Real Estate and Economic Links

BiggerPockets.com:
* Housing Market Insight – Week of September 6th

Inman News:
* Most bankers don't see credit easing

RealtyTimes.com:
* From "Double Dip" to Double Opportunity

New York Times (Economix):
* Mortgage Rates and Home Prices
* Interest Rates and House Prices: A Murky World

Calculated Risk:
* Mortgage Rates and Home Prices
* Housing Starts and Vacant Units
* Housing Completions will set new record low in 2010

Landlord, Tenant, and an Eviction on Rye

This kind of news gets to be awfully exasperating. When do people learn to simply get along and work together? Does everything have to come down to a lawsuit? Are the issues needing to be addressed here so insurmountable that all parties being impacted can't get into a room, have a civil discussion, and find an amicable solution? Oh right, I'm assuming that people are willing to find some middle ground. How simplistic and foolish of me!

Jamie Dimon Singing the Real Estate Blues

The Los Angeles Times blog recently posted an article titled, "Jamie Dimon's real estate woes" noting that Dimon hasn't been immune to the housing downturn either as he has had to drop the asking price of his Chicago mansion:

"The mansion, where Dimon lived back when he headed up Bank One, originally went on the market for $13.5 million in 2007. The bad real estate market has forced a series of reductions that have brought the listing price down by nearly half, to $6.95 million."

As a result of Dimon's misfortune, the author (Daniel Popper) states:

"As homeowners have struggled to modify their mortgages with JPMorgan Chase & Co., more than a few have probably felt flashes of anger toward the company's chief executive, Jamie Dimon ...... It may be some comfort to these folks, then, to know that Dimon has not been immune from the problems of falling home prices."

I'm the last person to sympathize with the likes and ranks of people like Jamie Dimon, but I don't wish him ill will or find comfort in his circumstances despite not liking to deal with CHASE bank on any level.

Unfortunately, the greed and irrational exuberance at the highest levels (Jamie Dimon's world) of these uber and / or multinational corporations has created turmoil for the vast majority of people in this country. Furthermore, countless hardworking Americans have encountered these incredibly tough times to no fault of their own as a result of this unregulated mess and the slick maneuvering these uber banks use to assess account and various transaction fees.

For Jamie Dimon, the economic mess that he was complicit in developing (or stood by allowing it to happen) has now landed like a big pile of crap squarely in his mansion's backyard. Welcome to the sober party! Unlike many Americans, I'm guessing he'll fare a little better even if he does have to get more aggressive with price drops on his modest abode.

Tony Robbins Warns on Housing and the Economy

Tony Robbins gives a "special warning" regarding where he believes the U.S. economy is headed:

" ... the financial world, as you know it, is about to change radically at levels you won't even imagine and it's coming really quick. I can't tell you when, but I know it's coming quick; sometime in the next three, four, five, six, seven months it's going to happen".

In the same camp as many economists, Robbins' is predicting more difficult times around the corner (stock market and housing). In fact, Robbin's is citing that the U.S. economy is on the cliff again as the stimulus effect is weaning.

Times are difficult, but it's certainly not productive to be frozen by fear and to concentrate on everything that's not working. In fact, it's difficult to operate at any level when your actions are being guided by fear and negative emotion. As Robbins' states, "Put yourself in a position where you educate yourself."

Positive thinking and education don't guarantee that everything will come out rosy. However, simply look around to see what fear, ignorance, and negative thinking get you. It's a waste of time and leads to many bad and uniformed decisions. We all know times are challenging. How we deal with it will largely determine how we're going to get through it. Cliche, yet true.

For obvious reasons, millions are made during the most dire economic conditions. It's our job to figure out how we're going to be one of those who prospers.

Embrace the challenge!

