Here is an article from the Associated Press “Retail Sales rise unexpectedly in January”. Really? Unexpectedly? Really? How can this be unexpected? Oh yeah, silly me, the Economic Recovery Bill hasn’t passed yet, so in theory, this cannot be possible. However, it is what it is and it has happened. So what is really going on here? Simple, the economy is beginning to recover on its own. Yes, I said “On its own.” I know for some people it is hard to believe, but it is true.

Let’s take a look at what has happened over the last year and put the pieces of the puzzle together. The two biggest factors were gas prices and house prices. These are the two biggest items that drives a person’s day to day life. When light crude oil prices reached record levels in 2008 at almost $150 a barrel, gas prices were around $4.00 a gallon or higher. At the same time, real estate values were plummeting at record levels and no one could sell or refinance without taking a hit.

Foreclosures reached historic levels in 2008 and prices started dropping fast as these properties either went through foreclosure or loan modifications. While everyone expects even more foreclosures over the next couple of years, that is to be expected as that always happens after a boom, which we went through one of the largest
Read More...

Yet again, leave it up to the government to demonstrate their ability to legally create a double standard. In many if not most states, it is illegal for investors to buy a property from someone in Foreclosure and then rent it or sell it back to the homeowner. This type of transaction is called Equity Stripping when a nongovernmental investor does it, but according to Freddie Mac, it must be considered compassionate.

According to the Finance and Commerce legal paper in Minneapolis, MN, Freddie Mac announced a new policy that would allow some borrowers the ability to stay in their properties after the foreclosure process if they can demonstrate the financial ability to make a rental payment. Freddie Mac s reasoning is that it is better for overall property values and neighborhoods if the properties were occupied rather than vacant.

While that may seem like a worthy goal, it is simply illegal for the rest of us to do the exact same thing, so we now have a new competitor in the real estate market, Government. And besides, if they had a clue, they would realize that by keeping the previous homeowners in the property as renters, would result in a lower
Read More...

According to the Minneapolis Association of Realtors

“Foreclosures and short sales are showing early signs of slowing. During the fourth quarter of 2008, there were 4.3 percent fewer new lender-mediated listings than in the third quarter. That's the first quarter-to-quarter decrease since 2003.”

The association has released a new interactive data tool that allows you to sort neighborhoods and cities within the Minneapolis/Saint Paul region. You can find it here: www.mplsrealtor.com/downloads/market/Lender-Mediated/Main.htm

While the signs look like positive, don’t think we are out of the water just yet, many analyst are still saying that the next wave of foreclosures is coming between 2009-2011 with all the Conventional Option ARM loans that are set to start adjusting in right now.

If you are in the Short Sale Business, then you will be busy for a very long time and buyers will be getting some very good deals over the next few years. I was just thinking that when this next wave of foreclosures hits, the lenders will be more p
Read More...

Since real estate values have plummeted, Subject-To deals have been harder to do because most of the time, the mortgage balance from the seller is higher than the property values creating a situation that if we took over the sellers property and started making payments on their existing mortgages, then we would end up with a property that we could not make cash flow or even resell without having to pay down the mortgages ourselves.

While some lenders were accepting short sales, most lenders were waiting for their bail out from the government. Since that never happened, some lenders have been more susceptible to short sales. While short sales have been our only way to deal with over leveraged properties, we were forced to resell the properties to pay off the short sale. Which meant that Sub2 deals were not taking place which is why according to the National Association of Realtors®, about 50% of all transactions in the 4th Quarter of 2008 were either Foreclosures or Short Sale.

According to Bloomberg “ Citigroup Inc.’s agreement to back legislation that lets bankruptcy judges cut mortgage rates for at-risk borrowers drew criticism from ban
Read More...

It’s that time of year again, when we sit down and reflect on the previous year and look forward to the year ahead of us. This past year has been filled with extreme swings in the economy and our emotions. For some people 2008 was a great year and for others it was a nightmare. I have been caught right in the middle of both, so I guess for me, everything evened out and it was a year that makes me look back and ask, what the heck happened. I had some winners and some losers. The losers of course came in the last quarter of the year and I did pretty well during the first 3 quarters of the year. Some might look back with discouragement and frustration. I however am looking ahead with a clear determination to make 2009 the best year ever.

With the shake up in the credit markets and the stock markets, I see huge potential for 2009 in real estate. I believe we have hit the bottom, for the most part. A new president and administration will take office on January 20, 2009 and they have made it clear that they are focused on stimulating the economy. Again, for some this will be good and for others it will be bad. For real estate investors, this will be very good. Just like when the real estate market was hot, the economy seemed unstoppable and real estate prices climbed to artificially high prices, the collapse of the credit and financial markets has artificially lowered real estate prices below the point of where they normally would have settled at.
Read More...