I realize this article is from a Utah paper and has a Utah slant, BUT read through the article. Actual # of homes in foreclosure jeopardy is expected to go from 2.8 million last year to 3 million in 2010, a 7% increase. It also lists worst 10 states and NV continues to lead the bunch.
I really hope that the commercial fallout doesn't hit at the same time. That would cause further problems, and dominos start falling, imo. Rich
I have written about this subject over on the Bigger Pockets News Blog for months... and the general consensus I have found is that we are headed to a double-dip and it will stay that way until unemployment stablizes.
That coupled with all of the anticipated changes in Governement policy and we are in for one hell of a ride.
For real estate investors... stay limber... don't be afraid to adapt to the changing conditions and keep the communications open, right here on BP, to what each of us is experiencing.
I suspect that we are in for a tidal wave of strategic defaults.
The banks are giving away their foreclosures and refusing to give mortgages to people who want to pay market rate. They are using their give-away foreclosures as the comps, driving prices down sharply.
The TV stations are running special after special, talking about all the people simply walking away when they are under water.
Monkey see, monkey do. If all those folks on TV are doing it, why can't I?
There are going to be a lot of home owners walking away who would never have even thought of the idea if they hadn't seen it over and over on the telly.
The cyclical nature of these "crises" shall continue indefinitely.
At core, we depend on emotional purchases by consumers to generate our economy using currency which is unrelated to any intrinsic value.
As it relates to home ownership, the discipline and long term vision required to undertake a 30 or 40 year contract is diluted in an "excitement" and material oriented culture.
We only need to believe they shall pass to avoid the painful self exploration that aligns itself with the inevitable.
Read Atlas Shrugged, it is essentially a commentary on today's economic and political environment. It's eerie. We will not recover from this recession for quite some time. The lights will go out before things turn around.
I do see there is some hope... Rand Paul won the primary in Kentucky. A good sign that not all is lost.
This link is extremely relevant to what we will be experiencing in the next few years. There will be a snowball effect where ARM resets / unemployment / a huge variety of other factors will continue to cause foreclosures which will cause housing prices to drop. This in turn will cause strategic defaults, and this is all without interest rates rising.
Hopefully I'm wrong - but I doubt we will be done with the housing crisis any time soon.
As a buy and hold investor you should want property prices to go as low as possible (as long as you can still rent the property). So foreclosures are very positive for property investors, because you can buy more property at lower prices. If you are in the market to buy properties for the long term, then you should be ecstatic if the property market falls.
William, thanks for the comment. I see that post as very relevant to our current situation. I hate to always sound the alarm bell, but from much research I do think we are near a perfect storm. Flippers and rehabers are not too likely to get hurt. While it also presents opportunities for buy and hold my call is that we have a good chance of seeing a double dip in valuations in many parts of the country. So buying a bit later may be more prudent and present even greater opportunities.
Ted- You're stealin my Perfect Storm analogy! tic. I've been saying that for a long time. I also question your thought about flippers and rehabbers not getting hurt. I disagree. Most of those folks have VERY limited funds, high interest HMLs or short term transactional loans. With higher costs and lower prices in new comps, it has to have an effect on them also, imo. Rich
I'll stick with the "landmines out there" analogy. As for the rehabbers, I guess I do not see the bottom falling out quickly but more so pressure over time. But yes, more dangerous territory using hard money with fewer buyers and increasing inventory as the foreclosures increase. I do agree with you there.