Pending home problems

[Greed is Good]

Keep dreaming for the bottom bulls

Pending home sales at all-time low

http://money.cnn.com/2008/04/08/real...ion=2008040811

NEW YORK (CNNMoney.com) -- An index of homes under contract for sale fell more than expected in February, reaching the lowest level since the index's 2001 debut, according to a report released Tuesday.

The National Association of Realtors' (NAR) Pending Home Sales Index fell to 84.6 in February, down 1.9% from a revised reading of 86.2 in January and down 21.4% versus the same period last year.

Economists were expecting the index to decline to 85.2 for the month, according to a consensus estimate compiled by Briefing.com.

"The slip in pending home sales implies we're not out of the woods yet," said Lawrence Yun, NAR chief economist, in a statement.

The Pending Home Sales Index is considered a more forward-looking indicator of home sales than the NAR's more closely watched existing home sales report, which tracks sales at the time of closing, typically a month or two after a sales contract is signed.

The Pending Home Sales index was launched in 2001, and a reading of 100 is equal to results that first year. Before the housing market began to deteriorate last summer, the steepest decline in the index's history came in September 2001, when the 9/11 terrorist attack sent the index down to 89.8.

The Realtors revised their forecast slightly for existing home sales, projecting first-quarter existing home sales to decline 23.1% versus the same period last year after saying in March they would decline 23.2%.

For the full year, the NAR predicted existing home sales to be 4.7% lower than in 2007, after saying in March they would be down 4.8%.

Existing home sales for March will be released April 22.

"February was another poor month for housing, with pending sales down in most of the country," said Mike Larson, a real estate analyst at Weiss Research.

Larson thinks tight lending standards and the absence of speculative buying are to blame for the weakness in the housing market.

The NAR also lowered its forecasts for first-quarter and full-year real GDP growth, the broadest measure of the nation's economic strength. It also cut its expectations for nonfarm job growth in the first-quarter and full-year periods.

Yun thinks that the economy will not grow in first half of the year, but he is optimistic about the second half.

"The combination of recent fiscal stimulus enactment and the lagged impact of monetary policy will help jump start the economy in the second half."

[MianoSM]

I'm surprised people are still trying to sell their homes. If I were a seller I'd think that I'd just hold onto my home, rent it out, or slash the price.

It really would hurt to be on the selling side at the moment.

[slowdx]

If you can find a bank that is willing to lend. this is a great time to buy. These banks are making it damn near imposible

[Strangeholliday]

Originally Posted by slowdx

If you can find a bank that is willing to lend. this is a great time to buy. These banks are making it damn near imposible

if you're above 580. and can show full income and assets.. you're good.

no more 580, Stated income stated assets 100%'s.. thats asking for trouble..

On another note.. Wamu exits wholesale business a couple days ago.

[Strangeholliday]

Originally Posted by MianoSM

I'm surprised people are still trying to sell their homes. If I were a seller I'd think that I'd just hold onto my home, rent it out, or slash the price.

It really would hurt to be on the selling side at the moment.

Alot of these people HAVE to sell. They dont have room to slash the price because they bought it about 3 years ago.. when prices we're high.
They could rent it out, but they would likely still go negative on their mortgage every month, and then they would also have the expense of their new home or apt.

[Joe]

Originally Posted by Strangeholliday

Wamu exits wholesale business a couple days ago.

I think this will be the trend for banks...

I think wholesale lending is on it's way out the door. Banks will go back to their roots for mortgages, direct lending with using their own people (appraisals, underwriters, etc).

To many banks have been screwed by "trusting" others to do those things and buying the loans from the wholesalers... I bet one could say that MOST of the subprime ARM shit came from wholesale cesspools.... (not saying all wholesalers are like that, but there were a big majority of them)

Opinions?

[Strangeholliday]

Originally Posted by Joe

I think this will be the trend for banks...

I think wholesale lending is on it's way out the door. Banks will go back to their roots for mortgages, direct lending with using their own people (appraisals, underwriters, etc).

To many banks have been screwed by "trusting" others to do those things and buying the loans from the wholesalers... I bet one could say that MOST of the subprime ARM shit came from wholesale cesspools.... (not saying all wholesalers are like that, but there were a big majority of them)

Opinions?

I dont necessarily think they're going back to their roots. I think they're going to the future of banking, Applying for a mortgage will be like applying for a credit card. You can do it all in minutes. They use automated value modules, or AVM's.. to do the appraisals instead of having an appraiser come to your house and looking around, they will issue automated approvals through their banking system's software.

This will eliminate wholesale brokers doing prime loans.. I do think that with every change comes an opportunity, I think you'll see a few banks bump up and start to do what fannie mae won't.. even if its by 5 % LTV or 5 pts under the lowest credit score. This bank will capture all that business, I think wholesale brokers will continue to struggle, quit or join forces with retail banks. which kind of sucks.. retail loan officer makes ? what 40 - 50 k? while a good broker makes well over 100k.

[TampaDude]

If your credit is halfway decent (no lates in the past 12 months), you can go FHA with Ameridream and get a house with zero down. Not that I would want to buy right now with prices still falling.

