Nov272013
Loanowners drowning in debt: 21% underwater, 40% can’t move up
The mainstream media spins financial reporting to put news stories in a positive light. Apparently, making readers feel good about their investments sells more papers, or perhaps reporters feel a moral obligation to improve consumer sentiment to boost the economy. Whatever the motivation, financial reporting is one area where good news sells, so financial reporters treat us to happy-talk stories, and they often ignore harsh underlying truths.
The latest cheery chatter from reporters relieves those whose mortgages exceed their home’s value. House prices are up, so fewer borrowers are underwater. That’s the good news. The bad news lies just beneath the headlines.
Homeowners who owe more on their mortgages than their houses are worth don’t really own their properties. The only tangible financial claim they possess is a promissory note burdening the real estate they hold title to. In other words, the don’t own their home, they own their loan: They’re loanowners.
With house prices moving up, loanowners are becoming partial homeowners again. Their equity claim may be tiny, but at least it’s positive. They won’t own their homes until the mortgage is paid off, but they could sell without owing the bank money or seeking approval for a short sale. That’s a step in the right direction. However, market prices have to move much higher before both borrowers and the banks can breath easy without drowning on a lung full of bad debt.
U.S. Negative Equity Rate Falls at Fastest Pace Ever in Q3
Posted by: Svenja Gudell Posted date: November 20, 2013
… roughly 10.8 million homeowners with a mortgage still remain underwater … . Moreover, the effective negative equity rate nationally — where the loan-to-value ratio is more than 80%, making it difficult for a homeowner to afford the down payment on another home — is 39.2% of homeowners with a mortgage. While not all of these homeowners are underwater, they have relatively little equity in their homes, and therefore selling and buying a new home while covering all of the associated costs (real estate agent fees, closing costs and a new down payment) would be difficult….
(See: Even with recent gains, 44% of homeowners with mortgages still lack equity for a trade up house)
With many homeowners underwater, the supply of for-sale homes is severely limited, as homeowners are locked into their homes. The only options for selling the house on the open market are short sales or paying off the difference between the mortgage and the home sale. …
So why is this a problem? The housing market is suffering from lack of inventory. Buyers struggle to find the homes they want, and they bid up prices to unaffordable levels. The lack of housing inventory and high prices benefits banks, but it causes sales volumes declines and low levels of buyer satisfaction. (See: Negative equity keeping homes off the market).
Recently, inventory constraints have been easing as homeowners are freed from negative equity; therefore we use this summer’s (June’s) inventory level to compare to negative equity in the second quarter of this year. … the more negative equity, the tighter the inventory.
(See: Low housing inventory is an indicator of residual mortgage distress)
These tight inventory levels produced bidding wars and drove up home values during the peak of the summer selling season. … the tighter the inventory the stronger the gains in home values over the past year.
As further evidence that negative equity is driving home values and a heated real estate market, consider the link between days on … market – correlated with negative equity. … markets with higher levels of negative equity also have homes that remain on the market for fewer days. Of course at the end of this cycle, higher home values work to reduce negative equity and stabilize the market, a movement we have been seeing over the past quarter. ….
Zillow’s analysis accurately describes market conditions and effectively links negative equity with a lack of inventory. Basically, banks stopped foreclosing and approving short sales, which removed these properties from the market. This policy obviously helps banks at the expense of future homebuyers, but economists at the federal reserve gallingly whitewashed the facts and posited the idea that homeowners were withholding their properties from the market to capture gains from appreciation. (See: Federal Reserve willfully ignorant to real cause of MLS listing shortage). In truth, loanowners can’t list and sell their submerged McMansions without lender approval of a short sale, and those approvals are not forthcoming.
Markets that have seen the highest levels in home value appreciation in September include Sacramento (34.1%), Las Vegas (33.3%), Riverside (31.8%), San Francisco (25%) and Detroit (23.3%). Furthermore, continued foreclosure liquidations are also driving down the negative equity rate. Despite these high rates of appreciation, negative equity is still very high and will remain high as deeply underwater homeowners are slowly being lifted toward positive equity. This is a process that will take several years – especially in the hardest-hit markets – to work off the high levels of negative equity.
Financial reporters will regale us with emerging loanowner stories for several more years. Prices rose rapidly here in Coastal California, but the more downtrodden markets have further to rise and more bad debt to overcome. Coastal California is no longer undervalued, but most other markets around the country still are, and they will be for quite a while.
