“When I come into a house with buyers, I start picking it apart,” says San Diego’s Jim Klinge, known on the internet as ‘Jim the Realtor,’ a wise-cracking real estate agent who posts his honest, painful, and sometimes hilarious assessment of bank-owned properties on his Youtube channel.
While both the Bush and Obama administration have advocated programs aimed at keeping people in their homes , Klinge argues that this is the exact wrong approach and is only prolonging the agony in the housing market.
“If they wanted to do what was best for the market, they would just unleash the floodgates and let it rip,” says Klinge. “It would cause a frenzy of buying to see all of these bank deals, and people would come running.”
Reason.tv met up with Klinge for a walkthrough of a bank-owned property in North San Diego County, where he pointed out the issues with the home and talked about the past, present and future of the housing market.
When does he think the market will bounce back and bring values back up to peak levels? “We need to be prepared for it being never,” he says. “I hate this whole investment thing. Buy a house because you like it, and you want to raise a family. The good news is, I think today’s buyer is exactly that.”
You’ve been waiting patiently for the right house – preferably an older home with character.
One that’s been well cared for, and if it were on a canyon lot, great.
You see a video on the internet of a new listing in University Heights, which doesn’t have the refinement of Mission Hills, but is still a pretty good neighborhood. The last sale on the street was the house next door, which sold for $735,000 in 2008. So even though the list price of $799,000 seems high, you reluctantly decide to join the bidding war.
But someone with more horsepower blows up the field.
The house on Arch just closed for $900,000 cash, and 13% over list price.
Hat tip to our friend Auntie Agent, who was involved with the sale: “Good listings in that area are SO limited. The house is nice but nothing overly special, it is just its siting and location in the neighborhood. It is so highly prized in that area and being on the canyon just brought buyers out in droves creating the frenzy that propelled the price skyward.”
Hat tip to Tom Stone for sending this in from theTampa Bay Times:
Ralph and Michael Chancey have gotten some great deals on real estate.
A $1.15 million bayfront Apollo Beach home for $10,010. A 3,700-square-foot house in North Tampa for $8,090. Dozens of homes in Brandon and Riverview for less than $4,000 each.
The houses are in communities where members must pay fees to a homeowners association for maintenance of common areas. When the economy soured and owners stopped paying their fees, the associations foreclosed and the houses were deeded to companies connected to the Chanceys — typically for just the amount of fees owed.
As the Tampa Bay Times reported last June, it was supposed to be a great deal for associations running short of money for even routine cleaning and lawn work.
“I get paid, the association gets paid and that buyer becomes responsible for the upkeep and the HOA fees,” said Robert Tankel, a Dunedin lawyer who represents several associations in which the Chanceys acquired houses. But things haven’t always worked out as they were supposed to.
At least seven homeowners associations — including two of Tankel’s clients — have recently filed liens against Chancey-connected companies for failing to pay the maintenance fees. In some cases, the companies owe more than the original owners did.
Meanwhile, the Chanceys have moved in tenants and collected thousands of dollars in rent.
Richard Wiley, a private lender who holds the first mortgage on a New Tampa home, foreclosed this month to get back the deed from one of the Chancey companies, Prop Inc. After acquiring the house in May for $6,200, Prop Inc. rented it out for $1,150 a month.
“It appears to me they take the property for a small amount of money and then basically collect rent until they have to leave,” Wiley said. “I think it’s legal, but I also think it’s shady.”
Like banks, homeowners associations have the right to foreclose if people don’t pay. But in what Tankel has called a “race to the courthouse steps,” the associations have an advantage.
The lead attorney for CAR makes an annual visit to discuss the latest issues and changes.
The first minute is muffled, but what was said is that the California Department of Real Estate is investigating complaints about short-sale fraud being committed by realtors.
For those who have been looking to remodel a master bath, you’ve probably seen that you can spend $50,000 to $100,000 or more for the real high-end look, like this.
