Minnesota Real Estate Investors Association, Inc.

Category: Market Updates (31 articles found) - Clear Search


Is there Another Crash Coming?

0
Comments

The simple answer is yes of course there is.  There have always been buildups, crashes and recoveries.  That is just the way things work.  The real questions are when is the next big crash coming, what you do about it and how do you prepare for it.

I know people are freaking out right now, but staying informed and objective at this point will help keep your sanity. 

As I am writing this, an email thread from my Lifeonaire Titanium group started circling about just this exact same topic.  Some of them are taking advantage of the current market conditions because they have a great marketing machine running that is supplying them with good deals and because of the lack of inventory, they are making higher profits than they would have in a normal market.  Others are starting to panic and preparing for dooms day.

Here is my quick response to them:

Everything we are seeing right now is equivalent to 2003-2005 before the big crash in 2008.  While there are similarities to that time frame, there are also huge differences.  As Steve stated, there are no NINJA loans right now.  But they may be coming back.  Lack of inventory was not the driving force back in 2003-2005.  NINJA loans and other no qualifying loans were the main driving force. 

My short version is this:
If you look at the historical price index from case shiller which is adjusted from inflation, we are not seeing the same price increases as we did the last time.  Below is a screen shot of my local market that I just did for our meeting last week.  As you will see, we are at a 3% appreciation over the last 27 years.  Historically right were we should be.  The big thing to keep an eye on right now is how the lack of inventory affects the markets. Read More...



Leave / View Comments

What’s Holding You Back?

7
Comments

We live in uncertain times.  After the mortgage meltdown and the almost collapse of the financial industry, the real estate market has been going through several ups and downs.  The median sales price in my area went from its peak of $238,000 in June 2006 to a low of $138,500 in February 2012, back up to $210,000 in June of 2013 and we are on our way back down, currently sitting at $179,850 for January 2014.

There have been some wild swings in the past few years and the people that understand that and have kept a close eye on the trends, and have not been afraid of the market have made a lot of money the past few years.  However, I have seen most people sitting on the fence and haven’t done anything.  I can understand the feeling of uncertainty and being afraid to make a mistake, but let’s face it, if you’re afraid to make a mistake, you will never make it big.

You’re probably thinking right now “That’s easy for you to say Mike; you’ve been at this for a long time and have more experience than I do”.  While for many of you, that may be true, however, for your info, I have probably made more mistakes than most of you ever will, and I am still making mistakes.  But that is not holding me back.

That is one of the most common traits I see from those who are successful, even in this wild and uncertain market.  They are not afraid to make a mistake, and often do, but they don’t let that hold them back.

Everyone wants to minimize their risk of making a mistake and losing money or damaging their credit, myself included.  However, I see way to many people with paralysis of analysis and never do anything.  So what’s holding you back?  Read More...


Leave / View Comments

How Sensitive is the Market to Interest Rates?

1
Comments

This spring the market was chugging along just fine.  Then a 30 year fixed rate loan increased to just under 5% and the market came to a crashing halt. During the months of August and September, one of our largest local lenders saw a 72% decline in new and refinance mortgage applications and retail, renovated properties seemed to just sit there if they were priced a little high. 

Interested rates dropped by a mere half percent and houses that were sitting there started selling again and mortgagee applications returned to the same levels as they were in June and July.

I am assuming that the Feds will keep rates low for the foreseeable future because the economy is still too fragile, as evidence by less than a 1% rate increase in the real estate market.


Leave / View Comments

Shadow Inventory and the Hedge Funds

0
Comments

Ok, so it’s been a while since I have been able to post any updates to the blog.  This spring we were busy buying, selling and rehabbing houses.  Plus I spent a lot of time building and improving our website and member management and event registrations system call PROS – Professional REIA Operating System for REIA’s (Real Estate Investors Association).  And now we are spending our time creating new marketing campaigns and chasing down anything that might smell like a lead.

So what’s going on in the markets right now?  There are several issues we are dealing with lately.  Most recently, Interest rates have started to climb and there is a huge lack of inventory.  The lack of inventory can be explained by the rise of hedge funds buying billions of dollars worth of inventory directly off the market and from the banks, pulling most of the Shadow Inventory, out of the shadows. 

That is one of the primary reasons for the lack of inventory, but not the only one.  The banks stopped filing foreclosures, or at least slowed way down last year to deal with other issues, including packaging up shadow inventory for the hedge funds.  The banks are back on track now, but all that inventory that would have been hitting the market right now, is just now going through the foreclosure process and is expected to hit the markets later this year.

I have been hearing from fairly reliable sources, that the amount of expected foreclosures over the next few years is equal to the amount of foreclosures that have already happened over the past few years.  It should be an interesting next few years.


Leave / View Comments

Meet your New Landlord… The Banks

0
Comments

We knew this was coming, just a couple of weeks ago, BoA (Bank of America) sent out a letter to 1,000 customers who are currently in default offering them the option to rent the property back from BoA at fair market rent if they simply deed the property back to BoA in lieu of a foreclosure. This will only add to the currently unknown number of properties in the Shadow Inventory.

On Thursday April 5, 2012 the Federal Reserve issued a policy statement on the rental of REO’s.

