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Realtors to open listings to online brokers

From Reuters:

The National Association of Realtors will open its vast listing of homes for
sale to cheaper, Internet-based brokers in an agreement to settle a federal
lawsuit, the government said in a statement on Tuesday.

The change could save those who buy or sell a home thousands of dollars since commissions could drop as much as 1 percent of the selling price, said Deborah Garza, the deputy assistant attorney general for antitrust, in a telephone briefing with reporters.

The settlement will lead to "more choice, better service and lower commission rates," Garza added.

Essentially the deal requires the 800 multiple listings services associated with the National Association of Realtors for various local markets to give access to Internet-based competitors, the government said.

This is a great thing for real estate investors who have been looking to use the MLS services to sell their homes, but have not wanted to pay a full real estate commission to do it.

We’ve seen it happen in other businesses: once the internet gets a toehold in a commissioned industry, prices for the consumer tend to plummet. Look at the rates consumers pay to book travel or buy and sell stocks; each has dropped dramatically as the internet has become a more popular way to book trips or invest.

More and more business is conducted online, and the first place most potential purchasers go to look for a new home is the internet. By opening up the MLS listings to online brokers, we can expect greater innovation which will just benefit the real estate investor. That is, by making the purchasing process cheaper and more simple for that potential buyer, investors stand to gain.

How long before we see realestate.google.com? You be the judge.

Photo: Computer city #1: Downtown, originally uploaded by Rune T.

Banks miss an easy housing fix

From CNN:

Banks say they want to help troubled homeowners, but they are delaying deals
that could save everyone - including the lenders themselves - a lot of time and
money.

Lenders are taking much longer than necessary to approve short sales,
according to Duane LeGate, of House Buyers Network, a short sale specialist.
In a short sale, a homeowner who cannot keep up with their loan asks the
lender to take a dollar amount less than what is owed on a home's mortgage, and
forgive the remainder of the unpaid debt.

So if a borrower has a mortgage balance of $100,000 and finds a buyer who will pay $95,000 for the house, the lender agrees to accept that $95,000 and close out the loan.

"There was a much greater chance of success with these in the past," said LeGate

Ideally in a short sale, everyone wins. Borrowers avoid the ugly foreclosure process
that destroys their credit, while lenders recoup more of their costs than they
would by spending the time and money it takes to kick an owner out and resell
the property.

The CNN article is worth a read, and it discusses a number of problems that sellers, investors, and agents are having as they try and get short sales approved in today’s housing market.

In our experience as closing attorneys who work with investors, the entire short sale experience differs greatly from lender to lender, and there are few industry-wide standards that can be applied when negotiating a short sale. Some lenders require that their borrower be down a payment before talking short sales. Others don’t. Some are very responsive and work quickly to get potential short sales approved. Others drag their feet. Overall, it is impossible to paint with broad strokes the attitude of the mortgage lenders toward short sales, just because individual lenders approach them very differently.

To be fair, though: the recent rise in the number of short sale requests is unprecedented, and frankly something the mortgage industry was not prepared for. While years ago a lender might have a very few individual short sale loss mitigators, today they’ve had to create entire departments, with all of the policies, procedures, and bureaucracy that entails.

Still, with home prices continuing to fall and an increasing number of homeowners finding themselves upside-down in their mortgages, short sales are becoming ever more common. As they do, one should expect those lenders who have yet to streamline their short sale processes to do so, and the overall experience to become smoother and more uniform from lender to lender.

Photo: Safe And Secure, originally uploaded by bob1217.

Case-Shiller: Prices continue to decline

From the Wall Street Journal:

In the first quarter, the Case-Shiller indexes showed home prices across the
country fell 14% from a year earlier, representing the largest drop in the
20-year history of the indexes. From the fourth quarter, prices fell 6.7%.

“The steep downturn in residential real estate continues,” David M.
Blitzer, chairman of S&P’s index committee, said. He added, “There are very
few silver linings that one can see in the data. Most of the nation appears to
remain on a downward path.”

According to the indexes, released by ratings firm Standard & Poor’s, home prices in 10 major metropolitan areas fell 15% in March from a year earlier and 2.4% from February.

In 20 major metropolitan areas, home prices dropped 14% from a year earlier and 2.2% from February.

In Atlanta, the decline in prices continues to accelerate, with homes shedding 1% in value from last month, and 6.5% from last year. Still, it could be much worse: Las Vegas has lost almost 26% over the past year, with Miami and Phoenix dropping 24.6% and 23.0%, respectively.

While there is no question that house prices in Atlanta are falling, Atlanta’s continued desirability as a place to live has acted as a buffer to the effects of the housing market as seen in the rest of the county. Prices here have not fallen as much as they have elsewhere and will most likely rebound earlier than in other areas.

Still: as the availability of mortgage loans remains limited, it continues to be a challenging time to sell a home. With that being said, it remains an ideal time for real estate investors, with many, many homes available, and homes more affordable than they have been in years.

Photo: Flying ego, originally uploaded by Laurent Filoche.

Home sales up, home sales down

Existing home sales are down to another record low, from the New York Times:

Sales of previously owned homes, which make up the bulk of the housing market,
dipped 1 percent in April, to an annual rate of 4.89 million, the second
consecutive month that sales have declined. That figure represents another
record low, although the report, put out by the private National Association of
Realtors, dates only to 1999.

But, on the other hand new home sales are up. From CNN:

New home sales rose unexpectedly in April but remained near historically low
levels, according to a key government report on the battered housing market.

April sales came in at a seasonally-adjusted annual rate of 526,000, a
Census Bureau report showed, up 3.3% from a revised 509,000 in March, but 42%
below April 2007. The reading was above the consensus forecast of 520,000,
according to economists surveyed by Briefing.com.

The median price of a new home sold in April was $246,100, up 1.5% from $242,500 a year earlier.

The report showed a 10.6-month supply of homes available on the market.

Perhaps all of the discounting, upgrading, and other perks offered by homebuilders are finally having some effect on new home sales.

