Skip to comments.Foreclosures for sale: Big supply, low prices
Posted on 05/29/2011 5:14:57 PM PDT by Jim 726
There's a three-year inventory of homes in foreclosure for sale, and that's devastating home prices.
Las Vegas has so many foreclosures that 53% of all the homes sold in Nevada are in some stage of foreclosure, according to a report from RealtyTrac, the online marketer of foreclosed properties.
Foreclosures represent 45% of sales in California and Arizona, and 28% of all existing home sales during the first three months of 2011.
"This is very bad for the economy," said Rick Sharga, a spokesman for RealtyTrac.
What's more, the homes are selling at steep discounts, especially so-called REOs, bank-owned homes that have been taken in foreclosure procedures.
The average REO cost on average about 35% less than comparable properties, according to RealtyTrac.
(Excerpt) Read more at finance.yahoo.com ...
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.
>>Great news for buyers, though. If theres anyone who still has a job or money...<<
I’m buying — I just paid off my mortgage in California and it looks like I can pay cash — even BEFORE I sell my current place — for a nice place in Irving, TX.
Cash is king. I am glad I never took a dime out from my refi. That was to get a good interest rate. The whole mortgage took about 12 years to pay off.
I shan’t have another.
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.
You might want to check out the current and future demographics of where you are considering in Irving. Have a friend there and the value of her home is going down.
>>You might want to check out the current and future demographics of where you are considering in Irving. Have a friend there and the value of her home is going down.<<
This is to live — but I’ll look at trends, especially in the schools. I don’t have kids but school trends tell us about the families in the area.
But I have to be near he airport (that is why I am moving).
But if I buy the place cash then it doesn’t matter if I lose a few bucks and have to sell at a small loss after a few years. I won’t like but it won’t matter much.
Real estate has not been devastated yet. It was in a huge bubble. 14 years ago we paid $125k for our house. It is still worth right at $200k but at the height of the bubble it was worth almost $500k. Just look at the numbers.
Daughter is in escrow for a new house right now. They are still doing some rather creative financing. She didn’t qualify but they have a program that if you make no more than $60k a yr you qualify for a no down, no closing costs loan on a$180k house. That is ridiculous.
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...
Of course the entire landscaping was completely dead and I haven't even discussed the one bedroom monther-in-law suite which had been gutted. Stupid stupid Realtor. My BOE was $100K in rework to bring it to showroom. They wanted $380K for the property.
look in Mansfield (just south of Arlinton, TX) as well, some REALLY good deals there and it’s considered desirable by most people.
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.
Thanks, amigo! :)
Will that make us neighbors?
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.
“Lower prices attracts buying, and over time the market works thru the supply overhang to get back eventually to a healthy market.”
They’re going to need to be significantly lower, as more and more people lose their jobs. Next up will be more and more multi family homes, creating even more of an oversupply. There’s a long, long way to go before the prices bottom out. IMHO.
Real Estate prices have been in a huge bublle, for about 15 years. But you’re right, once things get cleared out and cleared up, the American Economy can bounce back. But it’s not practical to think that the debt sponsered way of life will continue. It won’t. Prices on all goods must either drop drastically, relative to work hours performed, or they will not be bought, plain and simple. Other citizens in other nations will soon no longer support the U.S. way of life (they have been subsidizing us as long as we have been running a deficit), and when that pull back comes, there will be a sever reduction in lifestyles, accross the board (Except the very rich, or elite, who will profit handsomely, as they will have the prior resources to do so, as always, throughout history).
chinese have plenty... and have been buying them up
They’ll move in with each other, have their kids on food stamps, and go to the E.R. for “Free” healthcare, and plead their case for benefits like unemployment, long, long before that. I’m from Vegas, and I do not believe for half a second that an Illegal will pack up, unless they already have their mansion built with tax free dollars they were sending home (Which is to say the more industrious will move back, the biggest moochers will stay).
“the price is so low that the tax value wont cover the costs of the City services “
Yeah, but if the house is empyt it’s even worse.
Federal policies to cushion the housing collapse are hurting localities.
Localities are going to have to turn to personal property, sales, income taxes and fees for more of their taxes.
But if the banks won’t sell their REOs for realistic prices even that won’t work
Contrary to the “buyers market” propaganda, it really isn’t in this area. Not as horrible as it was 4-5 years ago, but not very good either. Lots of inventory, but most all are dogs with at least one serious problem. Unrealistic prices being one. The would be sellers of the nice homes seem spooked. Perhaps for good reason.
Why don’t banks pay property tax on foreclosures?
Yes, around Washington dc, and you are paying twice for those.
I’m holding out for free or better.
Maybe their paying the taxes on what it’s actually worth, which is a mere fraction of what they’re trying to claim it is./sarc
(I don’t honestly know.)
My understanding is, however, that there is a federal bailout deal in which if they (the banks) foreclose, and then let it go to auction, they (the banks) are reimbursed (by the Fed Gov) for the difference between the auction prices and 85% of the NOTE value (Meaning they pay however much it takes to make the FedGov bailout contribution, plus the auction price, minus principle paid, total 85% of what the home was claimed to be worth on the foreclosed mortgage, not current value). The get us coming and going.
