My take on finance and real estate today vs yesterday (Minneapolis: middle-class, foreclosures)

[daxdickson]

I truly think that this current REO Rehab market here in Minneapolis & St Paul MN is better than what we saw a few years ago. Back then everyone banked on appreciation and no-one really seemed to think about the core values of real estate investing.

Now I am seeing more people really crunch the number and pay attention to things like Debt Service Coverage Ratio (DSCR) when buying investment properties and home owners really sticking to committing to a house payment that is 35% of their Debt to Income (DTI) or less.

This change from reckless home buying and investing to the more calculated purchases I see today really makes me feel better about this current economic situation.

We touched the stove and that is okay as long as we learn from it.

I really want to hear what other people here in the Twin Cities MN area think.

Let me know!

[StPaulEastSider]

Originally Posted by daxdickson

I truly think that this current REO Rehab market here in Minneapolis & St Paul MN is better than what we saw a few years ago. Back then everyone banked on appreciation and no-one really seemed to think about the core values of real estate investing.

Now I am seeing more people really crunch the number and pay attention to things like Debt Service Coverage Ratio (DSCR) when buying investment properties and home owners really sticking to committing to a house payment that is 35% of their Debt to Income (DTI) or less.

This change from reckless home buying and investing to the more calculated purchases I see today really makes me feel better about this current economic situation.

We touched the stove and that is okay as long as we learn from it.

I really want to hear what other people here in the Twin Cities MN area think.

Let me know!

I hope we did learn from it... I have had an up close and personal look of how the foreclosures of investment properties is affecting the poorest members of our society, and it is not pretty. The majority of REO properties thusfar were lost by investors, those who were forced out of these properties often were not the owners, but rather the renters.

The Strib reported yesterday that a new wave of foreclosures is upon us:

"As this recession has intensified, the face of this mortgage crisis has changed by 180 degrees," said Scott Anderson, a senior economist at Wells Fargo & Co. in Minneapolis. Job losses and other economic-related fallout are behind many foreclosures now, he said.



Anderson said the new wave of people unable to pay the mortgage often is middle-class families that most likely have two incomes. One loses a job and all of a sudden they can't afford their house. Or they are under water on their mortgage and can't refinance. ...


Gugin also said that low and moderate income homeowners were ahead of the curve in the economic downturn and were the first to lose their jobs and experience financial distress. What is happening now, she said, may be the second wave of the foreclosure problem.

Star & Tribune

I honestly don't think we've turned the corner as of yet.

Perhaps we have in certain markets, such as the under 100k market of certain zip codes, such as 55411 in MPLS and 55106 in St. Paul, and in the area of Investment properties.

But in solid middle class neighborhoods, we may have as ways to go.

Before we can say we have turned the corner, we need to know the economy has picked up, the wave of job losses and lay offs has been stemmed, and the ecomomy is growing to create new jobs.

But yes, there were important lessons to be learned, and I think, as long as the memory of this bubble burst remains fresh in everyone's minds, we are not likely to repeat the same mistakes anytime soon... perhaps not for another 30 years? Hopefully longer.

[Clifford63]

Originally Posted by StPaulEastSider

I hope we did learn from it... I have had an up close and personal look of how the foreclosures of investment properties is affecting the poorest members of our society, and it is not pretty. The majority of REO properties thusfar were lost by investors, those who were forced out of these properties often were not the owners, but rather the renters.

The Strib reported yesterday that a new wave of foreclosures is upon us:

I honestly don't think we've turned the corner as of yet.

Perhaps we have in certain markets, such as the under 100k market of certain zip codes, such as 55411 in MPLS and 55106 in St. Paul, and in the area of Investment properties.

But in solid middle class neighborhoods, we may have as ways to go.

Before we can say we have turned the corner, we need to know the economy has picked up, the wave of job losses and lay offs has been stemmed, and the ecomomy is growing to create new jobs.

But yes, there were important lessons to be learned, and I think, as long as the memory of this bubble burst remains fresh in everyone's minds, we are not likely to repeat the same mistakes anytime soon... perhaps not for another 30 years? Hopefully longer.

I think the current administration is prone to putting legislation to insure consumers have some protection going forward. Protection from both predatory lending and the temptation for the consumers to reach farther than they should. Mostly good strategy, but we already see where lowering of credit limits is impacting some consumers. Bottom line is it will involve some sacrifice to get back on healthy ground.

I think the general notion that the crunch is hitting in waves makes sense. People in the mid range had some buffers and thus it is likely they could delay some of the things that entry range buyers could not. The big question is how do the numbers stack up on the next wave? Might be fewer in numbers, but higher in terms of total dollars.

[daxdickson]

Education and well thought out decisions will prevent this from happening again. The last thing we need is this administration or any other administration jumping in to the private sector to control how the housing market or lenders lend. We as consumers were credit drunk for years. There were a lot of programs out there that did not make sense. However, it didn't make sense for consumers to take loans they new nothing about and could not pay if things changed. If the lenders, brokers and banks are to blame then so is the American consumer for not reading before they signed.
A situation like this worked itself out in the 80's and would have worked itself out now. All of this government control is only teaching the consumer if they screw up they can just wait for the government to come in and bail them out.
When the dust settles I hope we as American consumers will realize that we must think before buying and if we do not there are consequences.