Thursday, November 4, 2010
Many of these homeowners have come to the conclusion that giving up their home is a better financial decision than making payments until real estate values recover. Numerous "strategic defaulters" now can afford to buy mortgage payments.
With the way the foreclosure process works, it normally takes at-least 8 months of missed payments before the bank will actually finalize the foreclosure and repossess a house. With the huge number of foreclosures, some banks are literally taking years to initiate foreclosure auctions. They don't want to add the losses to the books and so are postponing foreclosures as long as possible.
Underwater homeowners can not only eliminate thousands in debt by being foreclosed on, but with way the system works, can also save money by not making home payments for many months.
Providing what is known as "stealth stimulus is the flaw in the foreclosure process.” People who are living rent free in homes undergoing foreclosure, have a lot of extra cash, and most of this is helping the overall economy by being spent.
To be specific, some owners of underwater homes listed in the Boston MA MLS Listings are actually making money off of the foreclosure process by renting out their homes that they aren't making payments on.
Foreclosure was meant as a way to protect banks from irresponsible borrowers by using the real estate as collateral. Foreclosures are providing the opposite effect because of the the current real estate market, and unscrupulous lending practices that occurred during the housing boom. Undergoing through a foreclosure process can literally provide financial benefits to the borrower while transferring to the bank.
Strategic defaulting provides huge financial relief to insolvent borrowers but somehow might be unethical in other ways. Because of the slow foreclosure process that stimulates buyers in today's slow economy to give out extra cash to people who need money for housing repayments.
Tuesday, October 26, 2010
If market conditions remained steady and constant, where would home sales and prices be? If they increased by exactly 2% each year, this is where annual home sales in Salt Lake City would be. If this were the case, we would have had about 4,750 single family home sales this year. This is two times the original home sales we'll see that are probably aroudn 2,400.
The real estate market in Salt Lake has been going up and down. Because of economic recovery and home buyer's tax credit, it is still considered feeble than the average rates. For buyers, this is a an opportunity to take advantage of the low prices. This is the best time to deal with properties for investors, but they have to be careful for competition is growing. For sellers, it is best to be patient because this is still the buyer’s market.
Compared with home price averages from 1998-2001, if Salt Lake home prices increased by exactly 3% every year, they would still be too high. The yellow and red lines show what “average” home values would be, while the blue and green lines represent the median values. Under this model, average home prices in 2007 were about 28% too high. This year they are still nearly 12% above the turn of the century adjusted for inflation levels.
The SLC Real Estate market has come down a long ways over the past three years, but with the way things are looking, it looks like SLC Homes will see further price declines over the next year.
Wednesday, October 20, 2010
If there are too many homes for sale, the rate of selling is relatively slower than expected, and homes might not sell at all. This trend results to home prices going down because there is more real estate inventory than potential buyers, which makes this period not a good time to market your home.
Hence, this is not a good time to try to sell your home because the market conditions are not in its competent state.
However, the real estate inventory might be at all time high, but lowering of home prices ensue delay of home sales. These market conditions might get worse next year and right now Northern Utah is experiencing this upshot. They observed a big decline in home sales. Compared with 2009, last quarter home sales in Cache County were down by 38%. So, the price you can get for your home now will be more than what you will be able to get next year with the current real estate trend.
But sooner or later, the prices will start rising again and the levels of inventory will level out when real estate inventory goes down. Hopefully, this will happen after 10 months if and only if something drastic sways the real estate market.
You’re probably better off selling now than you will be next year. But if you really need to sell, now is not a good time to sell if you want to get as much money as possible out of your home.
Thursday, September 30, 2010
There are a couple of things Bank of America does that especially make the short sale transaction difficult. For one, Bank of America will not allow the same agent to represent both sides of the transaction. They won’t approve a short sale file unless there are two separate agents.
I’m sure they are doing this because they feel it will help them to get the best purchase price for each home they need to approve, and will help them stay out of potential legal issues. But, for real estate agents who have BOA short sales listed, this can be a royal pain when they have a buyer who is interested in a property they have listed.
