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I'm starting to get that "2006" feeling again

Englewood

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Me too, I just built a brand spanking new house.
But...Havasu is a niche market and with Californians bailing out and retiring it will likely continue to appreciate.

Don't be so sure. That's what everyone thought in 08. The first thing people will let go is their second home. If SoCal crashes, Havasu will drop like a prom dress. Havasu will not be immune to any market changes.
 

DrunkenSailor

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I would say that there a lot of ducks walking around here. All calm on the surface but the feet are moving fast under the water. The biggest problem I am seeing is that there is a ton of institutional capital to deploy and not enough places to put it to earn the yields that equity is demanding outside of the stock market. If your cost of capital is cheap like a money center bank then you can play however you investor return levels are going to remain in the single digits which isn't sustainable. High single digit investment returns on asset backed investments is a thing this year that people are talking about like it's going out of style.

The market needs risk. We are too safe. I learned a few things about foreign markets. IIn Italy and Ireland and other places you can never foreclose on a property huge banks with staggering portfolios of debt are doing single digit foreclosures in terms of units yearly. You would think as a lender this would carry huge risk so investing in this type of collateral would carry a heavy interest rate but most of Europe is still in a negative rate environment. A performing loan in the UK carries a 30 fixed rate of 1-2%. If you were to put a million dollars into a bank account instead of that money earning a return for you the bank would send you a bill because the rate is negative. You have to pay to store money like it's a freaking boat.

The crazy loan products that we are seeing out in the market are coming from a few small players in small amounts. The guys have direct take ours and the amount are small. They still don't have institutional money behind them. The people who will actual hold that debt are putting it on their balance sheet with the thinking that the market will continue to loosen in terms of credit requirements over the next two years and they will have a seasoned portfolio that they can either securitize or sel. No institutional bank is working with these loans at this point and the levels of investor returns that they are targeting is high single digits.

There are still about 95bn in loans held by the gse's that are 90 days plus delinquent. Most of these loans are pre-crash with delinquency dates of 2007 or 2008. Fannie Freddie and hud (the gse's or government sponsored entities) are liquidating about 1.5bn a quarter. Fhfa still does not have a director in place but they have one confirmed by the Senate which means almost there. In the mean time hud has been at a standstill in terms of any new programs, movement or loan sales out of their vast portfolios. On top of this goldman has been ordered by the government to pay 1.5bn in consumer relief penalties due to crisis era misdeeds. This 1.5bn needs to be paid by reducing borrrowers principle in modifications, doing low cost rental properties to low income families, etc... They are about at 75% of paying off those penalties. Goldman isn't alone here. Deutsche bank has a 7.5 bn penalty in consumer relief that they need to pay. Goldman's strategy has been to purchase every non performing whole loan available on the market. A year ago a non-partisan loan cost in the 60% range of value because Goldman is buying everything it can get its hands on the price of these portfolios outside of her sales has skyrocketed to 80-90% of property value for a loan that is nonperforming. The performing resi real estate loan depending on coupon is still trading at 103-105.
 

Deja_Vu

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Don't be so sure. That's what everyone thought in 08. The first thing people will let go is their second home. If SoCal crashes, Havasu will drop like a prom dress. Havasu will not be immune to any market changes.

I'm not worried about it this time around. This is our primary residence and it will be our last home we own.
Don't really care what its worth cause we don't plan on selling. We put it in a trust and the kids will take it over when we don't need it.
 

wsuwrhr

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Don't need it. Noted.

I'm not worried about it this time around. This is our primary residence and it will be our last home we own.
Don't really care what its worth cause we don't plan on selling. We put it in a trust and the kids will take it over when we don't need it.
 

Racey

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I just got home from 2 weeks in New Zealand, they are right in the middle of 2006 as we speak, the market down there is set to bust BIG TIME. Housing prices have been rising so rapidly they just placed an outright ban on foreigners purchasing property, Residents or Citizens only can purchase now.
 

wsuwrhr

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I just got home from 2 weeks in New Zealand, they are right in the middle of 2006 as we speak, the market down there is set to bust BIG TIME. Housing prices have been rising so rapidly they just placed an outright ban on foreigners purchasing property, Residents or Citizens only can purchase now.

So xenophobe/nationalists are everywhere? :)
 

EmpirE231

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Everyone forgets before the last go around, unemployment was at an all time low... economy was strong... etc! This is usually the case before a recession.

the comment earlier about when people in the real estate industry tell everyone not to panic... it is time to panic lol... couldn't be more true.

Jobs are not shedding yet, but all it will really take for most people is their hours being cut back 10%, or no longer have this endless supply of OT available, for people to start defaulting because they are so over leveraged. Or the recent volatility in the market, if that continues... don't be surprised if it's followed by some bigger lay-offs.
 

EmpirE231

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I just got home from 2 weeks in New Zealand, they are right in the middle of 2006 as we speak, the market down there is set to bust BIG TIME. Housing prices have been rising so rapidly they just placed an outright ban on foreigners purchasing property, Residents or Citizens only can purchase now.

Sounds like Canada is in the same situation... they had imposed a 15% tax on foreign buyers in certain areas, and just recently raised that to 20%... and from what news I heard, is that sales are significantly down the last 2 months.

there are a lot of these "bubbles" globally that didn't burst last time....
 

Englewood

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Sounds like Canada is in the same situation... they had imposed a 15% tax on foreign buyers in certain areas, and just recently raised that to 20%... and from what news I heard, is that sales are significantly down the last 2 months.

there are a lot of these "bubbles" globally that didn't burst last time....
Canada is Chinese money.
 