When I gave presentations on investing in Las Vegas back in 2011, I posited Las Vegas would regain much of its bubble pricing by 2022. Most who saw my presentation thought I was crazy. With the premature bottom engineered in 2012, the market is two years ahead of schedule.
Over the past year, we have clearly seen the impact of negative equity on the market. We have described how negative equity limits the available for-sale inventory in the marketplace, which in turn has produced extreme rates of home value appreciation. Negative equity will continue to impact the real estate market, especially as mortgage rates rise and home value appreciation tempers, and this in turn will slow the decline in negative equity. … many markets are experiencing slowing home value appreciation, with some markets even experiencing home value declines. This is a good thing, as many markets’ home value appreciation was outpacing income growth, and homes were becoming too expensive, putting affordability at risk.
As affordability wanes, home sales volumes will fall, and home price appreciation will slow to a crawl. Formerly hot markets in Coastal California will continue to be outperformed by the less desirable markets where prices crashed harder. (See: SoCal house sales decline while prices stagnate)
Did a change in lender short sale policy also reduce inventory?
Lenders changed policies in late 2011 to favor
loan modifications can-kicking over foreclosure: Foreclosure statistics prove this. Lenders also changed policies toward approving short sales, a move not widely known or reported at the time. Lenders stopped approving short sales if the borrower had assets, whereas previously they let borrowers sell without recourse. Since borrowers didn’t want to pay the shortfall, they didn’t list their homes for sale when the short sale request was denied by their lender. Both policy changes were necessary to remove distressed sales from the market.
Some market observers speculate the reduction in short sales is a result of rising prices because potential sellers can simply wait and sell when they have equity. In my opinion, this puts the effect before the cause. A reduction in short sales was necessary, along with a change in policy toward foreclosure, in order to dry up inventory and force prices to bottom. The evidence of the proper cause and effect is the timing of the decline in short sales: Short sales started dropping before home prices bottomed.
Low inventory and inflated prices are the new normal
Lenders have no reason to change their foreclosure and short sale policies. They successfully engineered a huge market rally enabling them to liquidate their bad bubble-era loans with limited losses. Given lender’s success, they will delay foreclosures and deny short sales to keep distressed inventory off the market for as long as it takes to reflate the housing bubble. Unless something changes, this means MLS inventory will remain low, and house prices will remain artificially high due to the imbalance between supply and demand. Perhaps in areas like ours where prices are near the peak, the pace of lender liquidations will quicken, but until those 21% who are underwater or the 40% who can’t make a move-up are in a better position, between 20% and 40% of our normal supply simply won’t be there.
Six+ years of squatting
Borrowers like to portray themselves as victims. Lenders deserve much derision for their bad behavior, but since lenders don’t want to recognize big losses on bad loans, they often aren’t in a hurry to foreclose. Today’s featured property is the worst I’ve found so far for squatting before foreclosure.
The owners of this property quit paying their mortgage prior to my first blog post at the IHB nearly seven years ago.
The first NOD was filed on 11/14/2006.
The foreclosure didn’t take place until 12/31/2012, more than six years later.
There were 13 filings on this property including three failed loan modifications.
The loanowners who lived in this property didn’t make any housing payments for well over six years. Were you paying for your housing during that time? I was.
[idx-listing mlsnumber=”SR13236291″]
2534 East TERRACE St Anaheim, CA 92806
$899,900 …….. Asking Price
$615,000 ………. Purchase Price
7/23/2004 ………. Purchase Date
$284,900 ………. Gross Gain (Loss)
($71,992) ………… Commissions and Costs at 8%
============================================
$212,908 ………. Net Gain (Loss)
============================================
46.3% ………. Gross Percent Change
34.6% ………. Net Percent Change
4.0% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$899,900 …….. Asking Price
$179,980 ………… 20% Down Conventional
4.37% …………. Mortgage Interest Rate
30 ……………… Number of Years
$719,920 …….. Mortgage
$176,505 ………. Income Requirement
$3,592 ………… Monthly Mortgage Payment
$780 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$187 ………… Homeowners Insurance at 0.25%
$0 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$4,560 ………. Monthly Cash Outlays
($925) ………. Tax Savings
($971) ………. Principal Amortization
$287 ………….. Opportunity Cost of Down Payment
$245 ………….. Maintenance and Replacement Reserves
============================================
$3,196 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$10,499 ………… Furnishing and Move-In Costs at 1% + $1,500
$10,499 ………… Closing Costs at 1% + $1,500
$7,199 ………… Interest Points at 1%
$179,980 ………… Down Payment
============================================
$208,177 ………. Total Cash Costs
$48,900 ………. Emergency Cash Reserves
============================================
$257,077 ………. Total Savings Needed
[raw_html_snippet id=”property”]
[raw_html_snippet id=”newsletter”]
The Rush for Rentals by Investors Turns Into a Run for the Exit
This is the story of Dumb and Dumber…
The list of private-equity firms that over this past year have been rushing to get a stake in the supposedly red hot single-family home market include: Colony Capital LLC, Oaktree Capital Group LLC, KKR & Co., GTIS Partners and Waypoint Real Estate Group LLC, a real-estate investment firm in the single-family rental market that last year reported securing $245 million from Citigroup Inc., to expand its existing portfolio of over than 2,400 homes.
