68% of home owners in metro Phoenix have negative equity (bank owned, section 8)

[azsundevil99]

I left Phoenix and it was the best thing I could've done for my family and myself. I lost $200k in equity thanks to all the idiots who foreclosed and couldn't afford their home in the first place, but thankfully we have been able to regain some ground and move on. Good luck to those who have no alternative but to stay.

[khuntrevor]

Originally Posted by seattlecoming

What about people that want to sell? My brother and his wife would like move out of Arid-zona entirely and live up near me but they won't be able to unless they sell short. If they do that they don't stand a chance of being able to afford much at all. Is it any wonder so many people feel like they're stuck in a rut there?

And with 30%+ underwater in Seattle, there are plenty of people in a rut there, too.

[MN-Born-n-Raised]

Originally Posted by Ponderosa

You bring up a really interesting point. I have been house-hunting with a friend the past couple weeks. I was stunned to learn that it costs a little more than half as much to buy a comparable home as it does to rent one. We are talking hundreds of dollars difference per month! A good-shape 2000 sf foreclosure in my area can be had for about 800 per month mortgage and rents for about 1300-1500. That's a lot of money in the bank on buying versus renting. You would think people would be standing in line to buy.

If I was a Mega bank or Freddy or Fanny (the government), I'd rent out THOUSANDS of homes so that the inventory would dry up. Why sell something for a fraction of what something would cash flow for?? If I was printing several trillion of dallars anyways, why not use that printed money to make the distressed properties disappear???

[Captain Bill]

What we're seeing happening in the valley is the inventory still declining.

We know that people are buying up these properties as fast as they come on the market, and as has already been discussed, with multiple offers in all price ranges. We'll watch to see what happens after June.

While I'm certainly aware of the fact that there are many homeowners without equity, that doesn't tell the whole story. The important factor for me is what is happening in the market. How many are being foreclosed on, and how fast are those selling without becoming REO's. Is the inventory declining or increasing; sales declining or increasing; and prices stabilizing, declining, or increasing. Is the economy improving; are jobs being created; are companies moving to the valley; are people still moving here; and so on.

Finally I have a success story for my clients who have been looking for 6 months in the $700-800k range and losing out to multiple offers. One factor was my client wanting to offer too little, when the properties were scarce and the homes were selling very close to or at the list price.

They were getting concerned that I may tire of working with them because of the length of time it was taking. I had to assure them that I understood, and I'm there as long as it takes to find the right home.

On Tuesday they sent me a listing to make an appointment to see. When I saw the photos, plus the satellite view of the yard, and the price, I knew this was a real bargain and was perfect for them.

We saw it that day and I was right. It was their dream home, and I knew it would be a long time before they found another like this. The 1.5 acre yard in a gated Circle G community has a 3 year old lighted tennis court with a fence, a large $70k diving pool with spa, two Ramadas, lighted sport court with heavy duty basketball stand and backboard, large grass area for play and putting green. The inside has every amenity they wanted, plus some, and it's immaculate. This is truly a move-in-ready, start enjoying the house right away.

I won't go into all the rest but I knew it would cost around $1.2 to replace today.

When we got there, another family was going inside, so we had to wait until they finished. They were in there for one hour; and another Realtor showed up while we were waiting. They had to wait 45 minutes for us, and they did.

My clients loved it and wanted to see it again that night with the kids, so I made arrangements. However, when I called the listing agent, she said that she had just received a call that an offer was coming in the morning, and that three more showings were scheduled for tomorrow.

After viewing the home with the kids, they wanted to make an offer, but they wanted to make it lower than list. This time I had to tell them that if they wanted this house they were going to have to go in at list price. There was too much activity, and I knew the agent was not lying about another offer coming.

They agreed. The problem we faced was the possibility of the seller coming back with a multiple offer counter and I wanted to avoid that. So I had to devise a strategy that I thought may work. I went home, wrote the offer which the clients electronically signed with Docusign, and called the listing agent at 9pm to tell her I was sending an offer right away.

I included a cover letter, and what I said in the cover letter was the strategic part of the offer. At 10:00 am the following morning the agent called me with a verbal acceptance.

However, she was going to be getting on an airplane at 1pm and wouldn't have time to go get it signed. The seller had moved into their new home and didn't have internet connection yet to sign electronically, so she couldn't get the contract signed today. I asked her permission for me to print out the contract and take it to the sellers to sign. She agreed, so I went and got it signed, and we had escrow opened by 2pm.

She said that the other offer was just $10k under ours, and they elected to not do multiple counter offers (because of what I said in the cover letter).

While talking to the seller, he said he had put a total of $1,295,000 into that house, and I can see it. They had intended to stay there for a long time, but something came up that caused them to need to relocate to another part of the valley to avoid a long daily drive.

[khuntrevor]

Originally Posted by MN-Born-n-Raised

If I was a Mega bank or Freddy or Fanny (the government), I'd rent out THOUSANDS of homes so that the inventory would dry up. Why sell something for a fraction of what something would cash flow for?? If I was printing several trillion of dallars anyways, why not use that printed money to make the distressed properties disappear???

I know of some specific condos, where they (Franny) are doing just that.

[kdog]

Originally Posted by Captain Bill

...I included a cover letter, and what I said in the cover letter was the strategic part of the offer.
...
She said that the other offer was just $10k under ours, and they elected to not do multiple counter offers (because of what I said in the cover letter).

Well, don't leave us in suspense. What did you say in the cover letter?

[Ponderosa]

Originally Posted by MN-Born-n-Raised

If I was a Mega bank or Freddy or Fanny (the government), I'd rent out THOUSANDS of homes so that the inventory would dry up. Why sell something for a fraction of what something would cash flow for?? If I was printing several trillion of dallars anyways, why not use that printed money to make the distressed properties disappear???

Renting at least some of the REO inventory would make sense. Also, why not do short re-fi's splitting losses with homeowners? That might go a long way toward stopping strategic defaults and foreclosures due to life changes. One way or another investors are going to have to eat the equity losses. The way it is being done - wait for inflation to wipe them out - is painfui to the "little man" whose losses aren't insured by the federal government.

[observer53]

Originally Posted by wuds

3. people who have owned their home for many, many years. still with a mortgage, and still with positive equity.

Exactly. That would be me.

[roosevelt]

Let's see, thanks to the government, you can walk away from your house, 1st and 2nd mortgages (if you got the 2nd at the time of the 1st) and live payment free for over a year plus not pay property taxes; or, rent the house out. A person could accumulate all that money and have plenty to put down on a similar house at 1/3 the price.

[twiggy]

A lot of people will pay higher to rent simply because they can leave if needed. If you buy and get a job transfer, etc., you really have to go through the ringer to sell. If you rent you can just go. In this economy the jobs aren't as secure and so staying put isn't as secure either anymore. It's worth the extra rent to some for this option alone. You might lose more buying and having to get rid of the house for a lower price to leave. There are a lot of transplants their that have to keep a mobile option.
I know I won't buy anywhere for a long time simply because it took so long to get out of the last home I owned, lost thousands, won't do that again for quite a while. I imagine there is that "fear factor" as well. A lot of things have changed with this economy, it's not that simple. You don't just buy because it's cheap to buy anymore unless you're planning on being a landlord.