LargeOrangeFont

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I just got home from 2 weeks in New Zealand, they are right in the middle of 2006 as we speak, the market down there is set to bust BIG TIME. Housing prices have been rising so rapidly they just placed an outright ban on foreigners purchasing property, Residents or Citizens only can purchase now.

So xenophobe/nationalists are everywhere? :)

Racists everywhere!!
 

grumpy88

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Sold my house and I am renting for the first time in my life. In the meantime my down payment is earning crazy interest. Going to wait it out for a couple and see what happens.
I'm not wealthy or smart but I look at it this way . 24k a year in rent x 5 years is 120k . Not including tax breaks . My point is you plan on the housing market tanking on a house you like will be more then that to make it financially worth while to you ? This is a real question because I would like to know the angle I'm missing
 

rivermobster

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Oh I bet your hair stylist has all the answers😄
.
Big difference is this time the market is not full of unmanageable and deceitful mortgages made available by the Clinton administration.

BNAG!
 

Wheeler

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Oh I bet your hair stylist has all the answers😄
.
Big difference is this time the market is not full of unmanageable and deceitful mortgages made available by the Clinton administration.

I'm jumping on the Monavie sales cart early. Stocking it deep and selling it cheap! 🐫
 

JD D05

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I'm not wealthy or smart but I look at it this way . 24k a year in rent x 5 years is 120k . Not including tax breaks . My point is you plan on the housing market tanking on a house you like will be more then that to make it financially worth while to you ? This is a real question because I would like to know the angle I'm missing

We were just renting while our new home was being built...
 

nameisbond

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I'm renting because my provinces real estate boom is fueled by Chinese investors. Province enacted a 20% sales tax on foreign buyers. Foreign buyers are also assessed an extra 2% on their property tax. Real estate is slow to react, I'm waiting to see if this cools our real estate before committing. My rental lease is only six months. I like buying low and selling high. Just sold my house, closed last December. Trying to repeat the cycle. The area I want to move, the average house is currently $1million. Starting to see listings falling below $1million.
 
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Wheeler

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I'm renting because my provinces real estate boom is fueled by Chinese investors. Province enacted a 20% sales tax on foreign buyers. Foreign buyers are also assessed an extra 2% on their property tax. Real estate is slow to react, I'm waiting to see if this cools our real estate before committing. My rental lease is only six months. I like buying low and selling high.

Don't you have some seals to beat?
 

TCHB

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I can remember everyone saying it is great buy buy buy everything. Well everything was on credit and the house of cards fell. Homes up and down the street in Havasu had foreclosure signs on them. I think it could happen again. History is pretty good about repeating.
 

riverroyal

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Some areas here in SoCal are over the price of boom butbin general not close yet. The houses I sold in boom at 759k are not worth over 700k yet but climbing fast.
Where is that? Our area is way passed the last peak.
 

NicPaus

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Where is that? Our area is way passed the last peak.
Last month they went over the boom price when I checked. This is a older thread. Some areas now way above in Torrance.
 

TCHB

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Don't be so sure. That's what everyone thought in 08. The first thing people will let go is their second home. If SoCal crashes, Havasu will drop like a prom dress. Havasu will not be immune to any market changes.
This is exactly what happened last time.
 

DrunkenSailor

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Its not going to be rmbs this time. Guidelines are too tight and most of the loans written are pretty good. That said we are at 2006 levels in terns of total bond issuance. It will be commercial. The loans that we are seeing on fix and flip and long term rental are absolutely insane. How about a fix and flip program where you can pick your own comps and you dont have to make a payment for a year?

The cmbs market has more than doubled since 06. That is where the pain will be coming from.
 

hallett21

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When people are saying that we have hit pre recession housing prices are we factoring in inflation?

700k in 08 = 850k today. One would think we need to hit the same actual value before saying housing is overly inflated. Lending guidelines seem to be pretty strict unless you like high rates and have a bank account to prove you have cash in hand.

Of course real estate pricing can change street to street so I’m sure there are neighborhoods/regions that are already there.


Sent from my iPhone using Tapatalk
 

nameisbond

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With the collapse in oil and our heavy taxation on foreign buyers, etc. Canada is in much bigger trouble then the US. On Canadians we also have a extra property tax on vacant "investment" property, that can hit vacation homes. One area I'm considering is Kelowna, real estate there is fueled by vacation home sales. The first to go in a recession are vacation homes. A large number of the homes there are owned by Albertans. Its going to be an interesting few months, depending on how hard hit the Chinese are from shutting down. Plus with Alberta's wealth tied to oil, to see how well a vacation area such as Kelowna does. The rest of the world, Europe was in trouble before the virus. Japan is in a recession.
 

Orange Juice

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I remember from 2006-2010 the home prices in Havasu must have dropped 60% or more and the market was flooded with inventory. Not that I want to see anyone suffer, but we are positioning ourselves to buy in that type of environment. Same thing with boats!

I doubt if real estate prices will drop. Interest rates, and equity favor the homeowner. Real estate (land) is good as gold. ( see gold prices.)

credit card debt, consumer loans, are going to be a big problem this time around, and commercial real estate will continue to be vacant.
 

Orange Juice

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With the collapse in oil and our heavy taxation on foreign buyers, etc. Canada is in much bigger trouble then the US. On Canadians we also have a extra property tax on vacant "investment" property, that can hit vacation homes. One area I'm considering is Kelowna, real estate there is fueled by vacation home sales. The first to go in a recession are vacation homes. A large number of the homes there are owned by Albertans. Its going to be an interesting few months, depending on how hard hit the Chinese are from shutting down. Plus with Alberta's wealth tied to oil, to see how well a vacation area such as Kelowna does. The rest of the world, Europe was in trouble before the virus. Japan is in a recession.
Vacation homes will take a hit if employment falls, And gas prices jump. Doubt that will happen this time around.
 
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