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My neighbor is being foreclosed
Old 07-20-2008, 10:50 PM   #1
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My neighbor is being foreclosed

No, not the one negotiating to get their mortgage reduced, the ones behind me. I'm stunned. They bought before us for 220k, and even with the downturn they should have 150k in equity. I never saw them buy fancy stuff/cars/toys, but I do know he's had some underemployment issues. I can only guess the loan reset and ever since that happened they've been on a downhill slide.

After a brief lull, the downward movement in price for San Diego seems to be accelerating again. It looks to me that anyone with the guts to do it might look at getting in for a rental in the next 9-12 months. Homes that would rent for 2200+ EASY are falling below 350k. Not quite a positive cash flow yet, but getting there quickly. I guess no one has the cash right now. On the other end there are some AWESOME ocean view homes, 3000 sq. feet, pool etc. that used to sell north of a million now going for 750k. It would be a nice time to be a newly promoted corporate vice president!

Maybe I'll find out what the bank wants for this house so I don't have meth head renters living next to me.
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Old 07-20-2008, 11:03 PM   #2
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Uggh! Yep, I'd find out what the bank plans to do. I don't think I'd want to own a rental property abutting my own, though.

Let any cops who live on your street know about the situation, maybe suggest that if they park their cruiser across the street from the foreclosed house when they are off duty that maybe unsavory buyers will look elsewhere. Offer free doughnuts for this favor, if necessary.

Good luck!
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Old 07-21-2008, 01:02 AM   #3
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This is getting good. People with money on the sidelines will be making a killing down the road on real estate. We can start this whole bubble thing all over again
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Old 07-21-2008, 01:42 AM   #4
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Originally Posted by laurencewill View Post
I guess no one has the cash right now. On the other end there are some AWESOME ocean view homes, 3000 sq. feet, pool etc. that used to sell north of a million now going for 750k.
This is amazing. $750,000 in a good neighborhood in close -in Seattle would still only get you a piece of junk at least 40 years old, and likely built in the 20s. And Seattle is a little lacking in the beach department. Only bad thing I can see about San Diego relative to Seattle is California income tax.

Ha
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Old 07-21-2008, 03:48 AM   #5
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Maybe your neighbor refinanced. I have heard that many people with equity and some with full ownership are now losing their homes because they either refinanced or took out equity loans.
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Old 07-21-2008, 07:34 AM   #6
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On the other end there are some AWESOME ocean view homes, 3000 sq. feet, pool etc. that used to sell north of a million now going for 750k.

I see that happening here the houses that used to be a million plus are now in the $850,000 range . My house which is on the bay was probably about $ 800,000 before the downturn and now I'd take $650,000 in a heartbeat .
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Old 07-21-2008, 09:58 AM   #7
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Homes that would rent for 2200+ EASY are falling below 350k. Not quite a positive cash flow yet, but getting there quickly.
In a normal real estate market, I'm guessing that most homes should reach a price level where they are actually priced below positive cash flow (as calculated with full occupancy) because an investor needs to account for vacancies, expenses, etc. (not to mention profit).

It's a sign of how bad the bubble was when we're impressed that house prices are ALMOST positive cash flow. They're not "cheap" by any standard yet ... they're not even back to normal levels. I'd say hold your fire until next year at least.
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Old 07-21-2008, 10:02 AM   #8
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In a normal real estate market, I'm guessing that most homes should reach a price level where they are actually priced below positive cash flow (as calculated with full occupancy) because an investor needs to account for vacancies, expenses, etc. (not to mention profit).

It's a sign of how bad the bubble was when we're impressed that house prices are ALMOST positive cash flow. They're not "cheap" by any standard yet ... they're not even back to normal levels. I'd say hold your fire until next year at least.
It all depends on the market, try to get a positive cash flow home in the SF Bay area, you'd find it nearly impossible. Does not mean SF Bay prices will eventually return to earth, just that many places can have easy positive cash flow with less appreciation versus zero to negative cash flow with better appreciation.
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Old 07-21-2008, 10:14 AM   #9
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Forget the meth head renters, make sure you dont get any meth head squatters...

You might want to get a motion light and a 100' extension cord and hang it in a tree pointing at their back yard while its vacant.

The price drops seem to have slowed down around the sacramento area. A house that sold for $600 in the 2004 heyday sells for about $475 now. But anything over $500 was short-lived, frothy, bubbly BS. I'm still not seeing any bargains and you cant buy anything at all that you could make a positive cash flow out of without putting 50% down.

