Just read an article over on the NYTimes.com about a property auction in California. Evidently, some lenders coaxed Robert Friedman and Real Estate Disposition Corporation out of, as he put it, hibernation.
The article seemed to focus on a lot of bidders who went looking for a bargain, and had a sense of what the property 'should be worth', but came away loosers in the auction.
As one example cited in the article:
Jim and Betty Botley of Chino attended the event with their Realtor, Maurice Merchant. They were looking to spend what Ms. Botley defined as “$300,000, and that’s it.”
The house they wanted went for an auction price of $550,000. The Botleys thought it would have needed $50,000 to $100,000 for renovation. After the repairs, auction fee and closing costs, they couldn’t see how anyone got a deal.
Of the 100 properties for sale, 93 sold. So clearly, there are still buyers for the properties in question, and the prices look to have been off 20-30% of the previous values. That, to me, doesn't seem to be a 'crash'. Clearly, there is a correction going on. When home buyers are paying 100% for a property that isn't worth what they paid, and there credit is poor, it shouldn't be a surprise that these homes find their way to foreclosure.
I had thought some of these hedge funds and private equity shops that are in the market buying up Accredited, ResMAE and others might be in for a rude awakening- and though they still might- it looks like they might do o.k..
Rates are up, there are still buyers for properties. The real estate and mortgage markets might survive and the pain of the correction might not be that bad. But it is still early, and there will be more casualties.
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