How many think the worst is over ???

Question

528,000 foreclosures so far in first 6 months. On pace for over 1 million this year. That  is a # that, to my knowledge, has NEVER been reached. What will 2011 be? Higher or lower? Where are all the buyers and cash going to come from to buy? If this new batch of inventory comes on the scene, will prices retract again? Are we paying too much today based on the "worst is over" thought process? Average year is 100,000 foreclosures. Is  there a new low point coming in your area? What are you seeing? Rich

Justin S. · Answer

I do not think we will see any recovering until 2013.  7 year interest only ARMs are coming do from 2005 buyers so I expect another group of foreclosures in 2012.   I hope some auction buyers start walking away cause they are jacking up prices for no reason right now.

Timothy W. · Answer

Not over.  Not by a long shot.  Just how many new jobs are there?  People can't pay a mortgage without a job.

Nick J. · Answer

I want to keep believing that we're going to see another decline due to the exact #'s you and I and a lot of other people are seeing.

So far, I personally am having no trouble at all getting cash offers on properties selling retail or above retail prices. I'm playing cautiously, but also taking advantage of the current situation.

One thing I'm personally staying away from is buying anymore rentals in the phoenix area for now. I'm looking to buy in Birmingham Alabama with Eddie just because it seems to lack the high and low flux with what seems to be steady rental income. Once I, you and we all know for sure whats going to happen, I don't think I'll buy long term in my area.

I'm also worried about guys who's strategy is buying auctioned props and rehabbing them. I'm worried that they're going to get caught with 1 or 2 props on their hands and it may cost them dearly. For now, I'll stick with the paper flipping of shorts and take profits to buy more conservative props in Bama.

Steve M. · Answer

I see no stabilization happening over the next 12-18 months.  Maybe 2012 but like Tim, where are Jobs going to come from?  With the expiration of Bush's Tax cuts coming in 2011 *small business'* won't be hiring any time soon.

I don't think we'll see real stability for at least another 2-3 years, but even that is an unknown.

Ride the wave, do your DD, and invest smartly is really all we can do.

Bill Gulley · Answer

And, so long as the government provides stimulus to the corporate world, corporations and banks will hold on to their money, investing in the Treasury and Wall street instead of Main street. If they don't turn lose of the money, there won't be as many new jobs and as pointed out, mortgages can't be paid....so it's a cycle. Commercial foreclosures will be on the way, especially smaller properties. Banks are not even starting on foreclosures that they could start, just allowing people to sit there without making payments. 
I'd like to say it's getting close to the end, but I'm thinking now it may be 2013 or 14, when the perception of the economy has changed. Bill

Vikram C. · Answer

Yeah, banks are playing the game of "prisoner's dilemma" with each other.  Each bank is trying to be ultra-conservative by asking their appraisers to use REOs and SS in the comps while lending.  The net result is that appraisals are coming in low, which further depresses prices and further reduces the value of the banks' collateral.

The caution that they are individually displaying is turning out to be collectively reckless.

Vikram C. · Answer

I agree with Nick on the Phoenix area.  Prices have been declining each month since I got here and I see no reason to expect it to move in the opposite direction any time soon.

I also agree that the flipping business is risky when prices are declining.  I am in that business and I really hate it when a property sits on the market because I know I am losing value every day.

I expect 2011 to continue to witness a gradual decline in prices, with a possible stabilization in 2012, followed, hopefully, by a mild recovery.

Richard Warren · Answer

Remember that the figure for the first six months includes a lot of foreclosures that were held back due to the moratorium in place at the end of the year. Also efforts to increase the number of short sales as an alternative to foreclosures are ongoing.  The 1 million foreclosures is a huge psychological level and I would think that our trusty government will take steps to keep that from happening.

All that being said â€“ the number for the year will be huge, it already is. So far the cash has been coming in to eat up the inventory, but is it an endless supply?

:cool:

James Ward · Answer

Well, here goes.  In my humble opinion, I hold the belief that the present cycle of mass foreclosures has several years left.  There are muliple factors that bring this opinion to light.  We have many people that are unable to pay the obligation of the mortgage, for many different reasons.  We also have loads of people that now are "choosing" to no longer meet the obligation of the mortgage.  This will continue to cause foreclosures for several years to come.  And whether you belive it or not, it all causes chain reactions that ripple thru our economy.

Enjoy!

Mark N.A · Answer

People can't pay the mortgage OR the rent without a job (or another source of money).

So, no new jobs plus loss of benefits equals more tough times.  Or...  no new jobs plus new/extended benefits (thanks to the government printing press) equals more tough times of a different nature.

I'm sure glad to hear others have a more sanguine opinion of what's ahead.  From your lips to the creator's ear......

How many think the worst is over ???

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