Last September, Waypoint’s managing director, Gary Beasley, talking about investors buying up homes said…
“We’re finally starting to see the private sector coming in and providing a solution. It was just equity and now it’s debt. We’re seeing meaningful price appreciation in a number of markets across the country.”
Of course, reading Beasley’s comments bring two thoughts to mind. One is that “meaningful price appreciation” ultimately means lowering expected returns for investors, and the other is that transforming equity into debt doesn’t sound all that good to me. But who wants to worry about such things when there’s a gold rush in the works.
The numerous private-equity firms that have entered the single-family home space are ostensibly seeking a way to place a bet on the housing market’s recovery. It began as a mom-and-pop type of investment, but it gained legitimacy among private equity firms when private equity giant Blackstone started buying tens of thousands of foreclosed homes.
Analysts chimed in… like the sycophants that are… saying that investor demand from these firms and others could help strengthen the housing recovery, and early in 2013, the Federal Reserve voiced its support for the strategy, desperate to find a way to deal with the backlog of foreclosures that continue to weigh down the housing market.
Warren Buffett showed up on the scene with an exorbitant bid for ResCap loans, thus offering proof that the Oracle remained bullish on the housing market as an investment opportunity, and without question, tens of billions has been raised by private equity firms from investors looking to take advantage of home prices that have fallen by at least a third and are perceived to be at or near bottom.
If the rents are providing an income, I don’t see the investors as dumb or dumber; quite the opposite actually.
I’ve never understood the meme about cashflow investors being foolish. These guys saw an opportunity to buy up large numbers of cashflow properties at a huge discount, and now they are sitting on a mountain of equity on properties yielding good returns. That doesn’t seem particularly foolish to me.
Uh… negative cash flow equates to being ”particularly foolish, dumb or dumber”, no?
Absolutely, negative cash flow equates to speculation, and at this time speculating on home prices could easily be seen as foolish, dumb, or dumber. But why would you think that hedge fund investments in SFRs are resulting in negative cash flow? Because the writer of the article says so? He engages in logical fallacies which indicate that he is more interested in stridency than accuracy or correctness, and accordingly identify his article as specious and lacking in credibility. I see no reason to think that hedge fund investment in SFRs in the last couple of years is resulting in negative cash flow, and every reason to think that the opposite is true.
“Of course, reading Beasley’s comments bring two thoughts to mind. One is that “meaningful price appreciation” ultimately means lowering expected returns for investors”
The end game on this business was always going to revolve around cost of capital. Those players with the most expensive capital requirements would stop buying first, and those with the least expensive capital requirements would keep buying longer. House prices where these funds were active would ultimately be pushed up to the lowest cost of capital available. That’s what we are seeing now.
Mortgage applications fall slightly
Mortgage rates fell marginally for the week ending Nov. 22, dipping 0.3% from a week earlier, the Mortgage Bankers Association said Wednesday.
The refinance index edged up 0.1%, while the purchase index decreased 0.2% from the previous week.
As a whole, the refinance share of mortgage activity climbed back up, representing 66% of all applications filed, up from 64% a week ago.
The 30-year, fixed-rate mortgage with a conforming loan limit increased to 4.48% from 4.46%, while the 30-year, FRM with a jumbo loan balance increased to 4.48% from 4.47%.
In addition, the 30-year, FHA rate climbed to 4.16% from 4.14%, while the 15-year FRM remained frozen at 3.52%.
Meanwhile, the average contract interest rate for a 5/1 ARM escalated to 3.18% from 3.12%.