Photo: See-Saw, originally uploaded by pittsinger.

Single-family construction falls to 17-year low

From CNN:

Initial construction of U.S. homes rose unexpectedly in April, but the
all-important single-family housing start measure fell to another 17-year low,
according to a government report released Friday.

Privately owned housing starts rose to a seasonally adjusted annual rate of 1,032,000 in April, according to the Commerce Department. The rate was up 8.2% from March’s revised reading of 954,000 but 30.6% lower than April of 2007.

and:

Total housing starts got a boost from multi-family homes. Buildings with
five or more units rose 7.3% to a seasonally adjusted rate of 294,000, and homes
with two to four units rose 2.7% to 38,000.

and:

Construction of new single-family homes registered the lowest reading of
that measure since January 1991. Single-family housing starts were at a rate of
692,000 in April, 1.7% below March’s number. Single-family homes are considered
the core of the housing market.

Applications for building permits, however, rose to a seasonally adjusted annual rate of 978,000 last month. That’s 4.9% above the revised 932,000 rate in March. Economists were expecting permit applications to fall to 912,000.

That’s encouraging news for homebuilders, because building permits are considered a reliable sign of future construction activity. Single-family housing permits rose 4% to 646,000 in April, and multi-family homes rose 7.3% to 294,000.

With the number of homes under construction declining, and the numbers of apartments increasing, one can expect that there will be a more and more renters in the near future.

Photo: FOR RENT -- Snowbank!, originally uploaded by DavyRocket.

No respite, yet: US foreclosures rise 65 percent in April

From Housing Wire:

Foreclosure filings — default notices, auction sale notices and bank
repossessions — were reported on 243,353 properties in April, a 4 percent
increase from March’s total and a nearly 65 percent increase from one year
earlier. The data, reported Wednesday by foreclosure marketplace and data firm
RealtyTrac, shows that the housing market has yet to cycle through a
preponderance of bad mortgages.

“The total number of U.S. properties with foreclosure activity in April was the highest monthly total we’ve seen since we began issuing the report in January 2005,” said James J. Saccacio, chief executive officer of RealtyTrac.

“Although only about 2 percent of households nationwide are in foreclosure, these properties contribute to already bloated inventories of homes for sale, and put downward pressure on home values.”

Georgia was again in the top ten states with the greatest number of foreclosures, ranking seventh overall, with one out of every 422 homes affected.

Photo: Button, originally uploaded by d-stop.

Home prices continue sharp descent

From CNN:

Single-family home prices dropped 7.7% in the first quarter in the largest
year-over-year decline since the National Association of Realtors began
reporting prices in 1982.

The median sales price fell to $196,300, down 4.8% compared with the last three months of 2007.

Lawrence Yun, the chief economist of NAR, attributed much of the record decline to liquidity problems dragging down high-priced markets.

and:

Hurting home prices were big rises in foreclosure rates over the past 12 months,
which threaten to get even worse. Delinquencies more than doubled over that time
and more than 155,000 lost their homes in bank repossessions during the first
three months of the year.

All that foreclosure activity added to the glut of homes on the market. The total inventory has risen to an average of 10 months worth of unsold homes. In addition, a record number - 2.9 million - of vacant homes are up for sale, according to the Census Bureau.

The big inventory has led to aggressive price slashing and increased incentives by
builders looking to sell homes. They’ve also cut way back on housing starts,
which are at a 17-year low.

With the latest readings on home prices from the National Association of Realtors showing the largest year-to-year drop since the group began reporting prices, it is becoming clearer that the housing market is under increasing pressures.

As the group maintains: all real estate is local; but unfortunately, more and more local markets are facing increased downward pressure on prices: according to the NAR, 77 metropolitan statistical areas showed price declines in the last quarter of 2007. In the first quarter of 2008, that number increased 10 an even 100.

In the south, the median existing single-family home price was $164,200 in the first quarter, down 7.5 percent from a year earlier.

Blamed by the NAR for the most-recent record low were, once again, rising foreclosures and decreased availability of mortgage loans. As the number of foreclosures are expected to increase, and banks continue to curtail lending, there is every indication that home prices will continue to slide.

For real estate investors (and their closing attorneys) looking for a bottom, this is yet another sign that the troubles in the housing market will continue for some time to come. With falling prices, though, come opportunities never seen by investors before: there are more potential deals out there than ever, banks are desperate to get rid of REO properties, and more and more short sales are being approved every day. Investors who understand the overall market forces at play and turn them to their advantage are the ones best poised to succeed.

Photo: down, originally uploaded by nick3216.

Signs of the Times: Condo Discounts

Condo developer roundup from this weekend’s AJC Homefinder:

• Tribute Lofts: Up to $22,222 in incentives;


• Central City Condos: “Foreclosed Yesterday. For You Today.” Discounts of $77,100 on two-bedroom units;


• Atlantic Station: Up to $50,000 off;


• Viewpoint: Up to $75,000 off on selected homes;


• Twelve Centennial Park: up to $75,000 off select “move-in-ready” residences;


• Aqua: Get a BMW Mini Cooper convertible; and


• The Reynolds: New pricing and incentives;

With recent mortgage insurance program changes making it more difficult to obtain financing, and an increasing inventory of homes as more condo projects are finished, condo developers are fighting hard to lure potential purchasers in the door. In one word, they’re desperate.

It’s a tough time for developers, who are competing against individual sellers and investors, along with a surging number of foreclosures for those few buyers who can qualify for a mortgage.
Still, it’s a fight that most developers are in a position to win: most individual sellers or real estate investors can’t absorb the deep discounts that the developers can offer. Nor can they offer perks such as a free car or no mortgage payments for a year.

On the other hand, intown condos offer a lifestyle that cannot be found elsewhere; and for buyers attracted to the convenience of intown living, that lifestyle comes cheaper than ever.