Bank of America also requires that buyers get prequalified with BOA before they will accept a short sale offer. This is a pain for people who are trying to buy short sales, who are already prequalified with other banks, but it’s actually a smart move by Bank of America. For one, they know that the potential buyers are actually qualified, and they might actually get a few more loans out of the deal, helping them get business in a time of major losses.
If we step back and look at short sales from the view of Bank of America, it is a really tough situation they are in. They are losing millions every day. And while the policy’s they have are annoying for real estate agents, as a business, they have to do what they can to try and make a profit, or at least reduce their losses.
Now Bank of America has paid the attorney's fees to foreclose (estimated at a low end of $40K in my state) and will continue to face the same or worse market conditions. Not a good business move, but that's Bank of America for you. Wasting America's money!
They say that learning to do a short sale is very simple with Bank of America compared to other banks. But since they have been attacked due to their slow approval rate, short sale homes are processed painstakingly. In today's real estate world, purchasing short sales can really turn homeowners, buyers, sellers, and real estate agents upside-down.
Monday, September 20, 2010
If the market really got this bad, I wonder if real estate agents would start declining listings. With the way the real estate industry works, real estate agents don't make money unless the home actually sells. Having an overpriced, unsellable listing is only a cost. They still have to pay for advertising, filling flyer boxes, etc.
Most listing agreements are for six month terms. If only a select few houses actually sell within the first six months of listing, then real estate agents will be wasting their time with most listings.
While there will always be the desperate and new agents willing to do anything to get their name out there, I think we will begin to see the top agents decline listing homes unless the seller is reasonable and will price their home at a sell able point. It will be interesting to see what happens for the future real estate market.
Because foreclosures in Logan Utah have been low, we hopefully won't see double the time homes are on the market. Hopefully the Logan Utah Real Estate market can avoid this possible catastrophe.
The future for areas like Arizona, Nevada, California and Florida Real Estate could be substantially bleaker if the number of foreclosure homes really floods the market.
Friday, May 7, 2010
Thursday, April 29, 2010
Wednesday, April 28, 2010
Friday, April 23, 2010
The number of distressed homes is absolutely incredible. It will be really interesting to see what happens to the Utah real estate market this summer, post tax credit expiration. So far the rate of Utah Foreclosures isn't nearly this high.
Friday, April 16, 2010
Monday, April 12, 2010
Thursday, April 8, 2010
Friday, March 26, 2010
Thursday, March 25, 2010
Utah Home Sales don't count for nearly this many foreclosures, especially Real Estate Cache Valley.
Wednesday, March 24, 2010
Monday, March 22, 2010
Personally, I don't think there is anything wrong with lowering credit scores. In essence, these people receiving government assistance were unable to repay the amount they borrowed. It doesn't matter that their home is now worth less than they thought, they have proved unable to keep their financial commitments. That is exactly what credit bureaus are trying to track, how responsible borrowers are and how likely they are to meet their financial obligations.
Monday, March 15, 2010
Friday, March 12, 2010
While I do think that streamlining the short sale process is something that is much needed, I don't think that the $1,000 incentives to banks will make that much of a difference. I don't think that the return on investment, our future investment as American Tax Payers, will be worth the cost.
The $1,500 incentive for people who are selling their homes as short sales is just ridiculous. In most cases, these home owners haven't made a housing payment in months, sometimes years. Their poor decisions and actions have already cost the banks and American Tax Payers thousands and thousands of dollars. Why should they be rewarded for being irresponsible?
For credit reasons, home owners in distress are much better off short selling their home, rather than letting it foreclose. If the bank will approve the short sale, the sale of their homes at a reasonable near market value park, that should be incentive enough to get out and move on.
Thursday, February 25, 2010
I've decided that the forclosure situation is officially unreal. Nearly 1 in every nine California Homes is behind on payments! That's crazy. The sad thing is that as values continue to decline it's going to put even more people underwater. Home values are going to be even less than they were before the boom happened. Just think how much better off the housing market and economy would have been if the housing bubble never happened.