Pending Sales of U.S. Existing Homes Drop for Fifth Month
The number of contracts Americans signed to buy previously-owned homes unexpectedly fell in October for a fifth consecutive month amid higher borrowing costs that are denting the real-estate recovery.
The gauge of pending home sales decreased 0.6 percent after a 4.6 percent drop in September, the National Association of Realtors said today in Washington. The median projection in a Bloomberg survey of economists called for a 1 percent gain in the index from the month before.
Higher mortgage rates and price increases driven by a tighter supply of homes for sale may be keeping some prospective buyers out of the real-estate arena. Further gains in hiring and confidence would help boost the housing-market recovery as well as the U.S. economic expansion.
“When mortgage rates went up, people got spooked and rushed into the market to seal deals,” Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “The numbers that we’re seeing for pending home sales are payback for the stronger numbers earlier this year.”
Estimates in the Bloomberg survey of 39 economists for pending home sales ranged from a decline of 2.5 percent to an advance of 3.5 percent.
The NAR’s report showed purchases decreased 2.2 percent from the year prior on an unadjusted basis.
The Rush for Rentals by Investors Turns Into a Run for the Exit
The list of private-equity firms that over this past year have been rushing to get a stake in the supposedly red hot single-family home market include: Colony Capital LLC, Oaktree Capital Group LLC, KKR& Co., GTIS Partners and Waypoint Real Estate Group LLC, a real-estate investment firm in the single-family rental market that last year reported securing $245 million from CitigroupInc.,to expand its existing portfolio of over than 2,400 homes.
http://mandelman.ml-implode.com/2013/11/the-rush-for-rentals-by-investors-turns-into-a-run-for-the-exit/
Higher interest rates, rising prices dampen housing market momentum
Home prices jumped over the past year, according to a new report, but worries are growing over whether the housing market is fading as a bright spot in the economy’s murky recovery.
The S&P/Case-Shiller index of home prices in 20 U.S. cities on Tuesday rose 13.3 percent in September from the same month last year and ticked up 0.7 percent from August. But the pace of growth slowed in many places.
Those gains are also a double-edged sword. Rising values are essential for the approximately 7 million Americans whose mortgages are larger than their homes are worth. But housing affordability has suffered as a result, just as interest rates have moved significantly higher.
New regulations slated to take effect in January could also make it more difficult for many potential home buyers to qualify for a loan.
“It’s pretty clear that the recovery in home sales has at least stalled,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.
Real estate had been a source of strength for the nation’s economy after spending years in the rubble of the financial crisis.
The housing market was ground zero for the dangerous combination of insatiable demand and shady lending that triggered the country’s financial crash. Many economists believe the recovery will not be sustainable until the sector is fully healed.
Analysts had predicted that rising home prices, record-low mortgage rates and growing consumer demand would galvanize the industry, rebuilding household wealth and creating new jobs.
My bad…..didn’t see above post!!!
No problem. It’s good to see you post here.
Fannie Mae Home-Loan Limits to Remain Unchanged in Early 2014
Fannie Mae and Freddie Mac will continue to buy U.S. home loans of as much as $417,000 in most areas at the beginning of 2014, unchanged from the current year’s limit, the companies’ regulator said.
In high-cost areas, such as New York, Los Angeles and Washington, the upper limit will remain at $625,500, the Federal Housing Finance Agency said today
The FHFA may reduce the maximum size of mortgages the two government-owned companies can purchase in the middle of 2014, as part of an effort to shrink their footprint in the mortgage market. The FHFA will give six months’ notice before making any changes, the agency’s acting director, Edward J. DeMarco, said in October.
More information on “potential future changes in the maximum size of loans that Fannie Mae and Freddie Mac (FMCC) guarantee will be forthcoming,” the agency said in a statement today.
DeMarco may be replaced next year by U.S. Representative Mel Watt, a Democrat from North Carolina who could be confirmed to the job by the Senate in December. Watt has not said publicly whether he believes loan limits should be reduced.
Fannie Mae and Freddie Mac buy about two-thirds of new home loans and package them into securities on which they guarantee payments of principal and interest.
The conforming loan limit won’t be reduced in 2014 with Watt replacing DeMarco, but the question now is, will it be increased? Why just $625k in high-priced areas? Why not $750k? $1m? FHFA can justify slightly higher figures the same way $625k is justified, no?
You’re probably right. Nobody cares what the original purpose of the FHA or the GSEs were. At this point, they are tools to inflate prices, bail out lenders, and allow lenders to conduct business without risk.
