My recommended strategy:
Work to find a house that you can buy for 10% off, (downturn insurance), OR find a house so superior that it’s worth paying the freight because you’re comfortable with it satisfying your long-term needs (10-20 years minimum). If you can find a house that does both, you’ve hit the jackpot.
I think they are saying the same thing here?
He’s right and she doesn’t know what she’s talking about.
Get in the holiday spirit:
http://rsfbb.com/
They are both right. Which makes buying a difficult decision with so much uncertainty.
San Diego is still up 60% from 10 years ago similar to what she said, but, he’s right with more inevitable inventory but we’re talking about crap homes in crap areas so it’s not really a comparison.
It will be interesting to see what happens as rates go up. I think it will be a good thing because it shows more confidence in investments besides bonds. And, let’s hope for a little inflation as it would be indicative of a growing economy.
Look for the Fed to raise rates in Spring 2011.
1.He’s right
I lost interest in what Super Lawyer was saying after he mentioned that foreclosures would flood the market – there’s not much chance of that happening.
1. Lenders aren’t legally require to foreclose. If they don’t mind borrowers living for free, then so be it.
2. Once foreclosed, lenders aren’t legally require to sell the REOs. If they think hanging onto them is a better move, then so be it.
3. The federal government has come this far, you have to wonder if there is any chance of them getting out of the way.
4. One renegade servicer might rush a load of REOs to market, and they’d find out that THE DEMAND IS HEALTHY FOR REASONABLY-PRICED HOMES. Lenders/servicers have already figured this out – have you noticed that REO listings aren’t much of a deal? In fact, they feel like they are retail-priced?
If there was a flood of foreclosures, it would be in areas like SE San Diego – a great place for investors.
Three years is definitely not long term. Ask anyone who bought in 1988-1990 or 2004-2006 what they think long term means. Long term is an absolute minimum of 10 years and even then you may be lucky to break even if you have to sell.
NEW YORK (CNNMoney.com) — Bank of America said Friday it was ending its hiatus on foreclosure sales, and promised to get its act together after a series of sloppy home seizures prompted the bank to back off and re-examine its process.
“We have identified areas of our process that can be improved and while we make these improvements, it’s important that we move ahead with efforts to reduce the number of abandoned properties across the country,” said Barbara Desoer, president of Bank of America (BAC, Fortune 500) Home Loans, in a statement. “The properties can drag home values in neighborhoods and slow the eventual recovery of the housing market.”
The bank said it plans to proceed with 16,000 foreclosures this month, though it will observe a “holiday suspension” of sales and evictions from Dec. 20 to Jan. 2. Freddie Mac (FMCC) and Fannie Mae (FNMA) have announced a similar holiday freeze.
The Bank of America action ends the “voluntary freeze” that the bank initiated in October, after a series of messy real estate mistakes. They included the foreclosure of a house that was owned outright by someone who had paid cash, without any mortgage at all, as reported by the Sun Sentinel of Florida.
In another case, the bank shut off the utilities of a Pittsburgh homeowner and seized her pet parrot, despite the fact that she was current on her payments.
“We continue to be committed to ensuring that no property is taken to foreclosure sale until our Bank of America customer is given an opportunity to be evaluated for a modification or, if ineligible for a modification, a short sale or deed in lieu solution,” said Desoer. “Foreclosure is the option of last resort.”
The bank reiterated that “more than 86% of the bank’s home loans are current on their mortgage,” which means that less than 14% of home owners are not current.
The bank also reiterated that “at the point of foreclosure sale, one-third (of the) properties it services are vacant.”
Mozart. I’d love to take that bet. There is no way that the FED is going to raise early 2011, quite possibly for the entire year; regardless of what the economy does.
Chuck
Jim,
While technically true, the decision makers for whether a bank forecloses is the banking regulator/reserve bank. Which is why banks aren’t foreclosing; the FED is offering expanded terms for defining “non-performing assets” by offering to accept these as collateral and not affecting the bank’s reserve balances.
If they ever do during this cycle, then there will be a big push.
However, just because they don’t foreclose, doesn’t mean that people are off the hook. They just rack up additional fees/penalties that are so onerous that it’s impossible for the loans to be brought current. That means that this housing malaise will last as long as it takes to bring prices back to peak.
Chuck
10 to 20 years minimum? Who has that kind of stability these days? Probably not many younger buyers…
osidebuyer-If you think it is very likely that you will move within a decade, you should probably rent. The only exception I can think of is if you live in an area where typical monthly costs of owning area less than typical rents, such as the Inland Empire.
The dream/bargain house you are looking for IS out there somewhere, you just have to keep looking………….and looking……………and looking…………………………….and looking……………………………………..
Jim and Richard found our dream home. It took about a year but we were all patient and when it came on the market, we were all ready. What a fantastic team!!! (AND it has a smashing view).
Wow am I sorry I watched that piece of crappola…. 3 years long term? Glad I haven’t dated her!!!
“Bank of America said Friday it was ending its hiatus on foreclosure sales, and promised to get its act together after a series of sloppy home seizures prompted the bank to back off and re-examine its process.”
They still need to rexamine their processes. B of A just paid the December property tax installment on a property of mine they don’t own.
Is this a great country or what?
Thank Wikileaks for making BofA try to get its act together.
They’re shitting bricks right now waiting to find out what Wikileaks knows.
Also, it’s a complete farce of an argument to claim that now is a good time to buy because of interest rates. So what that they are low? It’s ALWAYS smarter to have a small debt with a higher rate than a larger one with a lower rate. Always.
Long live Wikileaks.
The “plan to stick around for 10 years” argument seems way overemphasized to me.
10 years ago I was earning maybe 1/7th of what I earn now. There’s no way in hell I could have planned the paths that led to this 10 years ago – but if I hadn’t been able to move freely I’d be earning maybe 40% of what I make now.
Stubbornly sticking around in a house to avoid losses while ignoring all of life’s opportunities really is a losing deal. By all means it’s necessary to stick around in a house for a while for it to make sense – but planning 10 years in advance is just unrealistic. I think back about what was happened economically in the last decade and there’s no way anyone could have foreseen even 10% of what happened.
Life if risky and waiting ten years renting isn’t going to fix that. For all we know, ten years from now we might be at the very top of a renewed housing mini-bubble about to crash back down. Or it might be the very bottom of a ten year slump. It’s fruitless wasting ten years of one’s life trying to predict either outcome.