The Global Financial Crisis and Real Estate (part 4)
Who knows how long it will take to sort out the financial part of sub-prime mortgage crisis and the real estate bubble. The bubble will take care of itself. There will be scars. There will also be some very good deals. The actual dollar losses to the failed mortgages have already been written down for the most part. When some money comes back on a lost cause, that will be positive for the financial industry. The real problem will be with us for many years to come.
The real problem is sub-prime properties and sub-prime borrowers. Many of the properties that were financed under sub-prime mortgages were really shoddy construction in really depressing settings. People who could not even rent a home from a diligent landlord were desperate enough to take these “blessings”. Much of the “cost” in these transactions went to pay off appraisers and mortgage brokers and give cash advances so the buyers could resolve old debts in order to qualify for the loans. Less than normal “cost” went into labor and building materials. This left a crummy house with no equity, which will remain long after the foreclosure is done.
Then there are the sub-prime buyers. There were many honest, quality type people who got sucked into this situation by crooked “professionals”. There were a lot of people who should have been left sleeping under the bridge. These people will need a lot of counseling and rehab before they are even qualified to rent a property much less own one.
Next edition will be on industrial property.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Showing posts with label Sub prime crisis. Show all posts
Showing posts with label Sub prime crisis. Show all posts
Monday, October 20, 2008
Thursday, January 24, 2008
The Sub-Prime Crisis and the Rental Home Market
The Sub-prime Crisis and the Rental Home Market
Charlotte does not seem to be affected quite as much as the rest of the country by the current housing slump. We have about 80,000 people a year coming here. I am sure that as the banks start laying people off we will get hit. The rental market has improved dramatically. Our company works the middle of the market, renting mostly to middle class tenants. We have found that our homes rent almost as soon as they are ready for occupancy.
I have a friend who does mostly lower end properties. He says that the rental market for him is the best it has ever been. I have not spoken to anyone in the higher end rentals or anyone who does the executive (fully furnished short term) homes. I don’t know how well that market is doing.
The rental market got really bad at about the same time that credit got really easy. Many people that we had turned down for rental or evicted were able to buy homes with 100% financing plus enough cash to pay off their credit cards so they could qualify for the loans. In the middle of that mess, were opportunist who were buying properties for resale. They would “fix them up” with cheap materials and poor workmanship and find a crooked appraiser and a crooked loan broker. Why do we have a foreclosure crisis?
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Charlotte does not seem to be affected quite as much as the rest of the country by the current housing slump. We have about 80,000 people a year coming here. I am sure that as the banks start laying people off we will get hit. The rental market has improved dramatically. Our company works the middle of the market, renting mostly to middle class tenants. We have found that our homes rent almost as soon as they are ready for occupancy.
I have a friend who does mostly lower end properties. He says that the rental market for him is the best it has ever been. I have not spoken to anyone in the higher end rentals or anyone who does the executive (fully furnished short term) homes. I don’t know how well that market is doing.
The rental market got really bad at about the same time that credit got really easy. Many people that we had turned down for rental or evicted were able to buy homes with 100% financing plus enough cash to pay off their credit cards so they could qualify for the loans. In the middle of that mess, were opportunist who were buying properties for resale. They would “fix them up” with cheap materials and poor workmanship and find a crooked appraiser and a crooked loan broker. Why do we have a foreclosure crisis?
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Saturday, September 22, 2007
Micro Events, Macro Results
Micro Events Macro Results
A common comedy theme is the tiny event with imagined (usually stretched) consequences that turn into a major possible implication. The comedy versions are usually far fetched. In the real world this stuff can happen. A good example is the current sub-prime crisis.
Only a very small percentage of mortgages are in foreclosure. Of those, many will liquidate without a large loss. The real crisis is fear. The sudden lack of confidence in mortgage backed securities has caused a liquidity crunch. This is not just in the sub prime market. When mortgage brokers can’t sell their accumulated mortgages, they can’t get the money to make more mortgages. No mortgages in most of the civilized world means no sales. No sales means no building. No building means no jobs and no materials purchases. The secondary purchases people make when they buy a house are also drying up.
Another by-blow of the sub-prime crisis is that noone really knows who owns all the bad mortgages. Investors afraid of getting stuck don’t invest. The whole world economy suffers. Is this a market landmark? How much further will the economies tank. The stock exchanges have benefited from the Federal Reserve rate cut. How long will this exuberance last? Answer these questions. Get rich.
David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .
A common comedy theme is the tiny event with imagined (usually stretched) consequences that turn into a major possible implication. The comedy versions are usually far fetched. In the real world this stuff can happen. A good example is the current sub-prime crisis.
Only a very small percentage of mortgages are in foreclosure. Of those, many will liquidate without a large loss. The real crisis is fear. The sudden lack of confidence in mortgage backed securities has caused a liquidity crunch. This is not just in the sub prime market. When mortgage brokers can’t sell their accumulated mortgages, they can’t get the money to make more mortgages. No mortgages in most of the civilized world means no sales. No sales means no building. No building means no jobs and no materials purchases. The secondary purchases people make when they buy a house are also drying up.
Another by-blow of the sub-prime crisis is that noone really knows who owns all the bad mortgages. Investors afraid of getting stuck don’t invest. The whole world economy suffers. Is this a market landmark? How much further will the economies tank. The stock exchanges have benefited from the Federal Reserve rate cut. How long will this exuberance last? Answer these questions. Get rich.
David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .
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