StarTrib:"up to half of all houses ... (in) foreclosure during the past year are owned by investors"

[El Pinko]

http://tinyurl.com/6daws7

Housing bets gone bad
By CHRIS SERRES, Star Tribune
Last update: April 21, 2008 - 10:05 AM

About this series: Just two years ago, Wright County epitomized the American dream of home ownership. Young families went there in droves, attracted by the cheap land, good schools and bucolic neighborhoods. But today, that dream is unraveling, as foreclosures rip through Wright County neighborhoods at a rate of 23 a week. What happened?

In the rush to find blame for the nation's current housing crisis, the easiest targets have been the lenders and mortgage brokers who peddled predatory loans. But across the country, from the desert suburbs of Las Vegas to the treeless subdivisions of Wright County, many homeowners face a predicament of their own making.

They gambled big that housing prices would continue to shoot up. Some bought homes as often as others buy new jeans, occasionally in return for thousands of dollars in kickbacks. These investors ranged from small-town working people looking for a quick payday to sophisticated real estate professionals who bet with other people's money, occasionally defrauding lenders in the process.

Now, with home prices falling and mortgage payments rising, panic has set in. Investors are dumping houses on the market before prices collapse further, or simply turning the keys back to the lender. That, in turn, is dragging down values for even longtime homeowners, wiping out the equity they'd built up over the years.

In Wright County, the number of unsold houses on the market has swelled to more than twice the national average. Officials estimate that up to half of all houses that have gone into foreclosure during the past year are owned by investors. "You had people buying houses here that they have never even seen," said Dean Zachman, a sales agent for Edina Realty in St. Michael. "They took bets that, in hindsight, seem reckless."

[jody]

1. "They took bets that, in hindsight, seem reckless"? Hell, they gambled and lost! Let them and the

lenders wallow in bankruptcy and losses they earned.

[Trajan]

2. If you're going to play the home price game ...

Then you needed to recognize the timing for getting out ....

That time has passed: The top is behind us .... Good luck to those trying to scoot out now ... It may be a forlorn hope at this point ...

[El Pinko]

4. Prices are still WAY above long-term trend lines in many areas.

A lot of people are waiting for a recovery that will be a lot further out and a lot more modest than they are counting on.

[DCKit]

3. "Investors"? No.

Investing is to build something: a life, a business, a career, a community. Speculators, on the other hand, profit - or lose - by gambling.

[L. Coyote]

5. Agree. It was Speculators investing very little of their own money often, on a dream

of very high capital gain in short time.

[El Pinko]

7. Thank you, Carleton Sheets & Dave Del Dotto and all the other infomercial RE moguls

"You, too can be a zillionaire with no money down using Dave's Cash Flow® System!"

[KSinTX]

6. I agree mainly, but what about the negative impact on real homeowners?

Every foreclosure in a neighborhood decreases home values for everyone in that area. Not suggesting we save the speculators, but do you do anything to help homeowners stuck in a situation not at all of their making?

[El Pinko]

8. Aside from neighboring vacancies, there is no negative impact of letting the market correct...

...on people who bought before the bubble. They still have their homes and equity.

More recent buyers will lose equity, but that's the breaks when you are foolish enough to buy at the top of a historic bubble.

They still have their homes. If the home wasn't worth $600K or whatever to them back in 2005, then they SHOULDN'T HAVE BOUGHT IT.

Buying a house with the assumption of 15% appreciation - or ANY appreciation is just foolhardy. if it appreciates when you sell, you're lucky - but don't expect it as a matter of course.

It wasn't until the last decade or so that people started making the assumption that an aging house would GAIN in value. There are LONG periods of US history in the 20th century where nationwide median house prices didn't appreciate at ALL for over 30 years.

[KSinTX]

9. Mine is a "pry it from my cold, dead fingers" deal

Was just curious about those who had to sell on an emergency basis, etc. etc. Good answer and somehow I think I should have known that but I suppose I had a sheer emotional reaction.

I do believe that corrections are good and shift benefit from seller to buyer and produce great bargains. Are you in the biz?

[El Pinko]

12. Nah, but I developed an interest in the topic when I lived in San Francisco 2002-2006

I watched the insane escalation in prices and listened as friends and acquaintances exhorted me to "buy now or be priced out forever".

The rise in prices, totally decoupled from local incomes seemed suspicious and unsustainable as early as 2004, and an article at the time in the SF Chronicle saying that 60% of new Bay Area mortgages were "exotic" (IE subprime, liar loans, etc.) made me certain of it and got me looking at all the online info about the growing housing bubble. At the time, the bubble folks were ridiculed by the RE whores, who chanted "housing always goes up" and "it's different here".

Well, we can see what happened. Even once-solid areas like Manhattan, Silicon Valley and SF proper are seeing chinks in their armor, and declines there are on the way (although they will clearly retain more value than the decimated exurbs).

So yeah, I'm just a renter who barely escaped the high cost of California living and now monitor the ongoing housing debacle more out of curiosity than anything else.

Housing prices here in El Paso never went up all that much - New Starter homes here can still be had for $100k. In fact, foreclosures here are actually down on a YOY basis - testament to the low cost of living here and a lot of growth combined with plenty of room to grow.

[gratuitous]

10. Unpersuasive reportage

If, as the lede says, Wright County was being inundated with young families buying homes "in droves," drawn by land, schools and neighborhoods, then it stands to reason that the foreclosures in those neighborhoods weren't caused by the young families, who weren't "investors" (read: speculators). Sloppy writing, sloppy editing.

And the article shifts from percentages to nebulous terms and back again without missing a beat. But I don't see any hard numbers that would support the contention that half of the houses that have gone into foreclosures were bought by speculators.

But the overall message is pretty clear: If you bought a home in the last two or three years and got screwed, it's your own damn fault and don't go looking for any sympathy or help from the good burghers who subscribe to the Star Tribune.

[nashville_brook]

11. at last! some good news!

okay, i'm being sarcastic -- but i used to do work for a real estate investor association and by-and-large these guys are...crooks. on one night during a "meeting of investors" more than $200K worth of bullshit "wealth building programs" were sold that outlined various "white knight" and "straw buyer" schemes. these people should have been put out of business a long time ago...or put in jail.

my neighborhood is blighted by empty "investments." i really hate these people. and i use that word very rarely.