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Nicholas Cage Needed You!
Looks like Nicholas Cage could have used your help last
week. But instead, he lost two mansions to foreclosure.
The bank auctioned them off for a cool $4.5 Million.
And here’s the kicker – they appraised at $6.8 Million.
That’s a difference of $2.3 Million.
What if you could have gotten ahold of Nicholas six months
ago…
…and set up short sales on his mansions?
There’s a few tactics you must know first. Because it’s
a different market…. but far more lucrative than typical
residential homes.
And I’ll reveal the secrets of how to flip a luxury home
as easy as you would a $67,00 colonial. Just sign up for
my fr-ee webinar here this tonight at 8:30 PM ET,
5:30 PM PST:
https://www1.gotomeeting.com/register/441411912
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1 in 4 mortgages underwater
Research firm First American CoreLogic says 23% of Americans with mortgages owe more than their home is worth. That’s 10.7 million U.S. mortgages, or almost 1 in 4, and another 2.3 million homeowners are within 5% of negative territory. Home prices have fallen so far that 5.3 million U.S. households are tied to mortgages at least 20% higher than their home’s value, the First American report said. More than 520,000 of these borrowers have received a notice of default, according to First American. Most U.S. homeowners still have some equity, and nearly 24 million owner-occupied homes don’t have any mortgage, according to the Census Bureau. The majority of underwater mortgages are heavily concentrated in five states that have particularly suffered from the housing bust: Nevada, at 65%; Arizona, at 48%; Florida, at 45%; Michigan, at 37%; and California, at 35%. Negative equity, also called an “underwater” or “upside down” mortgage, has become more common as home values plummet, and the numbers are closely watched because borrowers who are underwater are more likely to be foreclosed.
These five states have been hit especially hard because of a high rate of prime loans that went bad. Some of those loans were option-adjustable rate mortgages, and when the accumulated debt reaches a certain point — usually 10% to 25% more than the original principal — the option-ARMs loans are recast into fixed-rate mortgages. When that happens, many borrowers cannot afford the new payments. But mortgage troubles are not limited to the unemployed. About 588,000 borrowers defaulted on mortgages last year even though they could afford to pay — more than double the number in 2007, according to a study by Experian and consulting firm Oliver Wyman. “The American consumer has had a long-held taboo against walking away from the home, and this crisis seems to be eroding that,” the study said
Retail might be up on Black Friday
According to a survey by the National Retail Federation, the number of people shopping on Black Friday is expected to pick up more than 16% this year, with 57 million people (up from 49 million in 2008) saying they will “definitely” head to stores on the day after Thanksgiving. 77 million said they would wait to decide after seeing the weekend deals. Overall, up to 134 million people said they will shop on the Friday, Saturday or Sunday following Thanksgiving, up 6% from 128 million people the previous year. The survey said 66.3% of consumers said they will head to department stores and 62.4% to big box stores on the day that kicks off the holiday shopping season.
About 41.0% will shop at electronic stores, 36.3% at clothing stores, and 28.8% at grocery stores. 27.6% said they would shop online. 10.3% said they would even get to stores to scour for deals as early as midnight, and 28.8% said they would arrive around dawn, between 4 a.m. and 6 a.m. Another 28.2% said they would shop between 7 a.m. and 9 a.m. “Regardless of what we’ve already seen these last few weeks in terms of promotions, retailers still have a few tricks up their sleeves to excite Black Friday shoppers,” Mullin said in a statement. “Americans can expect huge sales on popular items like toys, electronics and apparel.” Good to hear we can still be tricked!
Multifamily mortgages down 40%
The Mortgage Bankers Association (MBA) says that in 2008, 2,877 different multifamily lenders provided a total of more than $88 billion in new financing for apartment buildings with five or more units — a 40 percent decline from 2007 levels. The top five multifamily lenders in 2008 were PNC Real Estate, Wachovia, Wells Fargo Bank, N.A, Capmark Financial Group Inc, and Deutsche Bank Commercial Real Estate. “Multifamily lending volume was down in 2008, but even in the face of the credit crunch, there was a broad and diverse market offering mortgages to apartment building owners,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “There is a core group of dedicated multifamily lenders that originated a large number of loans in 2008. In addition, there is a broad group of smaller institutions that each originated a small number of loans, but collectively offered borrowers a wide range of options. In fact, 26 percent of lenders who made multifamily loans in 2008 made just one, and two-thirds made five or fewer.” The MBA report is the most comprehensive view available of the multifamily lending market and includes a detailed summary of the $88 billion multifamily market, profiles of distinct market segments, a listing of 2,877 lenders who made multifamily loans in 2008, including their lending volume, number of loans made and average loan size, and a listing of metropolitan areas and the volume of very-small loans made in each in 2008.
