A record 269,962 U.S. homes were seized from delinquent owners in the second quarter as lenders set a pace to claim more than 1 million properties by the end of 2010, according to RealtyTrac Inc.



http://www.bloomberg.com/news/2010-07-15...re-backlog.html

Yeah, I read that last night - amazing. Well, let the flood gates open. I am interesting in hearing how the AM companies are going to manage the flood of foreclosures. I guess we will be seeing a huge growth in Q3 and Q4 as the economist have been predicting.

seized eh? Interesting wording.

Huge growth in listing foreclosures, maybe, but I'm not so sure about huge growth in actually SELLING them.

Who is going to buy all these properties?

"seized from delinquent owners"

Seized from delinquents.
Not "lost by well-meaning citizens who got suckered into Wall Street's Mortgage Casino."
No, they're DELINQUENTS!

We are already seeing builder incentives of 8,000 dollars in credits to move properties.

Since the tax credit expired many potential home buyers see rates falling and values decreasing which means only people that have to purchase are buying.

We can't expect purchasing to reach to boom speculative levels as most were buying as an investment and not a place to live.Take out the investment factor and many are fine with renting.

On the commercial side we are going to kick some serious butt.I have been gearing up for it for a year.Right now is the best time to purchase before government reform comes to the commercial side like it did with the residential side after all the defaults.

I THINK IT WILL BE ANOTHER FALL OF HIGH REO ACTIVITY AND THEN AS SOON WE GET THE MACHINE WELL OILED AND THE SUPPORT STAFF WE NEED TO HANDLE THE INCREASED INVENTORY THE GOVT WILL GO AND PULL THE RUG OUT FROM UNDER US AGAIN AND SLAP DOWN ANOTHER MOTORIUM THAT RUNS FROM NOV UNTIL APRIL. IN MARCH THEY WILL HAVE A NEW PLAN (HAMP, HAFE, H???) AND NO ONE WILL HAVE A CLUE ABOUT IT BUT IT WILL SAVE ANOTHER 5 MILLION HOMES FROM FORECLOSURE. I REMEMBER IN 2007-2008 THAT THE HOUSING CRISIS WOULD BE OVER IN 2010-2011.

And in top of that we still losing jobs.

http://www.miamiherald.com/2010/07/16/1733445/unemployment-rises-to-128-in-miami.html

The analysis that I heard on NPR and other sources is that this 3rd foreclosure boom will be driven primarily by unemployment. The first one was due to sub-prime loans, the 2nd due to alt-A/option ARMs, now it's just plain unemployment.

That is a fantastic question. Investors can only buy so many homes. The government can only afford so many buyer incentives. There is already a glut of properties on the market in my area with more coming. It's very hard to take on new debt (i.e. buying a home) while unemployment keeps rising. This is going to get very ugly folks.

The investor frenzie may be yet another round of FCs. I'm seeing investors start to pay just a tad too much for some of these properties. While these are exibiting a positive cash flow NOW, how will the cash flow hold up when these tenants become unemploed. Considering the unemployment figure seem to hit the lower end of the employment scale first, this could become a real issue. That is unless we listen to NAR, in which case the real estate industry is just fine, all bubble gum and ice cream. But then, NAR told us all there was no housing bubble. I guess the bubble gum popped.

It's better to hold the investment money out waiting for the right deal than to than to overpay in a speculative frenzy.

Many investors try to "talk themselves into a deal" out of frustration or to just get going with something.

Seasoned investors buy on conservative numbers. Not optimistic numbers that have a 20 percent chance of happening and being sustainable.

Just like buying an apartment building. If area rents are 450 a month and the building I want is 65 % occupied. I will buy based off of lower rent numbers 425 or 450 and repairs to have the nicest place with rents in the lower bracket.

My buildings will stay full while the others that assumed rents of 475 to 500 a unit tread water or go under. It's all about buying it right.

I work with some investors that follow your same mind set. As much as they'd like a specific property, they'll walk away unless the pricing fits their model. They've been around for years, survived nicely and will be around for years to come. Some of the new comers, infomercial folks are overpaying and bidding against each other. These are the next round of FCs and will probably be bought by that first group....and I'll be the broker they buy through.

IMHO we are about to see what happened in 2008. The MI companies who have to write the checks forced unrealistic pricing on many REOs then the started going to auction because they were unsaleable at the too high price. Some sold but then (because they had too high of a reserve price) we started getting them back for realistic prices and they sold.

Then they came to reality and allowed pricing that would work and the number of REOs that went to auction decreased significantly as they sold at the realistic prices.

Now they are restarting the cycle because they have now started to ignore the new reality with the end of the first time home buyer credit and (in our case) the gulf oil spill.

We just had one yesterday that had been listed too high, went pending FHA and after 80 days did not pass FHA inspection. Got a decent price reduction but the next day the MI company required that the list price be increased. Now it is going to auction.

My best guess is that it will have too high a reserve, not sell and then we will get it back at a saleable price.

A few months of this and then the MI companies should start coming back to reality again and we will get saleable listings again.

We are just now getting the new County assessors values for 2010 which is based on 2009 sale data and EXCLUDES REO and Short Sales in the calculations. We are seeing values drop 10% - 40% from last year. Some properties that were in the $500K range last year have dropped as much as $100K year over year for assessed value.

We are just now starting to see the ALT-Option properties hitting the market. We got our highest list price REO ever the other day at nearly $500K (It was an ALT-Option). So, for us at least we are just starting to see the ALT-Option listings hitting the market.

Yup the ugly is not over by a long shot.