  Quotaion Mark The general policy of the Federal Reserve is that banking organizations should make good-faith efforts to dispose of OREO properties at the earliest practicable date. Consistent with this policy, in light of the extraordinary market conditions that currently prevail, banking organizations may rent residential OREO properties (within statutory and regulatory holding period limits) without having to demonstrate continuous active marketing of the property, provided that suitable policies and procedures are followed. Under these conditions and circumstances, banking organizations would not contravene supervisory expectations that they show “good-faith efforts” to dispose of OREO by renting the property within the applicable holding period. Moreover, to the extent that OREO rental properties meet the definition of community development under the Community Reinvestment Act (CRA) regulations, they would receive favorable CRA consideration. In all respects, banking organizations that rent OREO properties are expected to comply with all applicable federal, state, and local statutes and regulations.

http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20120405a1.pdf Read More...


Leave / View Comments

Should there be a Moratorium on Foreclosures?

8
Comments

The new headlines catch phase is “Robo Signer”. These robo signers have been signing foreclosure documents at a rate of up to 1 document per minute. That’s 5,000 – 10,000 per month. Everyone knows that it is not physically possible for these robo signers to have read every document. That is the reason everyone is calling for a moratorium on foreclosures. Or is it?

If everyone was upset with the fact that these robo signers were not reading all the documents, then why wasn’t everyone upset that congress has passed health care and over a trillion dollars in stimulus programs while all along admitting that no one could possible read all of it before voting on it. So ask yourself, are they really upset that the robo signers didn’t read the documents. If you are honest with yourself, then the answer would have to be no.

So what is the real reason everyone wants a moratorium on foreclosures. Politics… In 3 weeks there is a major midterm election and this could be one of the most historic elections in our country. The politicians on both sides of the isle are looking for something to blame and point fingers at to make themselves look like they care and that all our problems are the banks.  Read More...


Leave / View Comments

A record number of US homeowners lost houses to their banks in August...

8
Comments

Over the last few years we’ve been predicting records were going to be broken for years to come and that it would be a uniquely incredible environment for real estate investors. Today RealtyTrac issued a press release for the month of August that illustrates the fulfillment of this prediction in no uncertain terms.

Here are the key numbers to note:

  • In August, 1 in 381 housing units received a foreclosure filing.
  • RealtyTrac has seen 1.2 million repossessions so far in 2010.
  • Before the housing bubble burst, in 2005 only 100,000 houses became REO’s.
  • 95,364 property foreclosures in August, a historic record.
  • An increase of 25% since the start of the 2010.
  • In August, 96,469 homeowners receive a notice of default.
  • 1% decline in the number of NOD’s filed in July.
  • A 30% decline since August 2009 after a peak of 142,064 NOD’s issued in April 2009.

For a complete list of notable numbers you’ll find them all just above the comment section. Our initial prediction was that with the drastic turn in the economy. This would create a flood of opportunity for real estate investors based on the sheer volume of properties vulnerable to a declining economy.  Read More...


Leave / View Comments

Mortgage Aid for the Unemployed...

7
Comments

Let me start out by saying that I generally try and stay away from political comments. I prefer to stay on topic and discuss the facts, but this time I have no choice but to comment on politics. This latest round of political games has my blood boiling and I can’t hold back any longer.

Congress just passed another $1 billion dollar emergency homeowners relief fund. You can read all about it on MarketWatch, here is the link: www.marketwatch.com.

Were shall I start?

I guess I will start out with the phrase “emergency homeowners relief”. Emergency, really??? The emergency was almost two years ago when they pasted the TARP funds to help, if you remember, homeowners and bail out the banks and financial institutions, but once the TARP funds were approved by congress, they decided it would be better to just buy stocks in the companies they chose to keep solvent. It didn’t seem to be that much of an emergency to congress in 2008, otherwise they would have spent that money on what they told us was the reason in the first place to pass the TARP funds. I think the only reason it is an emergency right now, is because the midterm elections are in 4 months.

So now that we understand the congressional definition of an “Emergency” we can then start to talk about the facts. They are as follows:   Read More...


Leave / View Comments

First Time Home Buyers Tax Credit was Extended!!!

3
Comments

In the 11th inning, the House of Representatives finally passed the closing date extension to September 30th for the first time homebuyer’s $8,000 tax credit. This is good news as an expected 180,000 transaction that were successfully signed and finalized by the April 30th deadline that supposed to close by June 30th, didn’t close.

There are many reasons why these transactions are taking so long, but the primary reason is because the most of those transactions are short sales and getting to the closing table with short sales can be a headache to say the least. But now they have an additional 90 days to rap them up and close by September 30th.  Read More...


Leave / View Comments

The First Time Home Buyers Tax Credit: Do you think it had an Affect?

5
Comments

Look at the drop starting on May 1st. This graph should be all you need to realize that the first time home buyers tax credit drove a lot of sales at the moment, but they would be sales that were pulled forward. In other words, if the tax credit wasn’t there, the sales would probably still have happened, but they would have been spread out over time rather than pushed back into April.

First of all, the banks are short staffed, so they can’t file NOD (Notice of Defaults) and complete the foreclosure process as fast as new borrowers are falling into default. The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics. That is the first part to Shadow Inventory.

Graph showing the rise and fall of pending sales over the last 3 months.
Click To Enlarge

This has also created other problems. I had a closing that kept getting pushed back because FHA hadn’t review the file to release the funds because they were so backed up. We finally closed last week and from talking to the buyers at the closing, they just wanted to close before they lost the credit, but it wouldn’t have stopped them from buying, they just bought now rather then this summer when they originally planned on moving.


Leave / View Comments