Hampton Roads Housing/Real estate/and Economy

[Telmnstr]

Yeh, our dollar doesn't carry us as far as it used to when it comes to housing. But this area has a tremendous amount of options and variety of price ranges and neighborhoods. You can find inexpensive homes in great neighborhoods as well as expensive homes in others. You just have to look for the right place to get what's in your budget. Sometimes it means going to a less expensive city or finding an older neighborhood with less amenities nearby. The "bargains" or at least more reasonable prices are still out there. Tell a realtor what you want, and they'll find it.

$170K in 2003/2004 to $330K in 2006 doesn't make sense. There is no real fundamentals behind it, other than lenders giving suicide loans to everyone. It is starting to shake out, but it won't rev up until 2007. News just hit that in Boston they finally hit 11 mortgage lenders with giving loans that they *know* would become unaffordable to the buyers in 2 years. They fraudulently upped the income. Go to PilotOnline.com and hit up real estate -> Finanacing, and look at the ads. Half of them talk "No income verification" and "Stated Income Loans." This is those. Liar loans.

I found out that a friend had 70% of household income going to mortgage to live in a nicer but not over the top neighbrohood. He has EE degree, wife is teacher. This was a $150K-$180K hood a few years ago, and I think he had to bid against others to get the place. Some friends, after they got married seemed to need to jump into housing. Unfortunately, it's a society thing.

My main point is, nothing happened in the past few years to really justify increases in house prices other than lax lending standards. Now that is going to fall apart, the rich will get rich off of it and everyone else will suffer. It's sort of like the .com boom, but the margins were bigger (50% margin max on stock to 103% CLTV loans on houses). It's going to fall apart, and take the economy with it.

The sooner, the better.

[spiker3]

LINKAGE

Housing market cools....taxes still potentialy to rise...

The housing boom is over, but the real estate tax whammy is not, as many homeowners in South Hampton Roads will soon discover.

After five years of record home price increases, prices might fall slightly this year for the first time since 1993, the National Association of Realtors predicted last week.

"Sometimes you see two words now you never used to see in the newspaper classifieds," said David Block, a realtor with William E. Wood Associates in Norfolk: "Price reduced."

Edited September 13, 2006 by spiker3

[erdogs]

This is a natural progression. I don't think any one thought the boom would last forever. But this is in now way a crash! Even with people dropping prices, they will still make a nice profit.

[Telmnstr]

This is a natural progression. I don't think any one thought the boom would last forever. But this is in now way a crash! Even with people dropping prices, they will still make a nice profit.

It's just the start. Next year some $1 to $1.5 trillion dollars worth of adjustable loans will reset, jumping up the payments. It is my understanding that a good portion of the people that took out these loans either do not understand the terms, or have the thought that real estate prices will never go down and will always appreciate at rapid pace. So we could see huge amounts of forclosures.

Finally the gov't stepped in and busted 11 mortgage lenders in Boston over the fact that they were pushing loans that after they reset, the buyers will no way be able to make the payments. They coached the buyers thru lying about their income to make the numbers work.

Also in California Centex and other builders were doing sales of $100,000 and $150,000 off of new homes. This puts the comps for all the new buyers under water, so if they didn't put a bunch of money down, then they can't sell without a loss.

In a down market, owning a home makes someone immobile. They can't follow the jobs without leaving a mortgage payment behind.

The comments on the Pilot Online article are priceless. Especially the one lady responding to the guy who cashed out. From her perspective, the person who cashed out at the peak pretty much gave up his American citizenship by getting rid of his house. Now he is a scummy renter (who will be able to buy back his house much cheaper in a few years).

Housing prices are going to fall like a rock. Especially once the lenders are no longer able to resell the garbage mortgages on the secondary market. Then they will have to re-introduce lending standard and very few will be able to qualify to buy a house.

The stats on the older housingtracker.net site say that inventory in Hampton Roads is up some 350% since 1 year ago or so.

There are for sale signs EVERYWHERE. I'm always looking for spots where I can take pictures of 5+ signs in one shot.

