When will residential business begin to turn around?

[c w d]

I think it's going to be greater than a year. *poof* <insert hot air here>

This is why I believe it's going to be greater than a year.

1) Lending criteria has tightened eliminating those that want to buy but haven't the income and/or credit to purchase a house.

2) Increasing oil costs.

3) Stagnant wages.

4) Inflation.

5) An indebted society.

6) The war in Iraq and Afghanistan.

7) Deflating dollar.

Although inflation is still relatively in control, so they say, everytime I go to the gas pump or grocery store I'm paying more. And I do mean everytime. There are many experts who believe we have or are approaching peak oil production. Given the speculative market and record setting oil prices on almost a daily basis I chose to believe we have reached peak oil production. Since some genius decided it was a good idea that Americans needed to compete with people across the globe able to live on less than a 1/5th of the cost of living here in the states wages have stagnated. Because of stagnant wages most people generally are unsatisfied with saving money and living within their means. So, in the past few year's they sold their built-in savings accruing in their home equity for toys: motorcycles, boats, cars, atv's, etc. Now their homes are worth less and they're indebt up to their eyeballs. Their is little Congress can do to stimulate an economy that is already 9 trillion dollars in debt. Since we only produce about $3.6 trillion a year thats going to take a while to pay off. Compound all this with a deflating dollar and now we're in more debt making even less. Funny but, I always though a deflating currency was inflation....silly me.

I don't see the wars, the deflating dollar, consumer debt, oil prices or national debt being turned around anytime soon. Least not until Bush, who appears to care less, is out of office.

I am seeing more neighborhoods change from declining to stable. However, I believe the overall trend will be a declining real estate market with several periods of it plateauing in the process.

 

[Colleague]

I suspect it will turn around about the same time appraisal fees do...

 

[Mike Garrett RAA]

How about 2012? Should take the Dems that long to take us back to 18% interest on home loans...Remember Jimmy Carter?

Oil will reach $500 a barrel. Gasoline $10 a gallon. Inflation at 20%. Nationalization of all industries. Private ownership of real estate discouraged. 70% total tax burden. Spanish will become the approved national language.

Or....

 

[Pamela Crowley (Florida)]

How about 2012? Should take the Dems that long to take us back to 18% interest on home loans...Remember Jimmy Carter?

Oil will reach $500 a barrel. Gasoline $10 a gallon. Inflation at 20%. Nationalization of all industries. Private ownership of real estate discouraged. 70% total tax burden. Spanish will become the approved national language.

Or....

Well... aren't you just a barrel of joy this Mother's Day morning!

 

[DonRico]

I don't think we'll ever see the Roaring 05's again. The factors that fueled that boom will never appear in our lifetime. Freewheeling Mortgage Brokers pushing Loan Products that were impossible to repay.....onto borrowers too gullible or greedy to see the folly.

A return to normalcy is possible, though. If you look at that famous graph of home price appreciation, go back on the curve to the time when the line was rising gradually at a few percent per year. A roof over your head, plus a solid investment. Not a get rich quick ponzi scheme.

I will say that lately my market research has shown that prices have stabilized. I don't know if this is just "pant-up" demand, by people who waited til the spring selling season and had built up a large enough down payment to qualify for financing. Or if this is the long term bottom and we'll establish a base to start an upward move.

The condo market has always been a canary in a coal mine around here. During the boom times....condos and townhouses represent a good entry point for the low end. A condo sale would fuel the move-up buyer and so on. During the downturn....condos took a relentless beating.

Research of the 12 month sales history would show the obvious trend. In the past year, the highest sales were always at the far end of the window with the lowest sales the most recent. I have noticed in the past month higher priced closings are popping up.

Again, I can't predict if this is a seasonal blip, or if a base is being formed. Check back in about 6 months and we'll see.

 

[Terrel L. Shields]

each state is seeing a decline at every renewal period.

