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North County San Diego real estate scoop

By Seth Chalnick | Broker in 92024

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Prime Mortgage Delinquencies Up 100%+

Posted Under: Market Conditions in San Diego | December 22, 2009 11:53 AM | 13 views | No comments

I am happy to report that my latest Seeking Alpha article submission was published this morning.

To view it, click here.

Seeking Alpha handpicks articles from the world's top market blogs, money managers, financial experts and investment newsletters - publishing approximately 175 articles daily. SA was named the Most Informative Website by Kiplinger's Magazine and has received Forbes' 'Best of the Web' Award.
It Ain't a DEFAULT if Golden Rule Applies

Posted Under: Market Conditions in San Diego | December 18, 2009 2:17 PM | 43 views | No comments

Morgan Stanley is walking away from five office buildings they bought two years ago at the height of the market for $6.5 billion (that's B... not M), which have since lost as much as 50% in value. The reason, says corporate spokeswoman, "This isn’t a default or foreclosure situation... we are going to give (their lender) the properties to get out of the loan obligation.”

So let me get this straight....

Even as Banks were getting rewarded will billions in bailouts for pumping up the industry I work in to feed my family... deliberately so that they could profit on both the way up... and especially on the way down by using trades that paid off with leverage when it collapsed... I myself have gone on record, actually branding consumers and homeowners as "punks" for strategically defaulting on loans that they realistically still have the means to continue paying.

And all the while banks have been spewing out rhetoric about how morally reprehensible it is to damage the fabric of our society by turning our backs on the contracts, which underpin our agreements.

So here we are, at the beginning of the most extreme financial crisis since the Great Depression. And with the direct impact of bailouts that came straight from taxpayers, Morgan Stanley, who was saved from collapse due to their own irresponsibility, ended up clocking banner results this year... and the average compensation and benefits they paid each employee for just the first three quarters of 2009... was roughly $175,000... per employee!

Now they "give (these) properties away to get out of the loan obligation"??

And they have the blatant audacity to say in the same breath that "this isn’t a default or foreclosure situation"!!!

Don't take my word for it. Read the objective story from Bloomberg.

For some subjective commentary, I recommend: Huffington Post and Calculated Risk.

In the part I like best, Calculated Risk writes:

"One of the greatest fears for lenders (and investors in mortgage backed securities) is that it will become socially acceptable for upside down middle class Americans to walk away from their homes.... I wonder if hearing about "rich" banks that are paying "large" bonuses walking away from commercial buildings also weakens the social pressure?"
Real Estate Market is Top Heavy

Posted Under: Market Conditions in San Diego | December 17, 2009 8:08 PM | 64 views | No comments

Active vs Sold Sales Analysis Last 90 Days

The preceding chart suggests to me that there is not enough inventory that people want... and too much inventory that people don't want. If we were in a normal, free market, I would expect higher-end homes to come down in price, and lower end homes to come up in price to bridge the gap.

But as followers of this blog know, I believe we are not in a free market at all, but a very manipulated one, that is vulnerable to many factors that could lead to futher downward pressure across the board.

Meantime, while lower-end homes still present good buying opportunities, notwithstanding futher price corrections, they are becoming increasingly difficult to purchase. As the rate of loan defaults continue to increase, banks are playing with fire by holding onto the non-performing assets, rather than foreclosing and putting them on the market, while there is still demand.

I say "while" because once rates tick up, or incentives go away, or 5yr interest only loans re-set in mass, or deriviatives explode, or unemployment rises to a job near you, or companies run out of areas to cut costs to show profits, or the stock market crashes, or any or all of these events or more occurs... it will be too late for people to buy with confidence at a pace that will outrun significant price drops across the board.
Market Outlook, November 2009

Posted Under: Market Conditions in San Diego | November 20, 2009 6:06 PM | 100 views | No comments

The market has been very interesting to say the least. There is a big disconnect between the low and high-end markets... in fact, they're almost behaving oppositely.

On the lower-end of the pricing spectrum, we simply can't get enough inventory. The banks and government are working together to artificially limit supply, and this is driving up prices and volume. On the high-end, there is very little demand for the loans that underpin the transactions, so very few sales are being made.

I expect downward pressure on prices in both market segments... but an especially significant correction on the high-end as the 5-yr interest-only loans start to re-set. Yes, I mean more of a correction... like another 30%. This may actually benefit lower-end homeowners, as higher-end folks who are displaced still need a place to live. (Btw, I went on record predicting this 11 months ago.)

Meantime the low-end market will suffer from overall economic problems too (i.e. unemployment) especially when the high-end corrects. But here's the thing... the low-end values have already dropped by half in some areas. Even if they drop another 15%, which would be huge, the rates are almost unanimously predicted to climb within the next 3-12 months. If prices drops by $50k, while rates increase by 2%, then your monthly payment will actually increase.

Right now rates are absurdly low (on amounts below $417k anyway)... around 4.625% with 1 point. The historic average is around 8%. It's only a matter of time before they spike. Most US citizens also benefit from an $8k tax credit if they close before July 2010, so this is a factor as well.

Bottom line: for low-end buyers with solid job outlook who can hold the property for 10+ years... I believe now is simply a great time to buy a home... if you can find one. 20% down payment is very helpful in this regard. For high-end buyers, time is on your side to wait, especially if you are putting down a lot of cash (which everyone is by necessity on the loan front). Unless you can afford to buy a high-end home just for the lifestyle, then stay out of the kitchen until things cool down from an investment perspective.

And that's the SethReport :)
A Few Words Are Worth a Thousand Pictures

Posted Under: Home Buying in San Diego | November 17, 2009 5:03 PM | 85 views | No comments

I love getting testimonials from clients, but there is something particularly awesome about getting validation from peers too. This card came from the listing agent of a home that was sold to a buyer I represented :)
Falling Up: The New Business Model

Posted Under: Market Conditions in San Diego | October 5, 2009 9:47 AM | 127 views | 2 comments

I am happy to report that my latest Seeking Alpha article submission was published this morning.

To view it, click here.

Seeking Alpha handpicks articles from the world's top market blogs, money managers, financial experts and investment newsletters - publishing approximately 175 articles daily. SA was named the Most Informative Website by Kiplinger's Magazine and has received Forbes' 'Best of the Web' Award.
There's a Financial Elephant In The Room

Posted Under: Market Conditions in San Diego | October 5, 2009 9:19 AM | 117 views | No comments

When folks say "there's an elephant in the room", they are referring to an important and obvious topic, which everyone present is aware of, but which isn't discussed, as such discussion is considered tbe uncomfortable.

Well in today's bankerment cirlcles there is a humungous, hungry, stinky elephant, and it looks very silly covered up by a blanket.

For a succinct overview of the problems that led to our banking crisis, and the reasons we are still in for very rough ride, you just have to watch this interview of Janet Tavakoli (a structured finance expert) by Max Keiser, a popular media broadcaster. They do a brilliant job of distilling the facts into laymen's terms.