As a closing attorney in Atlanta, I’d strongly advise any investor from seriously looking at condos right now as investment opportunities. Unless you are able to get a unit at a ridiculous discount, there’s just not enough equity in most properties to allow competition with the developers. Additionally, since most condo developments limit the number of rentals, there is a good chance that an investor would be prohibited from leasing out a newly-acquired unit as a buy-and-hold investment.

Photo :Balcony of Midcity Lofts, originally uploaded by a u b r e y.

Pending home sales hit another low

From CNN:

The number of homes under contract for sale fell in March, hitting a record low
for the second consecutive month, according to a report released Wednesday.

The National Association of Realtors' (NAR) Pending Home Sales Index
fell to 83 in March, down 1% from a downwardly revised reading of 83.8 in
February. The rate of decline was in line with a consensus estimate of
economists compiled by Briefing.com.

March's reading was down 20.1% from the same period last year and 35% from the index's peak in April 2005.

and from Bloomberg:

Fewer Americans signed contracts to buy previously owned homes in March for the
second consecutive month as falling prices and tougher loan rules discouraged
buyers.

The index of pending home resales fell 1 percent to 83,
following a 2.8 percent drop in February that was larger than previously
reported, the National Association of Realtors said today in Washington. The
decline matched the median forecast of economists surveyed by Bloomberg News.

The glut of unsold properties is driving down home values, while rising
defaults on subprime mortgages have prompted lenders to restrict access to
credit, representing more hurdles for buyers. The slump in residential real
estate may persist for much of the year, hurting economic growth.

Yet another record low in the pending-sales index .

With home prices falling, inventory surging, and credit and mortgage options limited, the downward trend in home sales seems to have reasserted itself after a brief uptick last fall.

These latest NAR numbers, which show a continuing decline in pending home sales as well as a downward revision from the last report, only serve to confirm what’s been said many times before: that we are still months away from a recovery in the real estate housing market.

The pending-sales index reports contracts signed, but not closed, and the value of the index lies in its forward-looking predictive ability to forecast existing home sales. Existing home sales represent the bulk of the market.

Real estate investors should take the lastest NAR figures as a sign that the downward pressure on prices will continue, and that a rebound in the short-term is highly unlikely. Still, tremendous opportunities abound on individual properties for the motivated investor willing to find them.

Photo: UP or DOWN / BLACK or WHITE, originally uploaded by Luichi74.

Linens ‘N Things files for bankruptcy

From the Pacific Business News:

Home furnishings retailer Linens ‘N Things filed for Chapter 11 bankruptcy
protection Friday and said it will close 120 underperforming stores as part of
its restructuring.

Clifton, N.J.-based Linens Holding Co., parent of the
chain, said the Chapter 11 filing was largely the result of the economic
downturn.

“The significant deterioration in the mortgage, housing and
credit markets and the resulting impact on the retail marketplace, particularly
the home sector, has overwhelmed the operating and merchandising improvements
that we have made over the past two years,” said Robert J. DiNicola, Linens
Holding executive chairman, in a release. “We are making the strategic decision
to use a Chapter 11 filing to proactively address our capital structure and
ensure that our stores will remain well stocked while we work through the steps
to align the capital structure of the company with the realities of today’s
business environment.”

Proof positive that the problems in the housing market are spilling over into related industries. Earlier Home Depot announced it was laying off 1,300 employees and closing 15 stores. Now, Linens ‘N Things has filed for bankruptcy.

Not to mention Starbucks.

Real estate investors should expect some great deals on props for home staging!

Photo: Color Your Life, originally uploaded by Orangeya.

Financing Just Got Tougher For Real Estate Investors

From Realty Times:

Call it the backlash after the boom: Major lenders and mortgage insurers are
turning off the money spigot for investors who want to buy rental houses or
condos with minimal downpayments.

The most dramatic cutback takes effect next week, when giant mortgage insurer United Guaranty -- a subsidiary of AIG International, the world's biggest underwriter -- says it will stop covering loans to investors in any of the thousands of Zip codes from coast to coast that it defines as "declining" real estate markets.

The ban includes all non-owner-occupied rental houses or condos -- including "mom and pop" two-to-four unit properties where the owners occupy one and rent out the rest.

United also is cutting off coverage of all condominiums and cooperatives
- whether owner-occupied or rental -- plus all second home purchases. It's even
refusing to look at loans to investors or owner-occupants that have limited
documentation in any market, whether declining or not.

Other major mortgage insurers are expected to follow some, if not all, of United's tough new restrictions in the coming weeks.

This is hardly surprising. Non-owner-occupied investment properties, in particular those beachfront condos in Florida, saw the greatest amount of price appreciation as the housing bubble inflated, and have crashed the hardest, resulting in multi-billion dollar writedowns at the big mortgage banks.

But it illustrates how interconnected the entire mortgage market is: a change in policy by a company which provides mortgage insurance effects the actual day-to-day business of real estate investors.

Most lenders have characterized Atlanta as a declining market, and as the latest Case/Shiller index numbers show, properties are losing an average of 5.6 percent per year. Anyone looking at purchasing investment property with any type of conventional financing is going to find it increasingly difficult to fund those deals.

The ability and resources to find alternate funding means is crucial for an investor looking to buy in today’s market. Whether it is raising capital for a significant down payment, buying subject-to or on a wrap, or looking at all-cash or hard money, investors are going to need to look beyond conventional non-owner-occupied loan sources when buying.

Photo: Spare Change, originally uploaded by riverwatcher09.

Steep declines in home prices continued in February 2008; Atlanta down 5.6 percent

From CNN:

Home prices have posted another record decline, as most of the nation's largest
markets suffered double-digit drops over last year, a survey released Tuesday
shows.

The S&P Case/Shiller Home Price Index, which tracks 20 of the
largest housing markets, showed prices plummeting by 12.7% in the 12 months
ending February. That's the biggest fall since the index began tracking prices
in 2000.

Of those 20 metro areas, 17 posted their largest year-over-year
declines ever. Ten of the 20 cities posted double-digit dips.