Our new and pointless regs are one reason

It is good that some clueless appraisers are leaving.

Those regs wree supposed to clue them in, right?

It is bad that some 20 year veterans are leaving.

Bad...but smart. This business will not improve even if the Res market does.

My main query however, is when you say When will Res Business begin to turn around, do you mean Building? Selling? or Appraising? There are going to be a lot of appraisals needed, and the only glimmer of hope for the appraiser is that the banks have to turn to the appraiser with humble hat-in-hat and ask their forgiveness and please come appraise our property and we won't peep - something like their situation in the early 90's when our opinions actually counted for something.... The regulators share some blame for not coming down hard on the banks who lacked documentation in files or accepted BPO's on complex properties. The Bank examiners could have red flagged them and demanded a certified report. They didn't until it was too late. Now those regulators are going into banks and going over them with a fine tooth comb....but is is shooting the dying on the battlefield and calling it a victory.

I have had to inspect and update some properties for a bank that are performing loans, but due to size, the Examiners asked that these properties be re-examined to assure that the loan is supported by the value. It wasn't a case of the borrower being behind nor was it the case of the property changing or selling.

 

[David Sawyer]

THERE HAVE BEEN 15,000+ FORECLOSURES IN LEE COUNTY (FORT MYERS-CAPE CORAL) WITHIN THE LAST 12 MONTHS . THERE HAS BEEN A PICK UP OF ACTIVITY OF FORECLOSURES THE LAST SEVERAL MONTHS WITH 2,160 FILED IN APRIL, UP 21% FROM 1,784 IN MARCH WHICH IS TRIPLE THE 783 FILED FROM A YEAR EARLIER ACCORDING TO THE SOUTHWEST FLORIDA REAL ESTATE INVESTORS ASSOCIATION. A THIRD OF THESE ARE FOR PRIMARY RESIDENCES (HOMESTEADED MARKET) VS INVESTOR/ SPECULATOR.

THE AREA IS VERY DEPENDANT ON THE HOUSING, CONSTRUCTION AND REAL ESTATE MARKET. THE CITY OF CAPE CORAL ISSUED OVER 600+ PER MONTH BUILDING PERMITS AT THE HEIGHT OF THE MARKET IN YEARS 2004 & 2005. THE MONTH OF APRIL, 2008, 13 BLDG. PERMITS WERE ISSUED, AN INCREASE FROM THE MONTH OF MARCH WITH 12 PERMITS ISSUED. THERE HAVE BEEN RECENTLY TWO LARGE SALE SINGLE FAMILY RESIDENTIAL TRACTS BY BUILDERS (FORECLOSURES) CONSISTING 112 UNITS ON ONE AND 72 ON THE OTHER THAT CONSTRUCTION WAS COMPLETE IN 2007, CONTRACTS WERE SIGNED EARLY 2006 WHERE THE BUYER "WALKED AWAY" AND NOW THE SALES WERE SLIGHTLY LESS THAN 50% OF THE ORIGINAL CONTRACT PRICE.

THE REO/ BANK OWNED PROPERTY SALE HAS REPLACED THE "SHORT SALES" AND HAS BECOME THE MARKET FOR MANY OF THE SUB MARKETS IN THE AREA. THE QUALIFIED, NON-DISTRESS SALE THAT IS AN ARMS-LENGTH TRANSACTION IN MANY OF THE SUB MARKETS IN CAPE CORAL ARE MINIMAL AND RELATIVE FEW AS NOW THE COMPETITION IS THE REO/ BANK SALE.

IN MANY OF THESE SUB MARKETS, THERE IS A 7 YR INVENTORY. TODAY, 25% OF MY ORDERS ARE OTHERS, I.E. ESTATE , ERC, DIVORCE, ETC. 60% CONTRACT SALES FOR LENDERS, 15% REFINANCE. 2-3 YEARS AGO IT WAS 25% OTHER, 60% REFINANCE AND 15% SALES. THE REFINANCE MARKET "DROVE" THE APPRAISAL INDUSTRY IN THIS AREA. THAT MARKET WILL NOT BE BACK UNTIL LATE 2010 AT BEST.