Existing home sales up
As expected, the National Association of Realtors reported that existing-home sales showed another big gain in October, surging 10.1 percent to a seasonally adjusted annual rate of 6.10 million units in October from a downwardly revised pace of 5.54 million in September, and 23.5 percent above the 4.94 million-unit level in October 2008. Sales activity is at the highest pace since February 2007 when it hit 6.55 million. Lawrence Yun, NAR chief economist, expects a decline over the winter: “With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer.” Since the tax credit has been extended and expanded, potential buyers have until April 30 to have a contract in place. “There is still a large pent-up demand that can be tapped before the tax credit expires. Our recent consumer survey further shows that 13 percent of successful first-time buyers had a previous contract that was cancelled or fell through – there likely are many more buyers who were attempting to purchase but simply ran out of time,” Yun said. Of course, very low interest rates also play into the demand too. A more accurate reflection of economic activity will be closely watched later this week when new home sales are released.
GDP revised downward
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — only increased at an annual rate of 2.8 percent
from the second quarter to the third quarter of 2009 instead of the 3.5 percent previously reported by the Bureau of Economic Analysis. In the second quarter, real GDP
decreased 0.7 percent. The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. The increase
in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, federal
government spending, and residential fixed investment that were partly offset by a negative contribution from nonresidential fixed investment. Imports, which are a subtraction
in the calculation of GDP, increased. The upturn in real GDP in the third quarter primarily reflected upturns in inventory investment, exports, and residential fixed
investment, and a smaller decrease in nonresidential fixed investment that were partly offset by an upturn in imports, a downturn in state and local government spending,
and a deceleration in federal government spending.
Commercial real estate still falling
Values of commercial real estate will continue to fall before a slight rebound and a gradual recovery, according to a new report from Moody’s Investor Service. Commercial property values fell 42.9% from their peak in October 2007 and will remain stunted far longer than cash flows, according to the report. Analysts further predict that values will decline 45% to 55% from that peak in months ahead. “We believe that valuations will rebound off the bottom and settle in for the longer term at levels 30%-40% below the market top as liquidity and investors return to the sector and property cash flows begin to recover,” said Nick Levidy, Moody’s managing director. Analysts at Moody’s see cash flows that back commercial mortgage-backed securities (CMBS) will recover slowly over the next several years. However, refinancing risk on CMBS will grow as maturities near on bonds issued during that 2007 peak. Moody’s anticipates downgrades of up to three levels for many tranches of 2006 to 2008 vintage CMBS, but ratings on the most senior bonds should remain at current levels. “Cash flows for properties with short-term lease structures, such as hotels and multifamily, will likely hit bottom in 2010 or early 2011,” said Levidy. “The bottom for office, retail and industrial properties will take longer to form.”
Now on to our real estate investing educational arena …
Now What Are People Waiting For?
Curious what people are waiting for? Every short sale investor should be because the same excuses are those you are likely to encounter on a daily basis. Oddly enough, some tend to remain the same over time while others change according to the economic climate. Here are the top reasons for waiting to sell or entertain a short sale offer as cited by most potential clients as of November 2009:
1. Waiting for the market to hit bottom and begin rising. Sadly, many homeowners have been led to believe the worst is over for the real estate market but most experts disagree. Take time to educate homeowners on the coming ARM adjustments combined with rising credit restrictions.
2. Waiting for the season to change…literally. Homeowners have been told spring is the time to sell so they are waiting for warmer weather rather than risking a lower price now. Explain that buyers are serious and the cost of waiting several months is to just get more behind on the mortgage. Instead, they can have a fresh start with the coming of the new year.
3. Waiting for Days to Disappear. If they have previously listed their home without a sale, many homeowners try to remove the home from the market for a short period of time with the hope of “resetting” the days on the market listing to zero. Explain how pricing right is the best policy rather than trying to play “head games”.
4. Waiting for government Incentives. This is a big reason behind many delays for both buyers and sellers. Buyers are hoping for more tax breaks while sellers are praying for bigger bail-out funds. Although the federal government extended the first-time buyer credit and included a clause for current homeowners that will sell in order to purchase another property, not everyone qualified. Likewise, bail-out funds designed to save homeowners from foreclosure have only reached a small number of those in need of assistance. Experts agree there is little hope of relief for the majority of homeowners.
5. Waiting for even lower interest rates. Currently rates are near historic lows with some dropping below 5% for a 30 year fixed mortgage. While there is some debate on whether mortgage rates will continue to drop, few believe the deductions will consist of more than mere partial points (at most). On the other hand, there is a general consensus that credit terms will continue to tighten making it even more difficult to obtain an affordable mortgage even if prices remain low.
See you at the top!
Chris McLaughlin
**************
Copyright Loss Mitigation Institute LLC 2009.
All Rights Reserved.
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Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog
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About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.
* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid reselling of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,
running 4 different offices, supporting over
400 agents, uniquely positioning him to help
thousands of investors make money in the
biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
* Follow me on Twitter: http://twitter.com/mclaughlinchris
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