Posted on 08/30/2007 7:53:13 AM PDT by Hydroshock
WASHINGTON (MarketWatch) -- Mortgages for investment properties constitute a major chunk of defaults in four states with the fastest-rising rates of seriously delinquent loans, according to data released Thursday by the Mortgage Bankers Association.
Mortgages on non-owner occupied properties in Nevada accounted for 32% of prime mortgage defaults as of June 30 as well as for 24% of subprime loan defaults, the MBA said. In the rest of the country, non-owner occupied homes accounted for 13% of prime defaults and 11% of subprime defaults. "Defaults are on the rise in most parts of the country, but it should be recognized that it is not always the case of a homeowner losing his or her home," said Doug Duncan, the MBA's chief economist,. Rather, it's "often the case of an investor gambling on a continued increase in home values and losing that gamble," Duncan said in a statement.
(Excerpt) Read more at marketwatch.com ...
not your ordinary real estate investors pushing prices higher....
Shows a lot of investment funds out there that could be put to good use if there were something worth investing in.
The market will take care of itself. Government STAY OUT!
My wife and I were watch FLip That House this weekend. SHe commented, “Yeah in 2006 it is flip that house for that guy (the house flipper on TV), in 2008 it will be flip that burger.”
“Investment homes” is an oxymoron.
>> The market will take care of itself. Government STAY OUT!
Amen, brother.
>> “Investment homes” is an oxymoron.
True, that.
Another problem: with many asset classes, not just real estate, “investment” has become a euphemism for what is really “speculation”.
Very true, though at many times, “investment homes” were and have been valid investments and not wild speculations. In this last cycle, obviously in hindsight they were not; but even at the time, it was clear that these so-called investments were being bought on risky mortgages for nearly double what I call the “rent vs buy indifference point” and thus made no sense whatsoever.
Yes, that's true. Sloppy use of language!
My parents invested in rental houses for many years. Their first property was a 5-unit apartment building in Southern California, and my brother and I had to talk to the tenants for my parents, because all the renters were Spanish-speaking.
exactly.
>> at many times, “investment homes” were and have been valid investments and not wild speculations
Yep.
The definition I use (because it has worked for me in the past): If I have MY money in it, it’s an investment. If you have YOUR money in it, it’s more than likely speculation.
;-)
Once more only louder...
The result now is that the investment homes are being foreclosed on, the banks are buying the properties back themselves becuse there are no bidders at the sale, and often the lenders are sending the borrower a 1099 for the entire mortgage balance. Worse still, many borrowers pulled the equity from their homes in order to buy these "investment properties", and are now stuck with huge mortgage payments which they can't afford.
All true. However the overwhelming number of so-called investment homes NEVER made sense on either a rental- cashflow basis or on any one of several traditional metrics used to gauge the potential profitability of investment real estate.
The MSM refusing to indicate SPECTULATORS rather than investors are driving the issue.
Also there was a FR article posted which stated the illegals who are self deporting are refinancing out the equity and then skipping town.
Good thought. The fund would need enough capitol to both purchase the excess housing inventory and absorb the holding costs until the next upsurge in home purchases
The holding costs would have to be factored into the investment cost but it still might be a classic buy low sell high situation.
One of the problems is that people with significant assets are allowed to walk off from their mortgages with minimum consequences.
At this time in the US it is ,, however real estate has been a really good vehicle for wealth creation ,, I have duplexes located near a college that bring in double the mortgage (15 year) cost after maint and taxes.
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