The 10-city Case/Shiller index is down 13.6% year-over-year, the biggest drop since
its launch in 1987.

The latest Case/Shiller price index numbers are not very encouraging and show that, unfortunately, there is no sign of a bottom in the housing market in the immediate future; in fact, the latest numbers seem to indicate that the drop in home prices is accelerating on a nationwide basis.

Moderated by an increase in the city's population, however, home prices in Atlanta are still faring better than most - only shedding 5.6 percent of value from last year. Compared to the almost 23 percent drop in value in Las Vegas, that 5.6 percent decline doesn't seem too bad.

However, there remains the danger of a vicious circle leading to further, and steeper, price depreciation, even with Atlanta's relatively-moderate 5.6 percent drop in value. As price losses continue, houses become less desirable and lenders less willing to extend mortgages. Fewer potential purchasers result in additional downward pressure on prices - and with the numbers of foreclosures and vacant properties already at record highs and expected to increase, the momentum on house prices to continue to move lower could end up accelerating very quickly.

This is not to say that anything relating to real estate investing is a lost cause. There are certainly a tremendous number of individual deals out there – perhaps more than ever before. But the nature of the market is fundamentally different, and the realities of that market have changed drastically over the past year. Strategies that worked two years ago probably are not as effective today, but the good investors continue to adapt to the market at hand and succeed.

Photo: Blue Arrow on Red, originally uploaded by raumoberbayern.

Foreclosures increase for the seventh consecutive quarter

From Forbes:

The number of foreclosures filed by US homeowners increased sharply for the
seventh consecutive quarter, according to a private sector report released
today.

In the three months ending in March, the number of foreclosures
totaled 649,917, up 23 pct from the previous quarter and 112 pct from the first
quarter of 2007, California-based RealtyTrac said.

The report, from RealtyTrac, shows that foreclosures, which were already at record highs, have more than doubled from this time last year. The statistics count of the total number of properties with at least one foreclosure filing reported during the quarter and show that there is no immediate end in sight to the rising numbers of foreclosing properties.

From the Atlanta Business Chronicle:

Georgia’s first-quarter foreclosures skyrocketed 80 percent, while metro
Atlanta’s jumped 69 percent, according to RealtyTrac’s Q1 2008 U.S. Foreclosure
Market Report released April 29.

Georgia ranked sixth in first-quarter
foreclosure filings — default notices, auction sale notices and bank
repossessions — with 28,503. This is a 79.9 percent increase over the first
quarter of 2007 and a 22.5 percent rise over the fourth quarter of 2007. One out
of every 136 Georgia households got a foreclosure notice in the first quarter.

Meanwhile, the Atlanta/Sandy Springs/Marietta metro area had 22,554
foreclosures in the first quarter, putting it at 16th among major metros. The
area’s foreclosures were up 68.7 percent over the first quarter of 2007 and 13.7
percent over the fourth quarter of 2007. One out of every 91 metro households
got a foreclosure filing in the first quarter.

Atlanta’s numbers do show a lesser increase in year-over-year foreclosures than the national rates – but the immediate future still remains bleak. Foreclosure rates are indicative of past problems, and each foreclosure filing today represents a borrower who fell behind in mortgage payments months ago.

Foreclosure rates also are forward-looking: while a number of the properties with loans in default will be cured before the actual foreclosure sale, it’s a good bet that the majority will not. More than likely these properties will end up back with the lender, only to be listed and resold as REOs several months in the future.

If we take it that the great bulk of mortgage foreclosures can be attributed to adjustable-rate mortgages, then as more and more of those loans adjust, we can expect foreclosure rates to continue increasing. With the peak of these loans not resetting until later this year, it is more likely than not that the record rates of foreclosures will continue.

Photo: Foreclosure,Wheaton MD, originally uploaded by chip py the photo guy.

Number of vacant homes hits record high

From Reuters:

The share of vacant U.S. homes rose to a record level in the first quarter, the
government reported on Monday, with homeowners finding it increasingly difficult
to find buyers in a collapsed market and more homes in foreclosure.

The percentage of owner-occupied homes now sitting empty rose to 2.9 percent in the January-to-March period, the third quarter in a row in which the vacancy rate
increased, according to data released by the U.S. Census Bureau.

and:

Homeowner vacancy rates were unchanged from the same time a year ago in both the Midwest and the South, at 2.9 percent and 3.2 percent, respectively. But they
shot up to 3.2 percent in the West, the area hardest hit by the crisis in
risky subprime mortgages, from 2.6 percent a year earlier.

According to the report, it’s a total of 18.6 million homes that are vacant, and the primary cause of the increasing number of vacant homes is the rise of foreclosures. And with the number of foreclosures expected to continue increasing for the foreseeable future, it would not be surprising to see the number of vacant home rise as well.

Still, vacant homes make for desperate sellers – especially the longer they stay empty – and investors who are poised to make them will certainly find that good deals abound.

Photo: vacancy, originally uploaded by Supercapacity.

New home sales at 16-year low

From CNN:

New home sales fell in March to the lowest level in more than 16 years,
according to a key government report on the battered housing market released
Wednesday.

March sales came in at a seasonally adjusted annual rate of
526,000, the Census Bureau report showed, down 8.5% from a revised 575,000 in
February and down 36% from a year earlier. It was the lowest annual rate since
October 1991.

and:

The median price of a new home sold in March was $227,600, down 13.3% from a
year earlier. The last time the median home price fell this sharply was July
1970, when it dropped 14.6%.

and:

The seasonally adjusted estimate of new houses for sale at the end of March was
468,000, which was down slightly from February’s 471,000.

However, at the current sales rate, it would take 11 months to sell the supply of homes on the market at the end of March.

The months-of-supply number has not been this high since September 1981.

Still more signs that real estate investors should not be expecting a turnaround in the housing market any time soon.

Photo: No Sale, originally uploaded by Something's Missing.

