Realtor Coaching & Training: Washington
What is the state of the housing recovery?
A sharp drop in pending home sales for January is the latest in a string of reports calling into question the health of the housing recovery.
The housing recovery is “in a precarious state,” says Robert Shiller, Yale professor, author and co-creator of the S&P Case-Shiller Index, taking a much more pessimistic view vs. his comments here last July.
Shiller’s eponymous index, which has risen for seven straight months through December, “shows some weakening of the upward burst” from last year, but is still going up on a seasonally-adjusted basis, the professor says. “If I were to forecast based on my usual models of years ago I would think we’ve turned a corner, we’ve bottomed and we’re turning up.”
But that’s a very big “if” and Shiller says there are reasons to wonder whether this time is different, or certainly to be worried about the sustainability of housing’s recovery:
* — Only the Shadow Knows: Housing experts say there’s anywhere from 2 to 5 million homes ready to come on the market, due to pending foreclosure. How soon…this year and into next year. This DOES NOT include the up to 15,000,000 other homes that may go into foreclosure over the next few years.
Do YOU think its too late for you to become a REO Listing Agent…and make money from BPOs? Its not. The banks are boiling over with REOs. Watch the FREE Agent REO Secrets video now…and download the new 2010 REO Secrets book. Free List of Asset Managers and other info you need know to cash in on the explosion of REO Listings!
*– Strategic Default…”I think people will become less resistant to defaulting on their mortgage,” Shiller says. “That’s a real cloud on the horizon.”
* — What happens when the fed stops buying the MBS’s. What this will result in is that the artificially low mortgage rates will increase as the secondary market demands returns greater than what are currently being offered.
*–The home buyer tax credit ends this spring… “We can’t just slam on the brakes and withdraw that — we could but I’d hate to see what happens,” he says. “When [government programs] do end there’s going to be a psychological component of that ending as well, which is really hard to predict.”
For that reason, Shiller expects some or all of the government housing programs will be extended, raising the broader question of how the government removes all the liquidity that’s been provided.
“It’s very hard to get out of this mess,” he says. “We have to transition to a more [market-based] economy. It’s going to be a difficult transition. That’s why I have worries for years forward.”
Agents, as Dr. Shiller is making clear in this video….and as we have been telling you…THIS MARKET IS THE NEW NORMAL. What homes are selling now? Short Sales and REOs. Do whatever it takes to learn how to list and sell short sales. Watch the FREE HREU CDPD Agent Short Sale Secrets video now..and grab your FREE Short Sale Secrets book!
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Let me be 100% clear…I didn’t write this post…its from another blog….
With that said, he makes many excellent points.
..points we DO agree with.
Read this and share your comments.
(Note: I edited some of the language used)
Source: Market-ticker.denninger.net
I’m tired of the repeated bull-crap from the media and various carny barkers about “moral obligations” to meet your payments on underwater property.
Why is it that you have a moral or ethical obligation to BANKS to do this, when THOSE VERY SAME DAMN BANKS ARE WALKING AWAY IN THE SAME FASHION I ADVOCATE?
Dec. 17 (Bloomberg) — Morgan Stanley, the securities firm that spent more than $8 billion on commercial property in 2007, plans to relinquish five San Francisco office buildings to its lender two years after purchasing them from Blackstone Group LP near the top of the market.
The bank has been negotiating an “orderly transfer” of the towers since earlier this year, Alyson Barnes, a Morgan Stanley spokeswoman, said yesterday in a telephone interview. AREA Property Partners will take over the buildings. Barnes declined to say when the transfer will occur.
“This isn’t a default or foreclosure situation,” Barnes said. “We are going to give them the properties to get out of the loan obligation.”
Right.
Seriously, that is almost funny. Banks doing ‘orderly transfers’ of their upside down properties. So, is that going to be what the real estate industry started calling foreclosues….’orderly transfer’?
