With default ahead, it would seem that real estate remains a long way from the bottom.
In certain areas, for certain types of houses.
Other places are full up, and prices are starting to rise.
Great news for buyers, though. If there’s anyone who still has a job or money...
“This is very bad for the economy,” said Rick Sharga, a spokesman for RealtyTrac.”
Wrong. This is GOOD for the economy. Oversupply bubbles means prices must necessarily drop for that asset. Lower prices attracts buying, and over time the market works thru the supply overhang to get back eventually to a healthy market.
That is of course the govt and banks don’t screw up the market again with their past practices.
Right now it sucks for the realtors and the banks, but homebuyers right now are getting great deals. People who likely couldn’t afford a home are doing so now. Now we just need to improve the job market.
A picked up a church friend at his house last week. He and his wife live in a brand new two-story house in a tony part of town. I know he doesn’t make much money so I asked him how much he paid for it. I knew the going price when they were built back in the boom—~$450K. He paid $165K and they gave him $5K in upgrades. The seller was the builder.
It all depends on the area. REO’s here are generally dogs.
And therein lies the root of the problem that localities all over the Country are facing; nobody is paying property taxes on those foreclosed homes, or on the ones that are in default right now and waiting to be foreclosed.
The longer those houses set empty, the worse condition they are in and the harder they will be to sell at any price. Even if they do sell, the price is so low that the tax value won’t cover the costs of the City services the house has; water, sewer, street repairs, street lights, Police, Fire...you name it...
For the most part, houses across the board need to drop about another 50%, maybe even more, before they represent what a home price should be (Approximately 2x one’s gross income, as a rule of thumb). The problem is a lot of people mistakenly believe that the price (they say “Value”) of a home should go UP, when in fact it should be stable or go DOWN (as supply increases, and manufacturing improves). There is a 116 year study of prices to back that up.
The price of a home increasing is due to 1) Dollar devaluation or 2) Price manipulation, in general (Especially if it lasts more than a few years). Hence the decades old rule of 2x one’s gross income. Houses are still in a bubble, and need to drop quite a ways to be “affordable” (Read: “Appropriate”). People bought houses they normally couldn’t have through government manipulation. Or we wouldn’t have the bubble we do today. Now that the insane debts people were building are being cleared out, the prices MUST fall to affordable levels, and that’s no where near as high as they are now.
People talk about how we’re years from a real estate recovery. I think this country has more potential energy than that, and if we could create a positive business climate, things could bounce back like a rubber band.
It would take government getting their dead hand out of the business world, which is a big if.
Why don’t banks pay property tax on foreclosures?
I’m holding out for free or better.
I just got home this morning from house hunting in the San Diego area, we looked at several foreclosures and a couple more investor owned ex-foreclosures.
As far as I was concerned three of the five needed to be bulldozed immediately, the other two might been salvageable, but at potentially prohibitive cost.
First House: Detached garage flooded, pool cabana burned down, signs of a recent attempt at marijuana growing, obvious electrical problems.
Second House: Mould everywhere, buckled hard wood floors, exterior windows replaced with junk, tons of cheap cosmetic repairs covering up god knows what else.
Third House: Kitchen and master bathroom completely gutted, only left the cabinets. Some interior doors and light fixtures also missing, septic system destroyed (probably by whoever stole everything and parked their truck on the lawn)
Fourth House: Completely invested with vermin, worried I might have contracted hantavirus just looking at it. Rodent droppings everywhere, stench of urine. Dead dog or coyote made it smell even worse.
Fifth House: Every wall had been kicked in and cheaply plastered and painted over, previous owners appeared to have been using the dining room as an annex to their garage. (I can’t think of any other plausible explanation for the stains) and there appeared to have been a hidden camera setup in the bathroom and bedroom in the apartment in the basement!
2 and 5 were the investor owned properties.
I think I will just build new,