“What’s the potential with Commercial Real Estate ?”

Don’t put “up or down” in the question.

Then stand back and watch the fun.

Making Homes Affordable ?

Call me simple, but I bought a home that was affordable (and still is), not one I could afford later if everything went just right. If I’m reading this right, we (fiscally responsible folks) are now financing the low rates paid by those that never really could afford those homes if they bought them in a fiscally responsible manner. These folks ‘could’ have made out like bandits if they sold before the bubble burst but they guessed wrong and lost, tough taquitos buddy, I ain’t gonna subsidize your speculation.

1. As with most realtors, you are seriously understating the market.
2. Right now banks are holding REO inventories that are about equal to current MLS inventories.
3. New construction is dead and will remain so for the foreseeable future. Builders are sitting on HUGE inventories of partially developed land.
4. We’re nowhere near the bottom of the market, not even close.
5. You can “modify” loans till hell freezes over and you won’t stop the fall in the market or raise the bottom. You’ll just extend the inevitable.
6. The default rate on modified loans is significantly higher than on existing loans.
7. There’s about $100B worth of option arms that are going to adjust this year. Think mostly high end property in areas already hit hard by price declines.
8. The Fed and their $8K rebate is simply propping up prices to new purchasers. In the long run – as in the second day after it expires – prices will fall.
9. If you’re a builder, you can kiss off getting construction loans for new developments or to complete existing developments.
10. Servicing banks are sitting on HUGE inventories of loans that are 90+ days in default. For example, Wells Fargo has almost 10% of their portfolio of 1-4 family homes (residential real estate) over 90 days. Cure rate on those loans is historically about 5%.
11. Current FHA loans are defaulting at about 18%. Keep in mind that those borrowers have the best rates they’ll ever get and absolutely no equity.
12. New FHA underwriting rules this year should raise the minimum credit score for an FHA loan from 620 to 660. That will take out 35% to 50% of potential borrowers.

Bottom line, a growing inventory of empty houses, large numbers of people in homes that they will never be able to sell, residential construction industry relegated to hobby status, lenders raising standards and reducing the number of eligible borrowers.

I’ve said for a couple of years that we were in for a five year turn around if the government stayed out of the market and ten if they got in. I was wrong. It’s probably more like twenty and every penny the government puts in to “rescuing” homeowners and the real estate market in the form of rebates or modification fees is cash totally pissed down a rat hole.

the crazy thing was, one of the bigger strip mall owners drove a lot of the strong businesses out a few years ago by increasing the rent so high after a wal-mart opened up close by. Those places relocated close by and are still doing great but the new places that moved in there keeping changing and going out of business. Now it’s about about 3/4 empty.

nt

do you have a link to the story about 12% of mortgages facing foreclosure. I couldn’t find it at the link you provided and frankly that number seems way too high.

there will be no recovery in the real estate market. Especially the commercial real estate market.

Government intervention on any level will just prolong the pain and increase the overall damage to the economy.

This was my first diary on RedState. I was expecting maybe one or two comments. In other places I have written, a comment will typically be “nice article” or “thanks for the info”

I was pleasantly surprised to come back tonight and see over 40 comments and some great discussions. Many commenters offered their own insights to the topic and I have learned a great deal just from reading the comments.

As I spend more time on Red State, I am seeing that this is common. You can learn more from reading the comments throughout Red State than an entire newspaper.

The only negative is that I’m still trying to get used to the flow of the comments and figure out who is responding to which comment.

Thanks for all the great replies. I look forward to becoming more involved here in 2010.

Thanks for the welcome and for your insight.

Happy new year to you as well.

of a NYT article that says what I’ve howling about for years. It’s here…

you’re looking for HP2K, is… “the percentage of homeowners who are current on their payments continues to climb…”

After all, with fewer people making payments, and the banks retaining ownership of properties, the number of those paying on-time just has to go up!