Exactly as you do when you strategically default on your mortgage, giving the property back to the bank to get out of your loan obligation.
Why is Morgan Stanley doing this?
The Morgan Stanley buildings may have lost as much as 50 percent since the purchase, he estimated.
As a consequence of being “upside down” they are walking away.
This isn’t the first one Morgan Stanley has walked off on either:
Morgan Stanley last month agreed to hand over Crescent to Barclays, ending the firm’s obligation on a $2 billion loan after taking almost $1 billion in losses.
WOW! and somehow normal Joe homeowners are ‘morally obligated’ to keep making payments on their upside down homes….
Agents, let me be 100% clear about this. We DON’T advocate doing strategic defaults…nor do we coach our students to do so either.
With that said, we understand why a borrower would want to do this. And..frankly…from a financial perspective…its hard to argue with not getting rid of your own toxic assets. Learn how to helop homeowners do Short Sales. Clearly, the government (watch this videos about the new 2010 Treasury Department Guidelines), Banks, Brokers, The Obama Administration, Brokers….agents…everyone is now pushing for short sales. Clearly, 2010 IS the year of the short sale. Watch this FREE Agent Short Sale Secrets video and Download your FREE Short Sale how-to book. Learn now how you can become a HREU CDPD.
When Morgan Stanley acquired it, Crescent owned 54 office buildings in cities including Dallas, Houston, Denver, Miami and Las Vegas. It also owned the Canyon Ranch spa and resort, residential developments in Scottsdale, Arizona; Vail Valley, Colorado; and Lake Tahoe, California.
Got it?
BANKS – the very same BANKS that people claim you have a MORAL AND ETHICAL OBLIGATION TO PAY EVEN IF YOU ARE UPSIDE DOWN – are walking away (by “negotiation” – as in “do it or we’ll default and you’ll get even less!”) from properties EVEN WHILE THE CARNIVAL BARKERS IN THE PRESS ARGUE IT IS IMMORAL FOR YOU TO DO SO.
In a word: BULLS**T.
This is exactly the same thing – a “strategic default“, which people define as:
“strategic default,” walking away from their mortgages not out of necessity but because they believe it is in their best financial interests.
Morgan Stanley CAN pay, they are simply choosing not to, because the property has fallen in value.
This is exactly identical to you choosing not to pay because YOUR HOUSE has fallen in value.
Excellent point!
George Brenkert, a professor of business ethics at Georgetown University, says borrowers who can pay — and weren’t deceived by the lender about the nature of the loan — have a moral responsibility to keep paying. It would be disastrous for the economy if Americans concluded they were free to walk away from such commitments, he says.
Really?
I called Mr. Brenkert and spoke with him for a while this afternoon, and pointed out the above – that the asymmetry of position here is untenable and is in fact a big part of why we’re in this mess.
Let’s be clear: Those arguing for this from the banking and regulatory industry know how you stop people from “Strategically Defaulting” – don’t give people loans that make such an option attractive!
Note: state laws…not mortgage terms dictate this.
If we had only 20% down 30 year fully-amortizing fixed-rate loans in the mortgage business nobody in their right mind would strategically default, because they would lose their 20% and even if prices declined they would likely (with amortization) be either ahead or darn close to it – that is they’d lose actual money.
But on the business side of things we allow companies to set up separate LLCs and then trade on the “parent” credit even though there is no recourse to the parent. This allows firms like Morgan (or the builder down here near me that has a bunch of these shell LLCs) to build and buy huge amounts of real estate – yet when something goes wrong they have tremendous leverage on a short sale, put-back or simple walk-off: if the lender doesn’t like it they’ll bankrupt the “container” LLC and the lender will get nothing.
Consumers, of course, can’t do that. Try to set up a LLC and then use it as a vehicle to buy a house without a personal guarantee associated with the loan.
Forget it.
Try to get a small business loan with only the business as the collateral – no personal guarantee.