I always get the question "when do you think the prices will start to rebound". Without much thought my answer has been 3-5 years - conservative. I am starting to wonder - is that the right answer anymore? I'm seeing a much darker picture now, wondering if real estate will just go flat and stay there. How do you guys answer that question? I used to get stared at when I said 3-5 - with folks thinking that was way too long. Nope - it could be longer.

All of us here already knew this.

After all we are on the front lines selling and BPO’ing; getting our information months before it hits the news.

All real estate markets are local, but here in the northeast I do not see a turnaround yet.

I just did a few BPOs on recently built current REO listings in excellent condition that are priced far below good recent comps yet are lingering on the market unsold.

I can not explain why they have not sold other than there are no buyers at any price.

When the subject is 6 years old in excellent condition and is priced 47% below an identical 4 month old sold comp yet still remains unsold after 159 DOM, will another price drop sell the house?

We are either in the buying opportunity of a lifetime or…

With real unemployment as high as 17% why would prices rebound at all?

Just the last 3 or 4 days I have rec'd. numerous agent calls on my listings to set up showings; many of those listings are similar to yours BPO Drone. One telling perstective...I have 4 under contract right now. 1 buyer is a local real estate atty. 2nd buyer is a local real estate agent buying as an owner occ. 3rd is a first time buyer getting a heck of a deal and walking smack into 20k of equity. 4th is me and a partner buying an investment property.

I mean at some point buyers have to get over their fear and look at a deal on it's merits. I think that is starting to happen.

I have noticed the last 6 months have been very hot and cold. Hit or miss, all or nuttin'. Contracts come in waves and then the quiet sets in for about 5 weeks.

It reminds me about a famous quote I heard when I was starting doing RE " Be fear when others are greedy, and be greedy when others are fear" well said at that time back on 05 I did not understand the meaning, now I do.

One thing that has baffled me is that on quite a few of my bpo's, there are sale comps that were purchased with cash, and I double check title/assessor data to confirm, but they are paying well over many of the other similar properties. Sometimes very short DOM.

Then I see the investor flips at way over the top of the market prices, higher than any comparable sale in the last 365 days, and REO's not in nearly as good of a condition priced similar to the rehabbed investor flip.

They have long DOM.

My "personality" tends to come out in the comment sections of these properties!

I think what you're witnessing is realy "a good sign".

I've written about this before, based on the experience we had after the S&L Banking Crisis of the 1980s, and the introduction of mandatory appraisals that we live with today. If I can find it I'll put in a link. The current market has dwarfed the S&L Crisis into a mere footnote in history.

The phenomenon is that Cash Buyers are a necessary ingredient to establishing a bottom, or a base. Without them, transactions that are based upon borrowed money and Appraisals will tend to perpetuate a downward price curve . . . . just like escalating prices projected a buoyant continually rising market. I think that without CASH, we'd continue in the same direction FOREVER.

Transactions based on "CASH" represent True Market Values. Months afterwards, Appraisers will be able to factor in those purchases into the new sales that are reliant on borrowed money (and their "arms-length" appraisals). Then we can (hopefully) start the cycle all over again. They'll probably always be inclined make an overstatement of the future highs . . . . and be more pessimistic in predicting future lows. There has to be a better way ?

So, let's give thanks that there are at least some Buyers who still have a bit of CASH to get us out of the rut we're in.

Who was president when the S&L scandal happened?
And who was president during our recent bank meltdown/bailout?



All-cash usually sells for less than financed so I give it an upward adjustment for values.

No offense intended Artiste, but in my market you can't (and shouldn’t) always do that. Some neighborhoods are purely cash driven. The inner city in my area is all cash investors looking for rental properties. I rarely if ever see any type of financing. Most of these homes would not qualify for FHA/VA financing due to condition. Many are boarded up slum lord properties to be honest with you.

The same can be said for the local condo/townhouse market. Unless one has at least 30% down, you won't be able to get financing for these units. While I don't sell R.E. anymore, I know enough agents locally that do and have told me as such. The vast majority of these condo/townhouse sales are cash as it is difficult if not next to impossible to purchase these units any other way. The banks are just too gun-shy to lend on these properties that are experiencing such rapid depreciation of values.

So while I understand your reasoning, here in Florida unless you have cash it just isn't going to happen in various circumstances.

That's my response to the question "When will it turn around?" The market will turn when people have jobs. Prices will start to rise when people's wages rise. When will that be? Who knows.

There isn't going to be appreciation based on loose lending for a long long time. Its going to have to come from real increases in income.

Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter and Reagan.
Clinton, Bush, and Obama.

All well intended leaders, with small cadres of do-gooders carrying out what they thought were solid policy decisions.

There have been many Cooks in the Kitchen, and these are not "Date-Specific Events".

Sometimes it's conspiracy by neglect, and the Law of Unintended Consequences.

Often the repercussions of minor experimental changes in the Law and Regulations don't manifest their full effect until decades after implementation when society has adjusted to the change and either come to fully embrace it or learned how to abuse it . . . . or both.

Some experiments fail and lead to disastrous consequences that destroy entire nations.

"The market will turn when people have jobs"

I am not a big believer in this statement.

I would counter it's not how many jobs are created but the TYPES of jobs created is the key.

I am not being political but I remember Bush and others touting all the new job creation. Sure the jobs were created but they were crap jobs at minimum wage.

What really drives the economy is quality jobs that pay really well that leave families and individuals with expendable income and not just enough money to keep the lights on.

The problem is with raising minimum wage is it just makes cost go up and does nothing for earning power.You have to earn more and be able to buy at the same prices as before to increase buying power.

So I would like to see more high quality jobs created than just more hourly positions.

I agree. The start of our current situation was when manufacturing jobs started going outside the US.

Those who make things add value and create real wealth.

Those who send their wealth somewhere else to purchase what they make soon will have no wealth.