Another thing that is interesting is it appears that with the large runup in housing prices, buyers bought new homes before selling the old homes. Because homes moved so quick, the assumption was that the old house would sell rapidly. But once the new home was finished and the buyers moved into the new home, the market had cooled and the old home wouldn't sell as rapidly at the price they expected. There are some stories creeping up. I tend to look on craigslist for houses that are listed "in move in condition" ... that is a good sign of either a flip or someone who moved up without a contingency.

You are right - real estate generally swings back and forth. The crazy lending has led to an unprecedented run-up in prices, that will swing back to the norm... which just happens to be a very large decrease.

Also, just to make one feel better... the last time the loan products that are in use today by the masses were popular, was right before the great depression. They aren't new products.

[wrldcoupe4]

CNN Money had an article this week on how much foreclosures have increased this year. Many people are unable to handle the Adjustable Rate Loans.... I'm not sure how much regions like HR and elsewhere are affected though. It seemed that the markets most affected were the most overpriced.

[erdogs]

CNN Money had an article this week on how much foreclosures have increased this year. Many people are unable to handle the Adjustable Rate Loans.... I'm not sure how much regions like HR and elsewhere are affected though. It seemed that the markets most affected were the most overpriced.

Getting an AR loan is foolish! If thats the only way to get your loan approved, maybe you shouldn't buy a home at your price range. Those people need to buy a lesser house. I hope prices do fall so more people can afford a home. As long as the economy doesn't crash we should be fine. I don't see the next depression. Only time will tell.

[spiker3]

Disagree erdog, i am looking for an ARM for my first home, regardless of the market. It'll be my first house, and i'm looking at a 5/1 or 7/1 ARM, not for more house, but for the slightly lower payments. My first home will not be my last one, it'll be more than likely short term. My plan is to get sell the house four years into the 5/1 or 7/1, but at least have made equity on the house (assuming the market doesn't just implode). Taking out interest only loans, or 40-50 year fixed rate mortgages are where people get into trouble, or the uneducated who don't research. I'm confident that an ARM is what's going to work best for me.

Tel, are you Bubble Boy on norfolk craigslist?

[erdogs]

Disagree erdog, i am looking for an ARM for my first home, regardless of the market. It'll be my first house, and i'm looking at a 5/1 or 7/1 ARM, not for more house, but for the slightly lower payments. My first home will not be my last one, it'll be more than likely short term. My plan is to get sell the house four years into the 5/1 or 7/1, but at least have made equity on the house (assuming the market doesn't just implode). Taking out interest only loans, or 40-50 year fixed rate mortgages are where people get into trouble, or the uneducated who don't research. I'm confident that an ARM is what's going to work best for me.

Tel, are you Bubble Boy on norfolk craigslist?

If you think you can afford it a few years from now, go for it. I had a friend who's mortgage went up $400. He had to sell! He didn't think it would go up that fast. All I'm saying is don't get in over your head. There is nothing wrong with moving up slowly.

[rusthebuss]

Disagree erdog, i am looking for an ARM for my first home, regardless of the market. It'll be my first house, and i'm looking at a 5/1 or 7/1 ARM, not for more house, but for the slightly lower payments. My first home will not be my last one, it'll be more than likely short term. My plan is to get sell the house four years into the 5/1 or 7/1, but at least have made equity on the house (assuming the market doesn't just implode). Taking out interest only loans, or 40-50 year fixed rate mortgages are where people get into trouble, or the uneducated who don't research. I'm confident that an ARM is what's going to work best for me.

Tel, are you Bubble Boy on norfolk craigslist?

Bubble boy! It wouldn't surprise me one bit if it was. I still say there is no bubble. The market goes up and down.

[spiker3]

'Bubble Boy' on craigslist would repost ads for homes that were for sale for radically high prices, and shred them with his comments, for example:

2 BR 1 BA house on the outskirts of downtown, completely repainted and recarpeted. Quiet street, easy parking, $245,999. This won't last long!

becomes

2 BR 1 BA house on the outskirts of downtown (which means 28th St and Layfette), completely repainted and recarpeted . Quiet street (so it's easy to hear the drive-bys), easy parking, (since your car will be stolen if it's on the street for an hour) $245,999. This won't last long!