[Strangeholliday]

Originally Posted by TampaDude

If your credit is halfway decent (no lates in the past 12 months), you can go FHA with Ameridream and get a house with zero down. Not that I would want to buy right now with prices still falling.

absolutely, but how long before FHA tightens up their guidelines like fannie mae?

FhA has been the new Subprime.. especially with these streamline refis..

[TampaDude]

Originally Posted by Strangeholliday

absolutely, but how long before FHA tightens up their guidelines like fannie mae?

FhA has been the new Subprime.. especially with these streamline refis..

It's the gub'mint...that shit will always be around...

[TNathe]

if you ahve the means necessary to fund the buying sort sales are prob VERY easy to obtain.

[Strangeholliday]

Originally Posted by TNathe

if you ahve the means necessary to fund the buying sort sales are prob VERY easy to obtain.

Actually they take forever to close.. even when the loan is no problem. Its hell to deal with..

[MiDiablo]

My office closes foreclosures, preforeclosures and short sales within 14-28 days all the time

But it does take a considerable amount of time to negotiate the short sale deal(s) prior to marketing the home for sale; so that's a hassle.

-Jo$h

[Country Boy]

The only thing I will say about the housing market is this... We have more than doubled our work in the last month. Feb we had 40 houses, Mar was 80 and now we are at over 120 or the month... I see much more work goin on than I used to and theyre actually haveing a bunch of new starts...

Think what you want....

[BAMF]

Originally Posted by TNathe

if you ahve the means necessary to fund the buying sort sales are prob VERY easy to obtain.

I've looked at a few short sales. They're slow to close on, and more often than not the hosue is FUCKED UP. They aren't as great as everyone thinks. Neither are foreclosures. You gotta get lucky.

[Greed is Good]

Originally Posted by Country Boy

The only thing I will say about the housing market is this... We have more than doubled our work in the last month. Feb we had 40 houses, Mar was 80 and now we are at over 120 or the month... I see much more work goin on than I used to and theyre actually haveing a bunch of new starts...

Think what you want....

That's funny with even New home construction at 17-year low on starts

Where's all this building going on at? I don't see anything in hills or pasco everything i see has come to a stop

[Country Boy]

Originally Posted by Greed is Good

That's funny with even New home construction at 17-year low on starts

Where's all this building going on at? I don't see anything in hills or pasco everything i see has come to a stop

Remember, that stat is also nationwide. Obviously you cant see everything... but hell, what do I know, right? Just listen to some guy that sits behind a desk and guesses.

[MiDiablo]

Originally Posted by BAMF

I've looked at a few short sales. They're slow to close on, and more often than not the hosue is FUCKED UP. They aren't as great as everyone thinks. Neither are foreclosures. You gotta get lucky.

Short Sales definitely suck. They are turning a lead-time of up to 6 months in some banks right now. Loss-Profit Litigation departments = teh suck.

As for Foreclosures, we are buying/selling them each and every day. Some with as good as 40 cents on the dollar. Some with as high as 65 cents on the dollar. Some are good cash-flow opportunities, while others are just good if the Investor is seasoned in the rehab/flip method. We've also done some lease-option exit strategies for some of our Investors, but few and far between.

-Jo$h

[BAMF]

Originally Posted by MiDiablo

Short Sales definitely suck. They are turning a lead-time of up to 6 months in some banks right now. Loss-Profit Litigation departments = teh suck.

As for Foreclosures, we are buying/selling them each and every day. Some with as good as 40 cents on the dollar. Some with as high as 65 cents on the dollar. Some are good cash-flow opportunities, while others are just good if the Investor is seasoned in the rehab/flip method. We've also done some lease-option exit strategies for some of our Investors, but few and far between.

-Jo$h

Foreclosures for 45-65 cents on the dollar? Damn, I need to get me some of those.

[MiDiablo]

Originally Posted by BAMF

Foreclosures for 45-65 cents on the dollar? Damn, I need to get me some of those.

Just as an example, this is a home we picked up this week:

6 bedrooms
2 bathrooms
1,872 total s/f
Block Construction
Sitting on 1/2 acre of land
$102k sales price

Approximate Rehab Costs: $25k
Total Investors Investment: $127k (plus closing costs)
After Rehab Value: $195k appraisal
Gross Spread: $68k profit

Now of course we don't base this solely on these numbers. The ARV is an appraisal based value, and not necessarily conducive to the "going rate" as per the market conditions. So we usually base our spreads on an "80% of ARV" value. For instance:

80% ARV on this home would be: $156k --- more of an "actual" market value that one could expect to see/receive on the market if flipping.

That changes the spread from a projected $68k, to actually $29k (again, have to add in your closing costs from the purchase, as these are Net To Seller prices).

Either way; ~$25k profit for a single deal is pretty fair in my opinion. Some people aren't making that in an ANNUAL INCOME from their 9-5's! There are some deals that aren't as lucrative as this, and there are others that are BETTER. Just depends on who we get them from, and how (short-sale vs. bank-owned, etc.).

So in this example, $127k / $195k - you're getting the home at 65 cents on the dollar; fully rehab'd.

-Jo$h