Despite economy’s rumblings, Atlanta looking up

From Commercial Property News:

Atlanta is on the rise, and now is the time for the commercial real estate
industry to jump on the opportunities that are coming with the city’s growth,
according to real estate experts at CPN’s annual Atlanta Property Opportunities
Conference. Over 150 market executives attended the panel discussions, held this
morning at the Grand Hyatt Atlanta in Buckhead.

“Atlanta had experienced a big decline beginning in the ‘70s in to 2007, but the city is back,” said Cheryl Strickland, managing director of tax allocation districts for the Atlanta Development Authority, who opened the conference as the keynote speaker. “And there is a lot more growth predicted, so think smart growth and infill.” The city expects a population of 7.3 million by 2030, and will account for over 80 percent of the growth in the state.

and:

Despite the rumblings in the national economy, there are a lot of good things
going for the Atlanta, Strickland concluded. “I hope you can see the
opportunities,” she said.

Indeed.

As other parts of the country experienced hyper-appreciating home prices as the housing bubble inflated, the overall Atlanta market saw, for the most part, slow and steady gains. Now that prices are in free fall elsewhere, the loss in value for Atlanta real estate is mild in comparison. In other words: we didn’t see home prices rise as quickly as did other areas, and prices haven’t fallen as fast, either.

Tempering the loss in home value here has been Atlanta’s increasing population. While there is no denying that prices are falling in Atlanta, prices are falling over three times as fast in Detroit, which has lost more residents over the past few years than any other city except hurricane-battered New Orleans.

Atlanta is, and remains, a desirable place to live. People want to be here. And as more and more people move to the city, there will be a demand for homes.

Photo: Sunny Side Up, originally uploaded by code poet.

Existing home sales slip in March

From the National Association of Realtors:

Existing-home sales – including single-family, townhomes, condominiums and
co-ops – were down 2.0 percent to a seasonally adjusted annual rate (1) of 4.93
million units in March from a level of 5.03 million in February, and remain 19.3
percent below the 6.11 million-unit pace in March 2007. A rise in condo sales in
March was offset by a drop in single-family sales. Regionally, sales rose in the
Northeast and West but fell in the Midwest and South.

and:

The national median existing-home price (2) for all housing types was $200,700
in March, down 7.7 percent from a year ago when the median was $217,400. Because
the slowdown in sales from a year ago is greater in high-cost areas, there is a
downward pull to the national median with relatively higher sales activity in
low-cost markets.

and, more relevantly:

In the South, existing-home sales fell 3.5 percent to an annual rate of 1.92
million in March and are 20.0 percent below March 2007. The median price in the
South was $167,200, down 7.1 percent from a year ago.

Blamed by the NAR for the decline in home sales are restrictive lending practices which have prevented many potential purchasers from being able to buy a home. While lending practices and guidelines such as insisting upon relevant down payments, documentation of income, and higher minimum credit scores required for loan qualification may seem restrictive compared to the wild-west rules of the past few years, to many they represent a return to a more rational lending environment seen before the days of MBSs, CDOs, tranches and hedge funds. Regardless, the truth of the statement is evident, and it is the mortgage lenders, the loan programs they offer, and the limited number of buyers who can obtain financing which continue to drive sales numbers down.

The first question to any potential purchaser is whether they can get a mortgage.

Total housing inventory rose 1.0 percent at the end of March percent to 4.06
million existing homes available for sale, which represents a 9.9-month supply
at the current sales pace, up from a 9.6-month supply in February.

This is not a good thing. Again, this shows that we can probably expect continuing price depreciation for the foreseeable future. As homebuilders, existing home owners, bank REO departments, and other real estate investors fight for that limited pool of qualified buyers, they will compete on the only level they can: price.

As prices decline, lending practices become even more restrictive. As we’ve seen here in Atlanta, most of the lenders and mortgage insurance companies have declared the city a declining market – and the size of the loans they are willing to extend get chopped 5% off the top, meaning that a potential buyer has to bring that much more to the table to close.

It’s a vicious circle, and unfortunately, one that is likely to continue.

Photo: peal of laughter, originally uploaded by camillesau.

Record number of foreclosed properties up for auction

From the AJC:

A record number of metro Atlanta properties are scheduled to be auctioned on the courthouse steps next month, according to numbers released Tuesday by Equity Depot, an Alpharetta company that tallies foreclosures.

The data is further evidence that metro Atlanta is mired in a real estate slump. Homeowners, builders, developers and commercial property owners have stopped making payments on these properties, so lenders are repossessing them.

In the 13-county metro area, 7,335 properties are scheduled for courthouse auctions, Equity Depot said. The previous record was 6,992 properties reported in January.

After a two-month reprieve in foreclosure advertisements, metro Atlanta’s foreclosure numbers have roared back with a vengeance.

While some of these properties may end up being reinstated, and others may be paid off before foreclosure, it’s a safe bet that the bulk of these houses will go back to the lender at the foreclosure auction – contributing to the huge inventory of homes on the market once they reach the REO stage.

Because the foreclosure rate is a backwards-looking figure (today’s foreclosures were yesterday’s late-pays and defaults), investors can expect that the foreclosure rates will continue to rise as people continue to fall behind in their mortgage payments. With more foreclosures, and more REOs flooding the market, buying opportunities abound, and the smart investor will take advantage.

Photo: onlyonlyonly lomokev remix, originally uploaded by lomokev.

New home construction at 17-year low

From CNN:

Initial construction of U.S. homes fell to a 17-year low in March, a much
steeper-than-expected drop, according to a government report released Wednesday.

Privately owned housing starts fell to a seasonally adjusted 947,000
annual rate in March, according to the Commerce Department. The rate was down
11.9% from February's revised reading of 1.07 million and 36% lower than March
of 2007.

Economists were expecting housing starts to decline to 1.01
million, according to consensus estimates compiled by Briefing.com.

and

New construction of single-family homes, considered the core of the housing
market, were at a rate of 680,000, or 5.7% below last month's number.
Single-family housing starts have not been this low since May 1980.

