All Forum Posts by: Account Closed

In the commercial sector, there are a good amount of owner-occupiers who have been able to float on a combination of (i) PPP loans and (ii) the CARES act deferred debt-service payments on SBA loans - this just ended Sept 30. When these benefits end and the music stops, we'll see who's still wearing shorts.

Maybe these benefits will be extended after the election, maybe not - but whenever they end, there are bound to be a lot of businesses that are not going to just 'flip back on' like a light switch and they will be forced to sell or be foreclosed upon. This is already in the works, the amount of properties that are falling into default on their loans has been steadily increasing every month since April in my local market (Los Angeles). It makes intuitive sense - large footprint indoor restaurants, crowded call centers, comedy clubs, etc. There are niche sectors of the economy that simply will not come back and typically own their own buildings. Now is the time to refi, line up your capital sources and prepare to buy.

There will only continue to be more demand than supply if rates and inventory stay low, but what happens when rates start going back up? Foreclosures are increasing? Fire is raining down???? LIONS AND TIGERS AND BEARS OH MY!!!

Definitely a volatile time. I think it will have a broad affect on the market depending which ways the wind blows with long term stimulus or bailouts. Suburbs seem to do better for now. Bringing up averages around. Rates will stay low for years, is my guess. 

Once there is a glut of inventory due to delayed sales and foreclosures starting people will become upside down in their houses due to falling values which will propel more to give them back like in 08. Never before in history could you just give the house back and then get your credit score back to 700 in a year or two. In years passed if you had a foreclosure on your credit your were over. Couldn't get loans for many years. This caused a cascading event in 08 as the typical person was not going to pay 200k for a house only worth 100k. They just walked. Especially highend second homes. My son lived in a Orlando in 2010 had a neighbor in a house he paid 600k for. Value had fallen to about 250k for same house. This guy made 150k a year with his wife's salary. One day he walked across the street and rented the exact same house for less than his payment and just moved. Let the house go back to the bank. 1and half later buys almost identical house for 350k as the market started leveling out. People have figured out you can just give it back with little repercussions. REO's are typically discounted about 15% for a quick sale. This is what starts the ball rolling down hill when the REO's start coming in a large number.

My two cents worth. I am a appraiser in Fl in a second home market. Haven't seen a REO appraisal in 5+ years. Got 3 week before last and 2 yesterday. These are million dollar homes.

But the market has been on fire here as well.  Lots of Northerns NY, NJ, Ohio,  buying sight unseen before could even travel.  Prices are up 20% in the past 90-120 days.  Rentals have been thru the roof.  Full capacity.  These are vacation homes.  Remember Fl was one of the fist to open especially in NW FL.  We are at full capacity in restaurants currently.  Everyone mentions the down turn in 08 well it started here at the end of 2015.  Prices started turning down before national attention with the collapse of the banks.  The clue I had in 15 was that inventory started to climb.  The bidding wars subsided.  Market times went up.  It will take a year to two after things slow I think.    I think the reo appraisal orders are very bad sign.  Red hot market and people giving them back to the bank?  There is a under current that I don't think people are seeing right now.  For 3 months you couldn't rent your vacation home/investment property.  Then their business is suffering and having to take out loans with hope you won't have to pay back?  In every economic downturn for the past 50 in this market the 1st thing that hits the blocks as a reo it the vacation homes and condo's.  The last thing you need when times get tight is a vacation house/condo.  Unless there is a continued migration to this area from the wealthy I don't see how it keeps going forward with demand.

People thinking there will be no downturn are highly optimistic. there are 4 million people delinquent on their mortgages as of October 2020. Half of them are more then 3 months delinquent. About 3% or mortgages across the board are upside-down. So once the stimulus packages run out, we will have a few foreclosures, but nothing like 2008 when so many people were upside down. However, inventory will skyrocket from all the people who are stuck unemployed and the people who have been waiting to sell because of not wanting people in their house. When inventory is up, prices go down. I am confident there will be a downturn based on the numbers.

This post is offering a fascinating array of opinions. Great conversation. 

Think of the long term for real estate in this economy. It remain a seller's market for now, once the interest rate stay where they are. Purchasing power is there for the average investor and people that are staying home are buying online. Sales for home improvement have pick up also. This should proceed into the new year.