Foreclosed Sales at U.S. Auctions Double as Prices Gain
Purchases of foreclosed homes at auctions jumped last month as banks benefited from surging prices and shunned approvals of sales by homeowners dumping their dwellings at a loss.
In October, about 20 percent of repossessed properties sold at U.S. auctions compared with 15 percent in July, said Daren Blomquist, vice president of Irvine, California-based RealtyTrac. Auction deals accounted for 2.5 percent of all U.S. sales in October, almost doubling from a year earlier. Short sales, in which banks agree to accept less than is owed on the property, comprised 5.3 percent of purchases, falling from 11 percent, data company RealtyTrac said in a report today.
“Banks are starting to get the prices they want on the auction block so they’re less willing to lock in their losses with a short sale,” Blomquist said. Some homes are being sold for amounts that almost match the values of their defaulted loans. “That means banks are getting close to recouping some of their losses,” Blomquist said.
Investors, including hedge funds and private equity firms, which acquire the lion’s share of homes at auctions, have raised about $20 billion to purchase as many as 200,000 homes to rent. Their purchases are spurring a rebound in property prices after the housing bust shaved as much as 35 percent off real estate values nationally. The median home price gained 12.8 percent in October from a year ago, just shy of August’s 13.4 percent gain — the highest since the peak of the property boom in 2005, the National Association of Realtors reported last week.
Obama’s Next Mess: The Mortgage Market
By trying to protect consumers from the excesses of the run-up during the 2004-2006 period, the administration is set to deliver a gut punch to mortgage markets:
Inadvertently, they are assuring that fewer Americans will qualify for home mortgages. This promises to speed-shrink the housing market, which constitutes an estimated 15% of the nation’s gross domestic product, versus 18.6% prior to the Great Recession. This, in turn, will ensure that the recovery remains anemic into the foreseeable future, with an average of about 190,000 or fewer jobs created each month — far short of the 300,000 required to make up for recession-related losses.
Crucial parts already are flying off the train. Banks are exiting from the mortgage business in large numbers, primarily because of the high operating costs and heightened litigation risks imposed by the Dodd-Frank financial-reform law.
GSEs Update Short Sale Policies
Fannie Mae and Freddie Mac announced changes to their Servicing Guides Monday aimed at helping more borrowers avoid foreclosure through short sales and deeds-in-lieu of foreclosure (DILs).
Some of the changes are to align with certain Consumer Financial Protection Bureau (CFPB) rules and regulations that implement the mortgage servicing provisions of the Dodd-Frank Act, and some are simply to ease eligibility requirements for liquidation workout options. The new GSE requirements also become effective January 10, the same effective date as the CFPB’s new mortgage servicing standards.
Documentation Exceptions. Eligibility for a short sale or DIL with borrower documentation exceptions has been expanded to include borrowers whose mortgage debts have been discharged in a Chapter 7 bankruptcy, regardless of
the borrower’s FICO score. Additionally, mortgages that were originated as investment properties are no longer eligible for the exception to borrower documentation. Servicers must now review a complete Borrower Response Package (BRP) to evaluate these borrowers for a short sale or DIL.
Cash Reserves. Servicers must now submit a short sale or DIL recommendation to Freddie Mac for approval when the borrower’s cash reserves exceed $50,000.
Foreclosure Delays. Servicers and their counsel must delay the next legal action in the foreclosure process when the first complete BRP is received more than 37 days prior to the scheduled foreclosure sale date and evaluation of the package results in an offer to proceed with a short sale or DIL.
Expedited Reviews. Servicers are no longer required to conduct an expedited review when a completed BRP with a short sale purchase offer is received greater than 37 days prior to a scheduled foreclosure sale date. However, servicers must continue to expedite review of a complete BRP received between 37 days and 15 days prior to a scheduled foreclosure sale date.
Trial Period Plans. If a borrower remains eligible for the original Trial Period Plan (TPP) offer after receiving an appeal decision and accepts the original offer, servicers must reissue the original offer with a new TPP due date. Any delinquent amounts accrued during the appeal review process should be included in the modified principal balance.
I’m in Las Vegas; thank you for the chart.
So many RE agents here are all over the radio telling people to sell, that the rise in prices is temporary and to get out while the getting’s good. Inventory is way up. Is it just the usual it’s a good time to sell but it’s also a good time to buy mantra?Are they talking about the short term?