Rich Toscano documented how today’s market conditions are ripe for higher prices.
There is a disconcerting anxiety among buyers today. They see fewer houses coming on the market, and more selling. But on average they aren’t paying more, at least not yet.
Here are detached stats from NSDCC for the March 1st-to-March-15th period. The categories are mostly unrelated, other than happening during the same time frame – but the change in the NL/S ratio demonstrates the frustration. Fewer homes coming on, more selling, and at lower prices:
Year
New Listings
Avg. LP/sf
Sales
Avg. SP/sf
NL/S
2009
230
$471/sf
47
$403/sf
4.89:1
2010
286
$475/sf
80
$391/sf
3.58:1
2011
284
$438/sf
97
$379/sf
2.93:1
2012
239
$416/sf
105
$374/sf
2.28:1
Even though the average SP/sf is still lower, it only dropped 1.3% Y-O-Y. The smaller gap between average LP/sf and average SP/sf is very encouraging too!
An excerpt from our friend Rich Toscano at the VOSD – clickherefor full article and multiple graphs:
It’s clear that there has been a good correlation between months of inventory and home price changes.
In addition to the directional similarities, there appears to have been a dividing line of about 6 months’ worth of inventory (the thick black line) which has tended to separate periods of price increases from those of price decreases.
Now, though, inventory has dropped even lower (gone higher on the inverted chart), and these factors may not be enough to keep prices in the doldrums.
The estimate for February’s Case-Shiller index (assuming it turns out to be right — it is calculated based on the past three months’ median price per square foot change) suggests that prices may have stopped declining at least for last month.
It’s worth noting that prior to the current period, prices have always been rising, and usually pretty fast, when inventory was at or below 4 months. Foreclosures and high unemployment were a big issue for most of that period, too.
Inventory levels, as measured by the ratio between current supply and demand, say nothing about the longer-term prospects for housing, nor about exogenous factors that could come into play and change that ratio (the possibility of sharply interest mortgage rates is my favorite one to talk about). But the level of inventory can provide clues about price pressures in the months ahead. Should the rather dramatic tightness in supply persist, the near-term pressure for home prices could be to the upside.
A San Diego real estate agent has launched an awareness website that aims to stop strategic defaults, when underwater borrowers choose to walk away from their homes even though they are able to afford their mortgages.
Tuba Gokcek, who is based in Clairemont, recently launched stopstrategicdefaults.com for homeowners and others to express their thoughts on this type of defaulting, which has become more accepted in recent years as home equity fell across the country and anger against banks increased. A 2011 Fannie Mae study shows 27 percent of homeowners who owe more than their homes are worth are open to a strategic default. That’s up from 15 percent in 2010.
“Legislators should stop this from happening,” Gokcek said. “It’s not ethical to borrow money from someone and then say they’re not paying it. It’s a practice that hurts others.”
How does it hurt others?
Gokcek said strategic defaults lead to short sales and foreclosure deals, which bring down the value of neighboring homes. More than half of county home resales last month were either foreclosures or short sales, as cash buyers and investors continued to chase lower-priced properties.
Gokcek, whose website outlines a case against strategic defaults in several sections, also includes a petition that reads: “We, the ethical and responsible People of the United States of America, urge the Congress to pass and enforce effective laws without loopholes to stop strategic defaults immediately.”
It’s unclear exactly how many defaults in the country are strategic. But a June 2011 study by Northwestern University shows defaults that appear so are on the rise, increasing from 26.4 percent in March 2009 to 35.1 percent in September, 2010.
Other findings:
Black, Hispanic and older homeowners are more willing to be strategic defaulters. Women are less likely.
Eighty-two percent of people surveyed said a strategic default is morally wrong.
Homeowners who know someone who has strategically defaulted are more likely to say they will follow suit.
Borrowers who are angrier about the economic climate and trust banks less are more likely to default strategically.