Something along those lines, it was priceless.

Also put a blog up at hrhousingbust.blogspot.com

[vdogg]

Tel, are you Bubble Boy on norfolk craigslist?

Were there any references to "McMansions" ?

[spiker3]

Yessir

[vdogg]

Yessir

It's gotta be him then.

[Telmnstr]

CNN Money had an article this week on how much foreclosures have increased this year. Many people are unable to handle the Adjustable Rate Loans.... I'm not sure how much regions like HR and elsewhere are affected though. It seemed that the markets most affected were the most overpriced.

I think it is something that is happening in a large number of markets. It's all about affordability. Median income doesn't afford median priced houses in HR. Right now the median priced house on the market is $349K and median household income is $50-60K. $50-60K affords $150-180K home. Three years ago, this was in check. Now it's not. It will revert to a situation where homes will be priced in line with salaries, because lending will tighten up. A whole bunch of people that are invested in mortgage backed securities are going to loose a bunch of money. The reasons why this has happened is that lenders are willing to lend people large sums of money, even if they won't be able to pay it. The lenders don't hold the paper. The appraisors are supposed to verify the property is worth the amount of the loan, to help protect the people holding the loan. But lenders lean on the appriasors to hit the numbers. There is a bunch of this documented, and appraisors complaining that if they don't hit the numbers, they get blacklisted and get no business. So the checks and balances are off.

Not all insitutions are involved with this. But the NAR themselves said that 30% of all home purchases in 2005 were investors, and I believe similiar numbers in 2004. Just look at the inventory. I just walked down for food at Hells Kitchen and passed the same condos for sale that I saw some 6 months ago. A few have sold.

It's just bad. It's bad for the economy.

Another thing that I didn't quite realise was that HELOCs are generally not fixed rate loans.

If you do not own, now would not be the time to buy IMHO. It's time for the market to revert.

Visist www.housingbubblecasualty.com and read his older posts. He was in the mortgage industry and telling stories of what he was seeing. Also www.thehousingbubbleblog.com is a GREAT resource. Those people have accurately predicted everything.

And BTW, the media has quotes David L. from NAR nonstop. He is nothing but a sales person mouthpiece for the real estate industry. The MSM (main stream media) does zero homework, and repeats what they are fed. They helped PUMP IT UP (a little more, get you going on the dance floor.. sorry technotronic) to the top. Now that it's levelling off and coming into the decline, they are beating it down.

And the line "The sellers market is over, it's now a buyers market" is more stupid realtor drivel. It's not a buyers market, it was a sellers market but now everything has halted and nothing is moving. Prices are too high and sellers don't want to (or can't because they can't afford to) lower, and no one is left to buy into the ponzi scheme.

[Telmnstr]

Disagree erdog, i am looking for an ARM for my first home, regardless of the market. It'll be my first house, and i'm looking at a 5/1 or 7/1 ARM, not for more house, but for the slightly lower payments. My first home will not be my last one, it'll be more than likely short term. My plan is to get sell the house four years into the 5/1 or 7/1, but at least have made equity on the house (assuming the market doesn't just implode). Taking out interest only loans, or 40-50 year fixed rate mortgages are where people get into trouble, or the uneducated who don't research. I'm confident that an ARM is what's going to work best for me.

Tel, are you Bubble Boy on norfolk craigslist?

B U S T E D !!!

The realtors are always standing by, with their finger on the flagger.

A few notes.

ARM loans are ideal when interest rates are really high, and have a good chance of going lower.

Real estate transactions generally eat what, 4.5-5% with a discount broker and 6% with normal Realtors. So if the house actually appreciates at 2-3%, after a few years it could be close.