Applications for building permits, considered a reliable sign of future
construction activity, fell to a seasonally adjusted annual rate of 927,000 in
March. That's 5.8% below the revised 984,000 rate in February. Economists were
expecting permit applications to fall to 970,000.

Because of the overwhelming glut of housing inventory, both new and existing homes, this is a necessary step in eventually finding the housing bottom. Only when the level of new construction, when combined with existing-homes offered for sale and lender-held REOs drops to a point where it is sustainable by new mortgage issuances will there be a hope of recovery.

Until that time, expect there to be a race to the bottom in prices as homebuilders, home sellers, and REO departments all scramble for the few mortgage loans out there.

Photo: Construction Love, originally uploaded by Ramperto.

Builders: Little Confidence

The latest National Association of Homebuilders market index remained unchanged in April, just shy of its record low for the third consecutive month.

The index, which comes from a survey of residential developers across the country, gauges builders’ perceptions of current conditions, interest from potential buyers, and expectations of sales in the next six months.

Driving the homebuilders’ lack of confidence: tighter lending standards, rising defaults, and fear about the market’s future – all of which have kept buyers on the sidelines.

Investors looking for guidance in the days ahead are well to look to the big homebuilders. While most investors generally are more adaptable to specific market conditions, the overall objective of the typical investor and the large homebuilder is the same: to sell houses.

Sand Castle, originally uploaded by crossmage.

Foreclosures Jump

More bad news from RealtyTrac: foreclosure filings increased 57% in March 2008, compared to last year’s levels. Foreclosures also are up 5% from February, showing that the housing market is continuing to slide.

Leading the nation were Nevada and California. It is Nevada’s 15th consecutive month as the state with the most foreclosures.

Year-to-year, the number of properties repossessed by mortgage lenders has increased 129%.

Georgia is still among the states with the most foreclosures, with only Nevada, California, Florida, Arizona and Colorado with higher foreclosure rates. One in every 351 Georgia households received a foreclosure notice. Georgia also totaled 11,047 homes in foreclosure – the fourth-highest in the nation.

Again, as a lawyer for real estate investors, the story remains the same: investors should plan on these levels of foreclosures continuing for the foreseeable future.

one would., originally uploaded by antimethod (cole rise).

All-time Low for Pending Home Sales

The National Association of Realtor’s February index of pending home sales has fallen to an all-time low, falling 1.9% from January levels. The drop was nearly double what was expected by economists.

Overall, pending sales were down 21.4% from last year’s levels.

The index measures contracts signed, and not actual closings. It is therefore considered a forward-looking indicator of the overall housing market.





Photo: maybe, originally uploaded by Tal Bright.

Snapshot: Atlanta

Courtesy of Radar Logic, a real estate data and analytics company, comes another view of home prices in Atlanta. According to their January 2008 report, released on April 3, prices in Atlanta have fallen 9.2 percent from January 2007 levels.

While this decrease is larger than the 4.8 percent decline shown by last case Case-Shiller report, the point is still the same: that home values throughout Atlanta are falling, and as a real estate lawyer in Atlanta, I certainly recommend that all investors need to take the reduction in home value into account when measuring the potential equity in any property.

Photo: Let Go, originally uploaded by rockmenow48.

Case-Shiller: Home Prices Fall Again

Standard & Poor’s S&P/Case-Shiller Home Price Indices for January 2008 continue to show home prices declining to record levels.

The 10-City index fell 11.4 percent from January 2007. The 20-City index dropped 10.7 percent. Again, both indices reached record lows.

Home prices are declining significantly across the country, with 19 of the 20 cities in the index showing depreciation in home values. Only Charlotte, North Carolina reported a year-to-year price increase with a modest 1.8 percent gain. Miami and Las Vegas had the worst declines, each shedding 19.3 percent of value from last year.

The Atlanta decline also increased, from 3.4 to 4.8 percent.

Photo: Impacto, originally uploaded by Xosé.

NAR: Increase in Existing Home Sales

According to the National Association of Realtors, existing home sales rose unexpectedly in February, increasing 2.9 percent. It was the first increase in home sales in seven months.

Driving this increase were two factors: changes from January to February typically measure seasonal differences only, and the median sales price plummeted 8.2 percent from last year.

Home inventory remains high, with close to ten months of properties on the market.

As an Atlanta real estate lawyer, I have often counseled my clients not to read too much into the NAR’s statistics, or at least the NAR’s interpretation of their statistics.

But what conclusions can be drawn from their latest report?

First: housing is far from staging a recovery. While there was a modest increase in January to February sales, this is more likely attributable to seasonal factors, and not an actual improvement in the underlying market itself. In fact, sales of existing single-family homes were down 22.9 percent from a year ago. That’s a lot of houses.

Second: the drop in home prices as measured by the NAR has almost doubled from last month. January’s year-over-year prices fell 4.6 percent. February prices dropped 8.2 percent to $195,900.00.

It was recently reported that the majority of homeowners were in denial about home values, with three out of four believing that their home had gained or its retained value over the past year. The rapid decline in prices reported by the NAR may indicate that sellers are finally recognizing that homes aren’t worth what they used to be, and they are pricing more aggressively to compete with each other and the surging number of foreclosures.

These motivated sellers, who may be finally reducing prices drastically just to get homes sold, are your competition, and the successful investor is the one who is best able to turn market conditions to your favor.

Photo: down, originally uploaded by lomokev.

Mixed News: Foreclosures

RealtyTrac, the online marketer of foreclosure properties, has just released their report detailing nationwide foreclosure filings in February.

Last month, foreclosures fell 4% from January’s levels, but there was a 60% increase from February 2007.

As a closing attorney for real estate investors, we are definitely seeing the effects. More and more of our clients are buying REO properties and funding those acquisitions with hard money. We’ve also seen a dramatic increase in the number of short sales prior to foreclosure.

What we’re seeing less of these days: mortgage reinstatements.

The RealtyTrac report seems to indicate that all of the recent governmental efforts to help borrowers avoid foreclosure aren’t really helping.

