adds.
The smart money, said Brad Hunter, a real estate analyst with the West Palm Beach office of MetroStudy, "is ready to go looking for deals."
Such investors are usually first in line to carve profit out of a sale of distressed properties. But it's not just investors. Diane Corbin, a Realtor with Exit Realty Neighbors, said she's had calls from house-hunters asking whether a property was in foreclosure.
These "third-party buyers," said attorney Stuart Gitlitz, are elbow to elbow. "There are more than we have ever seen before, and I have been doing this for 20 years," said Gitlitz, a Miami attorney who represents lenders in Palm Beach County foreclosures.
Small wonder:
It's a fraction of the $582,000 average Palm Beach County home price in May reported by Trend Graphics.com, which compiles listings. And it is almost exactly the amount considered affordable for a worker earning the median income in West Palm Beach, according to the Florida Housing Coalition.
The fire-sale prices have their drawbacks. For one thing, the deals may be one reason new homes are sitting empty. The inventory of homes waiting to be sold in Palm Beach and St. Lucie counties is rising, said MetroStudy's Hunter.
Corbin, the Realtor, cites the case of a local developer who was selling a home a week and who is now selling a home a month. "It's killing them," said Corbin.
The lure of a quick profit may also be attracting some of the same buyers who seized on buying homes and condos at the height of the market and flipping them. However, buying a home out of foreclosure can be more complex, said Foreclosure.com's Geisen; and diving headfirst into such deals can hurt inexperienced speculators the same as the downturn in housing prices.
Homeowners have reason to be cautious, too. It's not unusual for owners notified of a mortgage default to be swamped with unsolicited offers of help, said Gitlitz some more genuine than others. "There is a lot of fraud going on," he said, one reason state lawmakers took steps this past session to tighten protections for homeowners willing to sell their property before a foreclosure is final.
Many homeowners are successfully unloading properties, adds Geisen. "Usually there's enough time for a seller to sell and get out."
oh, yes it did.
Tens of thousands of dollars doesn't amount to much on the million dollar homes they have in these areas. A lot of it is just hype by the real estate industry to get people looking at houses. Even a 34% increase in foreclosures isn't that big of a deal, particularly since they were at a very low level to begin with.
I am comfortable quoting from a few posts on a very popular real estate blog. (Ben Jones was just interviewed by Newsweek). Note that these people are saying the same things that I have said. But, they have actually visited the Pacific Northwest.
Just got back from vacation the last week of July. Went to Seattle, Portland, and Vancouver (Canada).I noted a few things:
1) Portland downtown is filled with highrise luxury condo complexes. You cant take the free streetcar (love that!) more than 1 block without seeing another new highrise. Thing is: Portlanders dont make that much money. Who is going to live in these $750k condos?
2) Seattle also has condos everywhere. There are lots of luxury towers from the Space Needle all down towards downtown, and then zillions of smaller condo complexes (3-6 stories high) especially throughout Capital Hill and First Hill. For any of you Seattlites wondering if you could have a bubble, Ill tell you. YES.
3) Then on to Vancouver. The blogger from Vancouver has said this here before, but now Im inclined to believe. Vancouver may be the biggest bubble market out there. Maybe even more than Phoenix and Las Vegas (yes I know its hard to believe). Vancouver downtown is almost all condo towers (I believe it holds the distinction of the only downtown in the world thats over 70% residential). We saw more cranes in Vancouver than Ive ever seen. I stood in southeast downtown Vancouver (near Granville Island and the science museum) and looked around and saw 12 cranes. 12!!!!!! I took a picture that had 8 cranes within just a few blocks of me, maybe like 5 blocks or so . but the pic didnt turn out. :(
If I recall correctly, Vancouver has about the same population as Portland but Vancouvers downtown is at least 10 times bigger. And its 5x bigger than Seattles. crazy.
But overbuilding wasnt restrcted to the cities either. (except canada which has different zoning laws). we saw amazing overbuilding in Olympia, Tacoma, and even Vancouver WA. Are they kidding?
The Pacific NW is one of the most overbuilt (silently) areas of the country. Sorry guys.
