Comments on: All Real Estate is Local – You Could be Less Screwed than Others

By: Sven

Sven — Wed, 06 Feb 2008 19:09:22 +0000

I see that MN is not listed at all on that Countrywide list, yet DU is calling everything “declining”, several investors (SunTrust, GMAC) list most all of MN as declining, and now Freddie shops like US Bank (which rely more on LP which doesn’t designate property as declining or not) are starting to require that properties be cross-referenced against Radian’s zip code list, which, from what I can tell, counts 95% of MN as declining (and about 95% of the whole country). This stuff is changing on a day-to-day basis, but it appears that the vast majority of urban, suburban & exurban areas in the US will soon require at least 5% cutailments in LTV for conventional loans. Realtors better start prepping all buyers to start looking for gifts for down payments (and going FHA), as 100% financing will be next-to-impossible to get.

By: BestOne

BestOne — Tue, 05 Feb 2008 18:31:02 +0000

A lot of realtors are out of touch…still. They believe that people will start buying soon and then the prices will go back up. No way! Even after the buyers jump in, prices have to stay more connected to salaries because there is no more funny money….borrowers actually have to qualify. The rules have changed and some realtors don’t see it. Its just funny talking to them because there is nothing you can say that they won’t get defensive about. I just kind of nod and think “whatever”…. Once again we see that denial is not just a river in Egypt…

By: Morgan

Morgan — Tue, 05 Feb 2008 15:58:04 +0000

Ann » I agree. It’s funny to hear Realtors and the news talk about “bargains” that have fallen 20-30k off their peak prices when the above example is replicated in all of the bubbly areas of our country. If all real estate is local the only people in pretty good shape appear to be Wyoming.

By: Morgan

Morgan — Tue, 05 Feb 2008 15:56:25 +0000

joe » Yep – another aquarius. 1/25/76

By: All Real Estate is Local - You Could be Less Screwed than Others | The Long List of Odysseus Medal Nominees | Realtors and real estate, mortgages, lending, investments

Tue, 05 Feb 2008 08:28:54 +0000

[...] All Real Estate is Local – You Could be Less Screwed than Others, by Morgan Brown. [...]

By: joe

joe — Tue, 05 Feb 2008 02:58:30 +0000

does that make you an aquarius as well? i should have known!

excellent posts as usual Morgan.

sincerely,

Joe (2-8-1975)

By: Mark

Mark — Tue, 05 Feb 2008 02:43:04 +0000

I don’t like the phrase “all real estate is local”, it’s too convenient to misuse (to a realtor’s advantage) and only tells half of the story.

I’d rather hear “All real estate is made up of two parts: a normally dominant local portion, and a national component of variable strength”.

By: Ann

Ann — Mon, 04 Feb 2008 22:33:58 +0000

Morgan..the best consumer is an educated one…I left a declining market in SFL that is so bad that the person who purchased my home in March of 07 has already seen a decline of 150K in value..and how long it will take to get it back is anyone’s guess right now…

One home that stands out in particluar is currently a foreclosure…originally listed in the booming years at $950K, it is available at the bargain foreclosure price of $550K from the bank(which we all know has room for negotiation. Also the home is not destroyed/damaged. And maybe at the most needs 10-20K of basic work). Needless to say the homes in the area currently comparable are listed in the 700s and high 800s.

Consumers need to be aware of these markets because of the possibility of being “stuck” in a property. Normal appreciation is at 3-5% annually. Imagine the poor soul who purchased my home at 100% financing who will have to wait possibly 20 YEARS PLUS before arriving back at the mortgage balance! And that is IF the market doesn not continue to decline which all experts say it will for at least one more year in SFL!

Yes Real Estate is local in some respect…

By: Carl Pruitt

Carl Pruitt — Mon, 04 Feb 2008 21:30:41 +0000

Obviously, there are declining value problems all over, but the phrase
“real estate is local” isn’t just a smokescreen. Real estate values
quoted in those statistics are still averages or medians even on the
county level. I know of neighborhoods in areas in Georgia that are
on Countrywide’s list at level 1 and 2 that should be at level 5 and
some neighborhoods in those same areas where legitimate sale prices
have actually gone up substantially.

But that is just a fine point. The same advice applies to the potential
homebuyer that should have always applied. Get actual sales figures
over time for the specific area you are in and look at them yourself.
Then apply common sense to analyzing local trends. Never depend
solely on the advice of someone who only gets paid when you close
no matter how many times they tell you they have a fiduciary duty.