Look to see what a similiar house would rent for. If the rent of a similiar house is the same as the mortgage (with 20% down) + insurance + taxes, then the price is probably somewhat correct. I realize there is a tax deduction for mortgage interest (which really should be removed, but that is for a different discussion).

If you really do want to buy a house, lowball! If your not embarrassed to present the offer, your offering too much!

The market is going to go down. There is no place for it to go. The lax lending is coming to and end (investors are starting to see losses on the crap loans, mortgage firms are laying off in droves, prices are nosebleed levels). The punchbowl is being removed, and prices will move back to fundamentals. Fundamentals are technically 2001 prices!!!! Seriously, it's some wood, some contractor grade fixtures and some dirt. Real estate is generally really illiquid. The past few years have been a mania, and people often weren't paying attention or don't wish to remember outside of those years.

THERE IS NOTHING TO JUSTIFY THE RUN UP IN PRICES OVER THE LAST 2-3 YEARS. SALARIES HAVE NOT CHANGED.

EVERY REGION has something that is "it's different here because."

You want to see some real devestation? Check out Pheonix. California residents had massive amounts of equity thanks to run ups, so they decided they would invest in those cheap cheap houses down in Pheonix. Except, there aren't really people to occupy them. www.housingtracker.net shows over 40,000 houses on the market. I think the number is actually over 50,000. It is absolutely nuts.

BBOY

You want to know what the craziest thing about posting it real on craigslist? You can totally rip up a listing and people will still respond.

I wanna roll wif.. the gangsters... but so far, they all think I'm just too white and nerdy.

[erdogs]

My prediction is that we'll see 10 times the number of homeless people in the streets. Millions more of people are going to file bankruptcy, lose there home, and have no where to go than the streets. We can all thank those evil bankers and realestate cons. We will pull out of Iraq when Al Gore is elected. He will cut our military by a 1/3 and stop building any new submarines or ships. Bill Gates will start a new software company that will put Microsoft out of bussiness. Most of our computers will turn obsolete and crash. After that you will see the number of homeless jump another 30 percent. Most of those people will have gone crazy cuz they couldn't get on myspace or craigslist. After that Mr. Gates will rule the world and we will all be forced to wear pocket protectors. And by the way Telmnstr wil be the Mayor of Norfolk and will relocate the office to the AT&T building. That way he can shoot spitballs out the window and hit the few people walking out of Granby Tower.

[vdogg]

That way he can shoot spitballs out the window and hit the few people walking out of Granby Tower.

This thread is hilarious.

[rusthebuss]

My prediction is that we'll see 10 times the number of homeless people in the streets. Millions more of people are going to file bankruptcy, lose there home, and have no where to go than the streets. We can all thank those evil bankers and realestate cons. We will pull out of Iraq when Al Gore is elected. He will cut our military by a 1/3 and stop building any new submarines or ships. Bill Gates will start a new software company that will put Microsoft out of bussiness. Most of our computers will turn obsolete and crash. After that you will see the number of homeless jump another 30 percent. Most of those people will have gone crazy cuz they couldn't get on myspace or craigslist. After that Mr. Gates will rule the world and we will all be forced to wear pocket protectors. And by the way Telmnstr wil be the Mayor of Norfolk and will relocate the office to the AT&T building. That way he can shoot spitballs out the window and hit the few people walking out of Granby Tower.

Dude that is too funny! You forgot that tel will stick the needle in the housing bubble!

[Telmnstr]

And by the way Telmnstr wil be the Mayor of Norfolk and will relocate the office to the AT&T building. That way he can shoot spitballs out the window and hit the few people walking out of Granby Tower.

There are no windows! It's nuclear hardened or something.

[erdogs]

There are no windows! It's nuclear hardened or something.

As Mayor you put them in!

[spiker3]

here's an example of Tel's handiwork...freshly posted:

Bubble bubble bubble, can't you see, it's going to wipe out your equity, combine that with your IO loan, you might as well mail in the keys to your home!

Betcha didn't know I was a rapper! Oh wait, I live in Hampton Roads and that is all our region has to show!