Clouseau
Im from Portland originally, and my parents still live there. Downtown has indeed gone condo crazy, but the real fun is out in the burbs. The condo bust started way early out there, like several years ago, from what I recall. They built a light-rail system out to Beaverton and the western suburbs and did zoning stuff so that a whole bunch of condos got built around the light-rail stops. Smart growth and all that. Well guess what? No one wanted these crappy little suburban condos, and many of the projects languished, even as SFHs went crazy in the same suburbs. You are dead on about Portlanders not making all that much money, either. There are a lot of California equity refugees, and a few decent large employers there, but nothing that provides huge wealth. One of the saddest parts is that downtown Portland used to be kinda funky and coola bit weird and off in an artsy wayand all of the overpriced condos and cookie-cutter yuppie businesses that followed made downtown really tacky, plastic, and just plain uninteresting.
Very observant...
It isn't a bargain!
The current 'stall' in home prices is not an actual pullback yet...if you want a bargain, wait another 18 months from today for the trough.
Reagan80
Right on!
The cause of most of this is lack of common sense on the part of the mortgage holders. They sign up for silly loans like interest only, etc just so they could 'get rich quick' off the real estate boom. Some got lucky and got out before the bubble sprung it's leak. Others didn't. That's their own fault.
I think you have to admit that the "track record" of the experts (predicting gains) is much better than your track record (predicting losses).
Why should anyone believe that, after soooo many failed "prophecies", you are "right" this time?
Why don't you read: "The Boy Who Cried Wolf", Aesop
How about a little personal responsibility? No one forced another to buy real estate, no one put a gun to anyones head and said "Sign this adjustable rate mortgage or I will kill you" If people are to damn stupid to take the time to understand the possible consequences of their actions then they deserve all they get.
The price is only $495,000 It has about 1,300 sq. ft. and is on a beautiful landscaped lot surrounded by trees and a large garden area in the back. "The list of features goes on, but already with all this said, it is clearly the best bargain you will find in Sunland, California."
Hot! Hot! Hot! . . . Buy it today!
LOL, LOl, LOl !
We are living in our third house. It is paid for. We swapped houses about every ten years with good interest rates and now we own our home free and clear, and I'm 50. I see my foolish friends taking out incredible mortgages at old ages and I just shake my head. Case in point: a good friend just spent $150,000 on a lot that wasn't even on the lake (it came with a "dock") and 500,000 on a house. He's 55 and she is 54 and just about every penny they have is going to the house payment which is something like close to 3,000 a month.
Let one job be lost and they are totally screwed. You couldn't PAY me to take on another mortgage at my age.
http://www.berkeley.edu/news/media/releases/2006/08/07_delong.shtml
Yeah, maybe if he prays...oops, no, scratch that, if he wishes hard enough it will happen. I guess I could claim there will be a recession in 6 months and if I do this every 2 months, one day I will be right.
Ok. Fair enough. If you really believe that realtor/ mortgage broker propaganda, flip that house in # 30.
Well, if you pay more, you get more...
To see what other people think homes "should" cost, why don't you check out:
http://roundhillpartners.com/homesearch.htm?scope=OFFICE&action=Search&hometypes%5B%5D=1
Enjoy!
PS: Most buyers of such properties "pay cash".
How are the nummbers compared to May, in other words month to month?
Its the adjustable rates that are causing the problems. If you didn't pick up a fixed rate when they went down to about .04% you have to be numb. My first house in 1964 had a higher rate. Thank God we don't have another Carter in office because when he was POTUS my 4th house had a 12% Mtg.. Since we are currently here to stay the .04% works great. Adjustable rates work OK if you want to keep a house for a short time or build up your capital to re mortgage it at a fixed rate later. "We Buy Homes" is cleaning up here in FL. People are trying to get out from under and are taking almost 1/3 of value off their property just to get the mortaget off their backs.
There were a lot of loans made without background checks a couple of years ago if the buyer was willing to pay an extra half of a percent in interest.
Lots of interest only loans.
Lots of overpriced property snapped up when the RE market became like our old stock market under Clinton before it all went south.
That house in # 30 is a POS house in border jumper heaven. Look at the beautiful tree lined street. The neighborhood looks more like Pecoima than Sunland. But all those Mexican neighborhoods all look the same. It is not worth a dime over $ 50,000. Like I said, if you truly believe that realtor/ mortgage company BS you ought to buy it. Buy it with a 2.5% option ARM loan. LOL, LOL, LOL!
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