Again, investors should plan on these levels of foreclosures continuing for the foreseeable future.

Photo: R ------------------------------------> L, originally uploaded by johanna.

FED: Home Equity Drops Below 50%

American homeowner’s percentage of equity in their homes has fallen below 50% for the first time since 1945, reaching a low of 47.9% in the fourth quarter of 2007.

The current amount of equity held by Americans in their homes: 9.65 trillion dollars.

More evidence of the difficulty in the housing market: Moody’s is estimating that 10.3% of homes will have zero or negative equity by the end of March.

Blamed for the increasing slide in equity are cash-out refinances, HELOCs and 100%-financed sales.

For the real estate investor, this latest reading on the US housing market should be viewed positively. It’s one of the few indicators that there is still a lot of equity out there for the investor who is capable enough to get out and find it. It may not be in pre-foreclosures, or in expired listings, but it’s out there, and there’s $9.65 trillion dollars of it out there.

Photo: empty, originally uploaded by Northern Country Boy.

Pending Sales Flat, Foreclosures Soar

The monthly National Association of Realtor pending home sales numbers are out, and they’re unchanged from last month. The index remains at 85.9 for the month of January and is the same figure that the NAR reported for December. It’s also the second-lowest reading on record.

The NAR also updated its market forecast. The group, known for being overly-optimistic, is projecting a 1.2% decline in median home prices, with a 6.1% decline in home prices alone. A modest turnaround in the second half of the year, however, is predicted.

As a closing attorney who works with investors, I expect price deterioration to continue for the foreseeable future, and real estate investors should adjust their investment strategies accordingly.

In separate, but not unrelated news: the Mortgage Bankers Association is reporting that foreclosures hit an all-time high in the last quarter of 2007. According to the MBA, two percent of all mortgages are in foreclosure.

Photo: More not so functional arrows, originally uploaded by Yolande....

Case-Shiller Home Prices: A Broken Record

The S&P/Case-Shiller Home Price Indices, released today, continue to show a broad decline in the prices of existing single-family homes, making 2007 a full year of declining prices nationwide.

Fourth-quarter 2007 prices fell a record 8.9 percent. Year-over-year prices declined 9.8 percent for the 10-city index and 9.1 percent for the 20-city.

Atlanta’s prices continued to slide: prices have now declined 3.4 percent from last year’s levels.

Investors should expect prices in the Atlanta area to continue to decline as buyers look for bargains, and excess REO and homebuilder inventory continue to contribute to the glut of homes on the market.

Photo: descent, originally uploaded by *ade.

Foreclosures Skyrocketing

RealtyTrac just released January’s foreclosure report, and the number of homes in some stage of foreclosure rose 57 percent from January of last year.

And it does not appear that the foreclosure train is showing signs of slowing down anytime soon; - the rate of foreclosure filings rose 8 percent from December.

As James J. Saccacio, the chief executive officer of RealtyTrac noted: "January's foreclosure numbers demonstrate that foreclosure activity is continuing on its upward trend, substantially increasing from a year ago in many states"

Georgia ranked in the top ten of states with the highest foreclosure activity, with over 10,000 reported properties in some stage of foreclosure.

As a closing attorney who works with investors, what do I think we can, and should, take from this?

First: while a number of governmentally-sponsored foreclosure prevention plans have been enacted, they do not seem to be having any effect on the overall number of foreclosures.

Second: these monthly increases in foreclosures should not surprise anyone, and will most-likely continue as more and more adjustable-rate mortgages reset to higher rates.

Third: Increasing number of foreclosures represents an increasing number of REO properties on the market that investors will have to compete with as they try and sell their properties.

Fourth: Increasing number homes in foreclosure means that there are more potential deals out there, and investors can really take their time and cherry-pick the best ones.

Photo: Toodle pip! Off to Amsterdam!!!, originally uploaded by columbo's dad.

Home Sales and Prices Down, but…

The latest National Association of Realtors’ figures are out, and existing home sales have fallen for a sixth-straight month.

January sales dropped to 4.89 million nationwide, 0.4 percent less than last month. Year-over-year sales were down 23%.

Economists had predicted that existing home sales would fall to 4.80 million.

Median home prices as reported by the NAR dropped to $201,100. Last January the median was $210,900.

Additionally, the total of homes for sale rose 5.5% to 4.19 million. Which represents a 10.3-month inventory of homes on the market.

While this report shows the market declining at a slower pace than expected, investors should be fully aware of the nature of the NAR report before trying to call a bottom to the industry’s decline.

First, while it is true that the NAR statistics show a smaller drop in home sales than expected, a drop is still a drop. Additionally, the NAR only measures contracts signed, and not actual closings. One can expect that a number of contracts will not result in sales.

Additionally, an increase in overall home inventory will result in more downward pressure on home prices.

There has been recent (relatively) positive news in housing, and investors should watch the reports carefully, but I still think it’s way early to call a turnaround to this market. Once we see several months of declining inventory and stable new-home and existing-home sales, as well as less-restrictive credit markets, then we can start talking about reaching bottom.

Housing Starts Decline, but…

Echoing the homebuilders’ confidence index released yesterday, the rate of single-family home starts fell to a 17-year low in January.

It was the tenth-straight month of declining single-family home starts, and the annual rate fell to $743,000.00.

New single-family homes building permits fell as well, also hitting a 17-year low.

However, overall housing starts increased slightly in January, thanks to an increase in multi-family units, such as condos and apartments.

While the big homebuilders are not seeing light at the end of the tunnel, there may be some good for investors in this news: the industry has been beset by a complete excess of home inventory, which combined with the financing and foreclosure difficulties, has worked to push home prices down. As the supply of available homes decreases, there is hope that prices will stabilize.

Additionally, an increase in apartment starts shows us that the big investors are projecting more renters in the future, and those investors who enjoy landlording should position themselves to take advantage of these new tenants.

Outlook Dim, but...