Home prices were far too high to begin with. About time they fell. Now, if only the rest of our property taxes would follow suit.
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,
Like all dem (them) public employees...
This Obama Recovery is great. I saw it on the news.
Lesson on how Obama will turn the USA in to North Haiti.
Here’s what happened to me, and I have found out I am not the only one with similar circumstances. In 2006 I entered into a contract to have a home built for me on 6 acres in No. Calif. The total cost was $ 445,000. When it was finish, it was appraised at $ 600,000. I put 100,000 down on it. In 2009, my job with a major company ( WF ) eliminated my position and left me without a job. There were no jobs available in my area for my occupation. I could move, but that meant selling my house. I looked into that, and found out my home was worth less than I had paid for it. Surprise . I decided to cash in my savings and retirement and start up my own business and compete with my prior employer. Today I am doing ok, in the next year, I should be back to where I was before this crap started, but in the meantime, I went through all the HAMP and other programs and was declined. So I went through the short sale process. It is now in escrow for $ 262,000. Which I could now afford to make payments on, but the bank would rather sell it to someone else instead of me. Go figure, but now I can take advantage of purchasing someone else’s problem. What a country !
I’ve been looking at foreclosures in Washington State as well and most of the time they make you sick to think that heathens were able to buy a house and trash it like that.
I’m looking now at getting one of those EcoCottages and have it put somewhere. They are small but quite nice and affordable.
I’ve also noticed that Fannie Mae is paying much more for these homes than they are trying to sell them for. Taxpayers are losing big time.
You’re exactly right, and we are already seeing exactly what you describe here in SW Washington. Our property taxes have gone consistently up while the assessed value of our home has plummeted. The City has a $10 Million deficit, they have already closed one fire station, and are talking about streetlight fees, street maintenance fees, leaf collection fees, enforcing dog licensing, etc, etc, etc.
There is no truth in Pravda, there is no news in Tass.
Some cities have gotten really tough on the banks that were letting the properties sit empty with yards not maintained. Passed ordinaces apply hefty daily fines. The banks go wise to that and hired maintenance crews to come out and clean up the yards.
If you live in a city where foreclosures are dragging down the neighborhood because the banks are not keeping them up, get after your local rep in your city. After the city sees how much it can cash in from the banks on this, they will put it in place in a hurry.
The house are already selling at half the cost it would take to build them. That is way under a normal selling price.
And if they drop any more they will be free. Housing prices here are way, way, way down. Prices are now below what they were before the housing boom even started, lower than they were 15 years ago.
Building in San Diego is not easy. The cost and time getting permits is not owner friendly.
I also do price consulting for lender and know the market from a value point, you have a price point too low for the market
Yep, they’re going to take it from you in taxes over the next 30 years, so you better take it from them at the auction block right now. Besides, 13% return on sub $100K duplexes beats the crap out of 1.5% in the bank, and so what if you have to put $20K into it to make it nice. That part is fun! :)
“Right now it sucks for the realtors and the banks”
It sucks a whole lot more to those of us who are trying to sell a home NOT in foreclosure.
Are you sure that's where you want to buy? There are better locations in the metroplex not too far away which don't cost much more. You might want to look north of DFW or up in Denton County except for a few pockets. There are some parts of northern Tarrant County that are OK, and Collin is like Denton - generally good, except for some bad pockets.
And if you are not familiar with the area, get a map that shows school districts - that can be more important than municipal boundaries.
Why dont banks pay property tax on foreclosures?
Same reason they don’t pay the HOA assessments or keep the property in good repair.
We are moving to San Diego because I have a business opportunity there, my wife however is retired as of July 1st. She wanted to look at foreclosures because she thought a fixer-upper might keep her occupied. We are going to take another look at 3 and 5 with a friend of the family who is a contractor. We really liked 5 since I want to bring my son out here and the basement suite would give him some privacy.
We also have a mortgage mess at home thanks to the incompetence of a mortgage servicer that is likely to require a quiet title action. So buying something with cash on hand is also appealing at the moment.
Would building over the line in southern Riverside or Orange be substantially easier?
“Why dont banks pay property tax on foreclosures?”
They do when they are sold plus penalties.
I’ve got a paid for house I want to sell and get another paid for house somewhere else. I live in Montana but I don’t want to anymore. The only thing I can trade for would be a mobile/modular or someone’s foreclosed property. But at least there have been a few lookers here and I thought I was going to get an offer last week.
“The house are already selling at half the cost it would take to build them.”
Due to labor, union labor, or materials? Already built houses should not (as history has shown) appreciate, they haven’t much for a 100 years of 116 year history (the last years being the boom) when inflation is adjusted out. Also, unless vast improvements are made, historically older houses depreciate with age, so they should be lower than the price to build new anyway.
There are of course outliers, such as a highly desirable area, where people are actually moving to, in response to something local, which would increase demand, but that’s not the standard, it’s the exception.
“That is way under a normal selling price.”
Not historically. But in the last 50 years as the dollar has been dropping in value, the nominal price has been increasing, but with inflation ruled out, houses don’t appreciate just by existing. As they age they are worth less, by the average price of an existing “standard” house on the market doesn’t change much in price.