Housing news is slow. Nothing but stories of all the houses that won't sell. It's mainly a waiting game. Watch the homes sit, watch the related industries slow to a crawl, watch the financial issues catch up with all the people that got duped by lenders. I've been reading a the housing blogs, and damn is it becoming clear that the lenders really took the standards low and coached people into signing up for mortgages that basically, there is no way people will be able to afford them, and now there is no way they will be able to sell their house. You know what this means? EVEN MORE INVENTORY.

Also, I'm into photography, so if you know of good spots where I can take simple pictures and capture like 5 or more for-sale properties in one place, I'd like to share these with others who are in similiar markets where real estate is absolutely crumbling. Drop me an email. I may not respond, cause I'm afraid the local realtor cartel will have me gagged and buried in cement of a soon-to-fail overpriced condo building.

FACT: The median household income in HR is $50-60K/year. That puts the median affordable house at $180K. Right now the median asking price is $350K. Therefore, your all doomed with your $350K asking prices on mediocre houses made of vinyl foam board. Half these new homes, the mortgage will outlast the dewlling!

BTW, not including Ford, I think I'm seeing the job market weakening. Anyone else?

Don't bother flagging it, I will just repost. There is value to my posts, unlike half the overpriced crap listed on here.

[erdogs]

This guy's a riot!

[rusthebuss]

This guy's a riot!

I totally agree. I think that his opinions on the market are very over exaggerated. The market is cooling but the sky is not falling like he tells everyone. The only change that I see, because its turning into a sellers market, is that the asking prices will go down and you won't see many people bidding 20-30K over the appraised price. I don't forsee huge price decreases like he implies. You aren't really going to see house back at prices in the late 90's.

[Telmnstr]

I totally agree. I think that his opinions on the market are very over exaggerated. The market is cooling but the sky is not falling like he tells everyone. The only change that I see, because its turning into a sellers market, is that the asking prices will go down and you won't see many people bidding 20-30K over the appraised price. I don't forsee huge price decreases like he implies. You aren't really going to see house back at prices in the late 90's.

It's not a sellers market. The realtors are saying it's a buyers market, but this isn't true either. It will just move to limbo. No buyers, and lots of sellers. Inventory is sky high. The people that invest in the mortgages are going to get burned by all of the bad lending practices. At this point, availible money from lenders will be hard to get. This further removes the buying pool. Anyone who has to sell is at a loss.

Look around, where is the money coming from to buy all these expensive homes? The middle of the road property in Hampton Roads is $350K. The money is easily availible thru shady lenders, offering loan products that can put buyers in the house. The problem is, in a few years if there aren't steep salary increases then they loose the houses.

2007 is when it will start.

Who do I see predicting this? People who work for mortgage companies that are honest, that are getting calls from people who took loans from the shadier lenders.

Glad someone saw my craigslist handiwork. People flag it off pretty quickly, although I do get praise. If I post about rents in HR, I get emails from people who work hard during the day to struggle to afford a basic place to live.

I've had people say it's due to Navy housing allowances, but I don't know if this is true. The point is the housing allowances help push the rents for the lower end of the market upwards, which makes it difficult for non-military to afford on low paying service jobs.

[hoobo]

All the money is coming from soaring salaries and a steady economy. People were gambling that their salaries would go up and rates won't go up too much so that they could switch to a fixed-rate loan once their ARM's initial period ends. That is looking more and more likely every quarter. Also, with oil prices dropping, the housing market cooling off, and exports rising to offset the increase in salaries (since productivity has little room for improvement), inflationary pressures are subsiding. Therefore, the Fed should hold off on more rate hikes (as they did today) which means fixed-rate loans will be within reach of most ARM holders. Some analysts even think the Fed may start lowering rates by next year. Again, I'm not saying that prices will go up. All I'm saying is that the housing market isn't going to collapse leading to significant drop in prices. Probably a 5% correction as the assessed price and the market price come into equilibrium, but not a bubble burst.

Edited September 20, 2006 by hoobo