Jim the Realtor, the Courthouse Steps, and Insanity

Good ol' public trustee auction house bidding action at the courthouse steps courtesy of Jim the Realtor. Despite watching the back and forth bidding action driving the final sales price of this property up, the intriguing point to note here is Jim the Realtor's following acknowledgement [actual YouTube posting by Jim the Realtor]:

"I submitted an offer of $600,000 on this house on July 1st when it was listed as a short sale for $649,000. The sellers didn't respond, but I think the bank would have wanted to know about it."

Keep in mind this home sold at the courthouse steps for $540k, despite Jim the Realtor having offered $600k when the home was originally listed as a short sale. As if we needed any more examples of how flawed the short sale process is. In most instances, loan modification workouts have been as pathetically unsuccessful as well.

Awfully hard to operate under utter incompetence.

A Positive Spin on Housing

Tired of hearing all of the negative news on housing? I am.

There's no doubt the U.S. housing market and broader economy still face many challenges. In fact, you'd be a fool to ignore this reality. However, at a certain point, it becomes counterproductive to simply concentrate on any one aspect of any subject matter since allowing such one-sided concentration will begin to overshadow and ultimately suffocate other realities.

The discussion on many real estate and economic blogs this past week regarding the latest S&P Case-Shiller Housing Price Index report (released August 31, 2010) is a perfect example of such behavior. The S&P Case-Shiller housing report highlighted some positive numbers yet the analysis immediately shifted to warnings that these positive numbers where merely inflated by the federal tax credit incentive and the predicted second half slowdown would tell a much different, more negative, housing story. Even though I find myself in this more bearish camp, let's look at some other realities from a different perspective.

Despite it being quite apparent that prices have further to fall in many markets, U.S. housing prices have already tanked significantly. In many markets, current residential housing price points are dating back to 2000-2003 levels and you can find great buys dating back to early 1990 levels or beyond. Furthermore, mortgage interest rates are at historically low levels and may slip to even lower levels.

Keeping this in mind, there are reasons to be cautiously optimistic about what could be if you are an investor looking for cash flow opportunities, a first time home buyer looking for their first home, a vacation home hunter, or a private lender looking for strong returns on a low LTV deed of trust investment.

In an op-ed housing article titled, "A Dream House After All", Karl E. Case further illustrates these positive points:

Do the math. Four years ago, the monthly payment on a $300,000 house with 20 percent down and a mortgage rate of about 6.6 percent was $1,533. Today that $300,000 house would sell for $213,000 and a 30-year fixed-rate mortgage with 20 percent down would carry a rate of about 4.2 percent and a monthly payment of $833. In addition, the down payment would be $42,600 instead of $60,000.

Does this mean you should go out and buy? Of course not, like any other investment or major purchase, you have to do your homework and weigh the pro's and con's of what you're looking to do based on the circumstances you're confronted with. Even though it's quite clear that the U.S housing market and economy will cause further pain in the lives of countless Americans, there are positive opportunities and data points to take into consideration despite the constant negativity that abounds.

Even Lower Interest Rates?

The 10-year Treasury note yield to fall below 2%? BofA Merrill thinks so. For those who have managed to come away unscathed from the seemingly endless and ongoing downturn in the economy, mortgage rates are truly at unreal levels.

They expect the Federal Reserve to continue to try to push long-term interest rates lower to support the economy. BofA Merrill now predicts that the benchmark 10-year Treasury note yield will fall below 2% in the first half of 2011, from the current 2.58%.

If you have cash and you're looking to buy a rental property, get a mortgage for goodness sake. With such low interest rates, endless opportunities abound for strong cash flow opportunities. While the banks are giving the money away, use it and keep your cash liquid. Why wouldn't you?

If you can't qualify for a mortgage, join the large crowd. The banks don't want to lend to you. They're doing just fine making money lending back to the government.

Regardless of what camp you're in, there's no denying that interest rates are extremely low and will ultimately trend lower if BofA Merrill's prediction is correct.

Complete Article: BofA Merrill sees 'growth recession' -- and another dive in interest rates