 

[Terrel L. Shields]

Cape Coral was on the national news last week as the absolute Nadir of the universe in regards to change in the market...tough place to be.

 

[David Sawyer]

Cape Coral was on the national news last week as the absolute Nadir of the universe in regards to change in the market...tough place to be.

Prime example, yesterday I emailed a completed report out. Subject and all 5 comps purchase new in early 2006 late 2005 as new & located on fresh water canals in the $320,000-$340,000 range. Today, the contract sale price all in the last 60 days, $138,000-$145,000 range. All are REO/ bank owned sales. That's a 55%+/- haircut!

 

[Pamela Crowley (Florida)]

THERE HAVE BEEN 15,000+ FORECLOSURES IN LEE COUNTY (FORT MYERS-CAPE CORAL) WITHIN THE LAST 12 MONTHS . THERE HAS BEEN A PICK UP OF ACTIVITY OF FORECLOSURES THE LAST SEVERAL MONTHS WITH 2,160 FILED IN APRIL, UP 21% FROM 1,784 IN MARCH WHICH IS TRIPLE THE 783 FILED FROM A YEAR EARLIER ACCORDING TO THE SOUTHWEST FLORIDA REAL ESTATE INVESTORS ASSOCIATION. A THIRD OF THESE ARE FOR PRIMARY RESIDENCES (HOMESTEADED MARKET) VS INVESTOR/ SPECULATOR.

THE AREA IS VERY DEPENDANT ON THE HOUSING, CONSTRUCTION AND REAL ESTATE MARKET. THE CITY OF CAPE CORAL ISSUED OVER 600+ PER MONTH BUILDING PERMITS AT THE HEIGHT OF THE MARKET IN YEARS 2004 & 2005. THE MONTH OF APRIL, 2008, 13 BLDG. PERMITS WERE ISSUED, AN INCREASE FROM THE MONTH OF MARCH WITH 12 PERMITS ISSUED. THERE HAVE BEEN RECENTLY TWO LARGE SALE SINGLE FAMILY RESIDENTIAL TRACTS BY BUILDERS (FORECLOSURES) CONSISTING 112 UNITS ON ONE AND 72 ON THE OTHER THAT CONSTRUCTION WAS COMPLETE IN 2007, CONTRACTS WERE SIGNED EARLY 2006 WHERE THE BUYER "WALKED AWAY" AND NOW THE SALES WERE SLIGHTLY LESS THAN 50% OF THE ORIGINAL CONTRACT PRICE.

THE REO/ BANK OWNED PROPERTY SALE HAS REPLACED THE "SHORT SALES" AND HAS BECOME THE MARKET FOR MANY OF THE SUB MARKETS IN THE AREA. THE QUALIFIED, NON-DISTRESS SALE THAT IS AN ARMS-LENGTH TRANSACTION IN MANY OF THE SUB MARKETS IN CAPE CORAL ARE MINIMAL AND RELATIVE FEW AS NOW THE COMPETITION IS THE REO/ BANK SALE.

IN MANY OF THESE SUB MARKETS, THERE IS A 7 YR INVENTORY. TODAY, 25% OF MY ORDERS ARE OTHERS, I.E. ESTATE , ERC, DIVORCE, ETC. 60% CONTRACT SALES FOR LENDERS, 15% REFINANCE. 2-3 YEARS AGO IT WAS 25% OTHER, 60% REFINANCE AND 15% SALES. THE REFINANCE MARKET "DROVE" THE APPRAISAL INDUSTRY IN THIS AREA. THAT MARKET WILL NOT BE BACK UNTIL LATE 2010 AT BEST.

You could exchange Lee County with Brevard County and not change much of anything else. Watching this building up was beyond sickening.