How much further are prices going to drop?

[sandspur_321]

I think we all got into this mess when people started seeing homes as opportunities for quick cash turn arounds and flipping. Only then, when the speculators got involved, did we see such outrageous run ups like the kind of 04-05. Real estate is, historically, a wonderful and tangible investment. But, like most investments, if you cant weather some ups and downs - then you have no business getting in the market in the first place.

Historically, real estate appreciates at 4%-6% per year compounded. Add to that the fact that money is VERY cheap right now, and the potential for reducing your tax burden via write offs, etc - and you'll see how fine an investment you have. I can't guarantee my Morgan Stanley stock won't tank when everyone finds out how much they've hedged on private equity - but my brick foundation has a replacement cost, certain value, utility and considerable mass (pun intended).

Housing is a long term win. But like any place you put your cash - you gotta be willing (and ABLE) to take the good with the bad. ARMs reset. If you can't refinance - yeah - you're upside down and the tide is coming in....

[CouponJack]

Originally Posted by sandspur_321

I can't guarantee my Morgan Stanley stock won't tank when everyone finds out how much they've hedged on private equity - but my brick foundation has a replacement cost, certain value, utility and considerable mass (pun intended).

Using ONE stock as an example of "investing" in equities is a terrible example.

A much more fair comparision would be a diversified portfolio of stocks/bonds taylored to your risk tolerance. Rebalancing periodically into low cost tax efficient mutual funds.

[Pasadena Note Queen]

I can't tell you the number of lenders that refuse to take a good short sale offer. You'd think with the mounting losses, that they'd try to stop the bleeding, but I've seen them refuse a short sale offer of $375,000, just to put it on the market three months down the road at $275,000. I guess it really doesn't matter that much to them . . . we will just keep bailing them out, and they know it.
The International Monetary Fund (IMF), for its part, expects a “mild recession” in the U.S. this year. It put a price tag of $945 billion on losses from the credit crisis yesterday. That would mean — with only $232 billion in write-downs behind us — we’re barely a quarter of the way there.
“There has been a collective failure,” says the IMF’s director of monetary and capital markets, Jaime Caruana, “to appreciate the extent of leverage in the financial system and the associated risks of disorderly unwinding.”
Sales of previously-owned homes fell nearly 2% between January and February, according to the National Association of Realtors. But NAR sees brighter things ahead for the rest of 2008. “The wider access to affordable credit should increase sales activity notably this summer as pent-up demand begins to be met,” says NAR chief economist Lawrence Yun.
Hmmm, mortgage rates haven't matched the Fed's cutting spree quite yet. But who knows? There's a lot of conflicting information out there.
My personal feeling? There are some great buying and selling opportunities (especially if you incorporate the owner financing techniques I frequently write about), AND there's still A LOT that's going to shake out from things already in motion. We haven't seen things fully come home to roost.
I see lenders stalling taking property back (sometimes putting off a Trustee Sale for over a year!), overpricing REOs and then pulling them off the market if they don't sell (and probably selling them in bulk at 50 cents on the dollar to an investor that can buy $10,000,000 at a time). This way, they hide the losses they're actually taking from the general public and hold off a "fire sale" mentality.
I also think that they're trying to stagger and stretch out their losses. They don't want to tank too badly in any given quarter.
Whether you're trying to qualify for a new loan, refinance an existing loan, negotiate a short sale or buy an REO at a fair price, working with lenders is tremendously tedious at this point. That's why I love putting together deals where we don't need the institutional lending community at all. Sellers willing to carry paper can get things done better, easier and faster.