Forget it.
It is therefore my contention – and on this point Mr. Brenkert agreed – that the rules must be consistent for everyone, and if big business can strategically default on their obligations for profit (rather than for hardship) then consumers should be able to do so as well.
Therefore, until the law is changed to prohibit the use of said “Strategic” legal containers and the resulting option of business interests – including the banks that are complaining now – to practice selective default when it suits them I stand by my original view:
Strategic Default, in today’s economic, legal and ethical environment, is perfectly within the rights of consumers and they should exercise that right when it makes economic sense, after consultation with both legal and accounting professionals.
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SURPRISE!
Great News….PENDING HOME SALES SPIKE….Record Breaking 32% Increase Over Last year!
What is selling….you guessed it…the Short Sales and REOs!
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Welcome to the future…the new American Dream…Home Renter-ship.
Earlier this year we reported that in Florida the FHA was experimenting with a new program whereby the home
owner gives the deed back to the bank,…..then RENTS the house…the very same house they ‘owned’. You read that correctly…the Federal Government is about to become the single biggest single family landlord in the world.
(Of the joys of property management…)
What kind of job will the Fed do as a landlord….will they evict home renters when they are late or don’t pay….who and HOW do they determine what the monthly rent payment will be…what effect will this have on existing landlords now that they have to compete with the government for tenants?
Will this program work…? What do you think?
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Here is a short quiz for you…(HREU Students, this should be easy for you…we have been preparing you for this market)
1) How many homes in the U.S. are vacant?
2) How many homes received a default or auction notice or were repossessed by banks last in September?
3) In the second quarter of 2009 what was the total value of all the homes that the banks were holding (to be sold via REO)?
If you are new to HREU…here is a hint to pass this quiz.
Take whatever numbers you think are correct and double if not triple them.
Answers:1) Nearly 19,000,000. To put that into perspective..there are currently around 4,000,000 home actively listed for sale now. 2) Nearly 1,000,000. Thats one million NEW REOs coming for sale soon in a town near you. 3) 34 BILLION! Thats the total estimated value of all the homes the banks took back via foreclosure in second quarter alone.
Its very important that you are clear what is really happening. You need to be focused on what opportunities you have today…and where the opportunities are in 2010. Clearly, the agents who have become Short Sale Specialists and REO Listing Agents will be the agents with a majority of the business.
Now, given what you now know about the massive number of REOs that must be listed and sold….over the next few months…and years….why wouldn’t you want to become a HREU Certified REO Specialist? Don’t make the mistake in believing that the banks have already selected their REO listing agents. Nothing could be further from the truth. Watch the FREE Agent REO Secrets video and grab your free how-to list REO’s book.
Here is an article from Bloomberg:
About 18.8 million homes stood empty in the U.S. during the third quarter as banks seized properties from delinquent borrowers and new home sales fell in September.
The number of vacant properties, including foreclosures, residences for sale and vacation homes, rose from 18.4 million a year earlier and 18.7 million in the second quarter, the U.S. Census Bureau said in a report today. The record high was in the first quarter, when 18.95 million homes were vacant. The homeownership rate, meaning households that own their own residence, stood at 67.6 percent.
The worst U.S. housing crash since the Great Depression has led to a record number of foreclosures and shaved almost a third off property values. The S&P/Case-Shiller Index of 20 cities in August was 29 percent below its 2006 high, after rising for four consecutive months.
“We are bumping along the bottom of the housing market,” said James Lockhart, vice chairman of WL Ross & Co. and the former director of the Federal Housing Finance Agency. “There is the potential for another swing down.”
Sales of new U.S. homes fell 3.6 percent in September to an annual pace of 402,000, the Commerce Department said yesterday. That was lower than the 440,000 median forecast of 75 economists surveyed by Bloomberg News.
OK, lets take a little breath and think about what you are reading.