Whats annoying is that there are three houses in my neighborhood that have been in foreclosure for over a year. Dead lawns. No exterior care whatsoever. If the banks think these total eyesores are going to sell anytime in the next year or two, they've got another think comin'...
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Old 07-21-2008, 10:16 AM   #10
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The only reason I would consider it now would be to keep nightmare neighbors moving in. I did the math and even switching both houses to 30 year loans ties up too much cash flow. We could do it, but it would be too stressful.
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Old 07-21-2008, 10:24 AM   #11
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The only reason I would consider it now would be to keep nightmare neighbors moving in. I did the math and even switching both houses to 30 year loans ties up too much cash flow. We could do it, but it would be too stressful.
Wait another few months and it shouldn't be a problem. I don't think we have hit the bottom here in San Diego, though it appears a lot of sellers are still delusional, confusing what they "need" versus what their property is actually worth.
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Old 07-21-2008, 10:36 AM   #12
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Wait another few months and it shouldn't be a problem. I don't think we have hit the bottom here in San Diego, though it appears a lot of sellers are still delusional, confusing what they "need" versus what their property is actually worth.
So true! I've seen identical or near identical homes selling for 100k different prices.
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Old 07-21-2008, 11:08 AM   #13
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I just checked a friends house in Clairemont on Zillow. They listed it for sale in early 2007, only offer they received was $505k, which they refused because they "needed" more. At that time Zillow said it was worth $574, today on Zillow it is listed at $558k, which seems ridiculous seeing it was not worth that 18 months ago when it was actually for sale. I wonder how many people are using Zillow as a guide for what their house is worth?
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Old 07-21-2008, 11:09 AM   #14
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I don't get it. Being in Texas, obviously we'd die to have $150k in equity in a home (well I do, but only because it's paid for).
Are you telling me, this person can't go to a bank or venture capitalist and borrow money to hold someone over until they can sell the house?
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Old 07-21-2008, 11:10 AM   #15
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I just checked a friends house in Clairemont on Zillow. They listed it for sale in early 2007, only offer they received was $505k, which they refused because they "needed" more. At that time Zillow said it was worth $574, today on Zillow it is listed at $558k, which seems ridiculous seeing it was not worth that 18 months ago when it was actually for sale. I wonder how many people are using Zillow as a guide for what their house is worth?
Zillow tends to be inflated. At least according to the real estate friends I've asked.
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Old 07-21-2008, 11:12 AM   #16
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Zillow is wildly inaccurate from my experience.
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Old 07-21-2008, 11:21 AM   #17
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I don't get it. Being in Texas, obviously we'd die to have $150k in equity in a home (well I do, but only because it's paid for).
Are you telling me, this person can't go to a bank or venture capitalist and borrow money to hold someone over until they can sell the house?
I don't know them well enough to ask that, I can only speculate that they pulled money out of the house for living expenses, because their newest vehicle is the result of getting sideswiped. I have never seen any conspicuous consumption on their part. House is furnished in a moderate manner from the glimpses I've seen on Halloween etc. Maybe bad investment scheme, he did try to start his own business. That may have been it.

As far as Zillow goes, I laugh at the "Zestimates" for my 'hood. One street will have 20 houses in a row, the middle one for sale for 60-80k less than all the "Zestimates" around it. Zillow was more accurate before the bottom dropped out, now it can't keep up with the free fall.
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Old 07-21-2008, 11:34 AM   #18
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I've always found Zillow to be a pile of baloney, but it's amazing how many howowners swear by the prices. I think that is likely because it tells them what they want to hear - that they overinflated price they all desire is achievable.
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Old 07-21-2008, 11:35 AM   #19
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Zillow is wildly inaccurate from my experience.
Zillow hasn't included my area previously, even before the storm. Nevertheless, I went to check once again before this post. Amazingly, they are (finally) giving me a price for my home! I *love* the price - - it is exactly what I think the house SHOULD be worth. It would represent 4.1% annual appreciation over the past 6 years. But unfortunately, I would expect it to actually sell for about $15K less.

They have NO information on my home - - square footage, bedrooms, baths, lot size, nothing. They give each house on my block the same value, with a few exceptions.

So I have to agree - - they are trying, but not terribly accurate in my area at this point. Still, the fact that they are within $15K of the selling price is surprising, given that they have zero information.
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Old 07-21-2008, 11:49 AM   #20
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Even in rough economic times, there are opportunities for those with cash, and the guts to gamble a bit. I would think that real estate comming back in the next 20-25 years, would be a fairly safe assumption. I do not subscribe to the "but it is different this time!" mentality. As a matter of fact I agree with an earlier poster about how a year from now would be a really good time to buy a home. I might even look into doing a rental condo. I will have to see how it goes...
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