Hearing this stuff is making me hesitant to buy (actually, the main things are it’s in an it-could-go-either-way neighborhood and the cost of renovation.) My rent for this place is very high in comparison to a 15 year, 20% down conventional mortgage payment.
With the cost of ownership being so much lower than the cost of rent, you should buy. Even if prices go down, which they probably won’t, you will be locking in such a low cost of ownership that you could rent the property out and move on if you needed to.
I haven’t checked back with the owner in a while. I know he doesn’t want the place; he’s not into it. Last time I talked to him he was still in a selling mood. Stupidly I told him I wasn’t going to buy until real bargains presented themselves (arrogance is a failing which I usually don’t have, but I read a lot of housing blogs.) However, in my defense, at the time, he was asking way over market.
So sad (for me.) Two years later, prices have gone up so much, if he still wanted the price I had refused before, some people might consider it a bargain. I still don’t, considering it has an original 1978 kitchen (quite the expense to renovate) among other needed updates, mainly the bathrooms.
When I’ve tried to clean the lighting fixtures, they’ve fallen apart in my hands. The glue is 35 years old, after all.
Well, I guess I’ll just have to ask how he’s feeling now. The wife told me, in a mildly haugty fashion that they’ve never lost money on real estate. They’re in their thirties, I am close to 60 and it’s not my first time at the rodeo; you can be burned – – in their world real estate only goes up.
This market is so bizarre those of us here can use all the advice we can get. Thank you.
It’s true. I’ve said to myself, you can always go if the neighborhood gets too bad and rent it out.
It’s just that I’ve been there before (co-op in Manhattan for a couple of years) and I realized I’m not into landlording, either.
Well, if that’s how it goes, I’ll deal with it.
Thanks.
I wouldn’t lock in on a single property. You probably don’t want to move, and if the owners know that, they won’t feel motivated to bargain. This will make it more difficult to buy the house you’re in. If you start looking around, you may find a more suitable property that doesn’t require work to update.
Interesting data on the short sales, good post, one more thing to think about
Do you see why I argue the bottom of the housing market was a cartel activity? It took coordinated effort and decision making. There were several moving parts that had to come together, and the collective benefited from this action. Prior to these collective policy changes, supply was overly abundant, and each of the parties to the agreement was acting in their own best interest at the expense of the others. It’s classic cartel behavior.
Irvine Renter says:
November 27, 2013 at 10:59 pm
I wouldn’t lock in on a single property. You probably don’t want to move, and if the owners know that, they won’t feel motivated to bargain. This will make it more difficult to buy the house you’re in. If you start looking around, you may find a more suitable property that doesn’t require work to update.
—————————————–
So true. It’s laziness and a reluctance to move that’s motivating me. However, I’ve always told the LL I’m not happy with the rent, and we went month to month so we could leave when we like.
There’s another factor. I am a native NYer (born and raised in a relatively rough neighborhood in northern Manhattan) and we always felt that being close to the downtown area is always a plus; in NYC, that is generally unattainable by the middle class (if we can lay claim to that lofty status anymore).
In NYC, if you could buy a property on the cheap close to the center of town, that was a big score. There’s a different attitude here. Everybody’s always carrying on about Summerlin, Green Valley, etc. I’ve rented in both.
Having seen the 70’s in NYC, I laugh at what residents of Las Vegas regard as a bad neighborhood. I know the hedge funds did not buy in central LV. (There was a map published someplace of where they did buy.) Central LV seems relatively mild to me. That’s where we are living now. I’m also looking in the 89169 area. Kind of creepy now, but later… Don’t get me wrong, it’s a gamble, but I’ve lived it before.
[…] Loanowners drowning in debt: 21% underwater, 40% can't move up – OC Housing News Given lender's success, they will delay foreclosures and deny short sales to keep distressed inventory off the market for as long as it takes to reflate the housing bubble. Unless something changes, this means MLS inventory will remain low, and house prices will remain artificially high due to the imbalance between supply and demand. Perhaps in areas like ours where prices are near the peak, the pace of lender liquidations will quicken, but until those 21% who are underwater or the 40% who can't make a move-up are in a better position, between 20% and 40% of our normal supply simply won't be there. […]
[…] lenders managed to remove 20% to 40% of the normal market supply. (See: Loanowners drowning in debt: 21% underwater, 40% can’t move up) Builders are taking advantage of this imbalance while it lasts, which may be for many more years. […]