Obviously, what is going to happen in 2010 will NOT be any sort of price recovery…if anything, there will be additional home value losses. We are predicting that most markets could see another 10-15% loss in value. For homes in the $200,000 and lower ranges the losses will be less…if any at all. The biggest hit will come from the ‘luxury’ home value segment.
So, what can you do now to help folks avoid foreclosure? Simple, learn how to do Short Sales. Forget EVERYTHING you think you know about short sales. The short sale process has changed significantly over the last 60 days and 2010 will be the ‘Year of the Short Sale’. Bottom line, if you plan on being in real estate…for the next few years….you simply must be doing short sales. Do you really have a choice? Do this…watch the FREE Agent Short Sale Secrets video and download the FREE Agent Short Sale Secrets book.
The percentage of all U.S. homes empty and for sale, known as the vacancy rate, rose to 2.6 percent from 2.5 percent in the second quarter. It hit an all-time high of 2.9 percent in the first and fourth quarters of 2008, the Census Bureau said.
There were 130.3 million homes in the U.S. in the third quarter, according to the report. In addition to the 2 million empty properties for sale, the report counted 4.6 million vacant homes for rent and 4.6 million seasonal properties that are only used for part of the year.
Foreclosures are included in a part of the Census Bureau that also includes vacation homes intended for year-round use and homes that are unoccupied because they are under renovation or tied up in legal proceedings. There were 7.7 million such properties empty in the first quarter, up from 7.5 million a year earlier, the report said.
Foreclosures could also be counted as vacant homes for sale or rent, or as owner-occupied properties if lenders have not yet evicted previous owners, the federal agency said.
U.S. foreclosure filings climbed to a record in the third quarter as lenders seized more properties from delinquent borrowers, according to RealtyTrac Inc. in Irvine, California. A total of 937,840 homes received a default or auction notice or were repossessed by banks, a 23 percent increase from a year earlier, the data company said.
U.S. banks in the second quarter held $34 billion of properties acquired through foreclosure, including repossessed homes and condominium projects gone bust, according to the Federal Deposit Insurance Corp. in Washington. That’s almost double the $18.9 billion of real estate a year earlier.
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Thank-you Joel (and your much better half, Michele) for sending this to me this morning.
After you have read this testimonial you will want to request a Free Coaching Call. Free coaching calls are available for enrolled HREU students and future students alike. Request your FREE Coaching Call NOW.
Tim and Julie,
Just a quick note to tell you how much I appreciate what you are doing for me and my family.
I have been participating in your programs for almost 2 years now and have become very effective as a short sale agent. Our income has soared back to the heights of the boom.
I finally took the opportunity to have the FREE Coaching call that you offer and must say that it was a huge surprise to me in many ways. First that you would be so inutitive and be able to ”read into my situation” as quickly as you did. Secondly, I was surprised that you would be so quick to slap me around (more like a kick in the teeth) about what I was not doing and need to be doing to move to the next level in this business. In one phone call you woke me to the fact that being “busy” was not moving me forward and in fact you caused me to acknowledge that I am, in your words, a slacker. .
I have since signed up for the Graduate Student course. Honestly, I had apprehension about the need for this because I have so much appreciation for the value of the individual courses you offer at HREU. However, after my first one-on-one graduate coaching call I can honestly say that you have changed my mindset about this business.
Never, in the more than 20 years I have been in the Real Estate business, have I felt this excited about the possibilities. Not just for making more money – but for changing the way we live our life and the prospect of growing a business that will take a lot of the stress out our life and enhance our lifestyle.
I seriously and genuinely believe that I got a years worth of tuition out of the first 1/2 hour session. However, I still want to talk to you next week and look forward to the next 12 months in this business. Not something I would have said before working with you.Thanks Tim and Julie.Take Care.Joel
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Joel McClintock
Century 21 Sunland Realty
561-296-8220
561-543-5635 cell
561-439-5475 fax
joelsmcclintock@gmail.com
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