The National Association of Home Builders just released their latest index on homebuilder confidence, and while homebuilders are seeing an increase in potential purchasers, their outlook for the for the next six months is still negative.

"Some potential buyers who have been sitting on the sidelines are starting to at least research a new home purchase given improving affordability factors and the large selection of units on the market," said the Association’s Chief Economist, David Seiders.

"That said, builders know there's a difference between people looking and people buying, and their current outlook remains quite subdued," Seiders added.

In today’s environment, where any good news is really, really good news, even a slight increase in potential purchasers is a breath of fresh air.

Mortgage interest rates are terrific for those who can get them, and the smaller real estate investors are much-better poised than the publicly-traded homebuilders to turn those lookers into buyers.

About The Future

The other night, I was out having drinks with a friend of mine who works for a homebuilder located just outside of Atlanta.

As a builder, his company is doing well; while the current market has certainly affected their business, they’re still chugging along and closing around five sales each month. But they are in a good market: they build moderately-priced homes in the low-to-mid hundreds, and really concentrate on first-time homebuyers with good credit. As he said: they’re the last ones to feel a drop in the housing industry, and the first ones to recover.

But, even though his company is continuing to thrive, my friend was interested in where I thought the housing market was going and what real estate investors were going to see in the near future.

As a real estate closing attorney, I follow the housing industry very closely. I have always thought that knowledge is the most important resource that one can have as a real estate investor; if you know more than the other guy, then you’ll probably do better than he will. Knowledge, they say, is power.

One thing to recognize is that the spectacular boom of the past few years in real estate investing came as a direct result of the access to easy mortgage money. Mortgage lenders were willing to lend trillions of dollars to those least able to repay. Why? Because there was an insatiable appetite for these types of products on the secondary market up on Wall Street. Hedge funds, pension plans, overseas banks couldn’t get enough.

This resulted in one of the most dangerous loan products out there, and one that I believe is at the root of the majority of difficulties facing the real estate market in Atlanta: the 100% adjustable-rate mortgage.

As a closing attorney, I closed hundreds of these loans, subprime and not. Buyers came to the closing table with no money and got a low interest rate on their loan for the first couple years. Everyone looks only at that initial payment, because they expect to refinance before the loan to reset to a higher rate; and as long as property values keep increasing, then there’s plenty of equity to pay for that refinance. Like I said, I closed hundreds of ‘em.

Well, of course, we know what happened: prices didn’t keep increasing.



These charts, in one form or another, have been on the wall of my office for the past year. They are, I believe, the single two most important indicators of where the mortgage industry is headed, and how long it will take to recover.

Both were created by Bank of America, the top is the original, the one below revised. And they show, in billions, the amount of adjustable-rate loans resetting to their higher rates.

Why is this significant? Because it is primarily the ARM resets that have driven down the housing market for the past year. As borrowers found their payments increasing, many of them quickly realize that their new payment was not affordable. Burdened with a home that they can’t afford, with little-to-no equity, these borrowers started scrambling for options.

Unfortunately, the options are few and far between. Refinancing isn’t possible for most because of tightening credit standards and reduced loan programs. Unable to refinance, borrowers try and sell their homes, leading to the glut of homes on the market. And with more homes on the market, there is more competition for the few buyers out there.

Prices are pushed downwards.

Lastly, there’s the final option for borrowers in these loans: foreclosure. And of course, foreclosures are at an all-time high and are expected to increase. The flood of REOs back onto the market again push prices down.

Both of the charts are very telling: that we haven’t seen anything yet. All of the homes on the market, all of the lenders going out of business, home prices deteriorating; and we haven’t yet even reached the peak of ARM resets.

The original Bank of America chart showed that peak in March of 2008; the revised has ARMS peaking in June.

For most borrowers, once the rates adjust, they’ll do everything they can: but the odds are definitely against them. They may struggle to make payments, and some certainly will. But the great majority won’t – and faced with a home most-likely worth less than what is owed, they’ll be unable to refinance or sell. Eventually they’ll fall behind on their payments.

So: as an example, let’s take someone who has a loan that adjusts in March. Their payment increases, and they make them for as long as they can. Say, four months. In August, they miss their payment.

Is the lender going to foreclose then? Probably not. It’ll probably take another four months for the lender to initiate foreclosure proceedings. So the borrower may get their foreclosure notice in December.

In Georgia, foreclosure is a fairly speedy process, generally taking two or three months. For our hypothetical borrower, it’s March of 2009 before the property is deeded back to the bank.

What does this tell to us? That as an industry, things are much more likely to get worse before they get better, and that the housing slump we’re in now is probably going to last for some time to come.

What else does it tell to us? That there are still ways to survive and profit as a real estate investor. I can't say this enough. My friend who works for the builder; they are still doing well. And other investors, who recognize and understand the broader market forces at play continue to thrive. Traditionally, in down times, investors do well. There’s a smorgasbord of potential deals out there. The smart investors recognize that, and continue to work today’s and tomorrow’s market to their advantage.

Looking Ahead

In the cover story for its January 31st issue, Business Week Magazine details the housing meltdown and sets forth the case that home prices may drop another 25% before bottoming out.

While a 25% decline would be unprecedented, it’s certainly not out of the realm of possibility. Right now there are a tremendous number of unknowns at play: foreclosures are at record highs and projected to increase; more homes are on the market now than ever before; the wave of adjustable-rate loans resetting to higher rates hasn’t crested; and more and more people are stuck an homes with little or no equity to help them get out.

Plus: there’s the rising specter of a government bailout.

Now, almost certainly the home values in Atlanta won’t drop as much as other places in the country. We’ve certainly seen that so far: as cities like Detroit and Miami and San Diego have been seen home values plummet, Atlanta has held steady. Even today, though the Atlanta area is seeing price depreciation, it is mild in comparison to the rest of the country.

But, nothing is certain at this point, and we really won’t have any idea how bad the problem is for some time to come.

So what does all this mean for the real estate investor? Is there no money to be made in investing in real estate?

The answer is: certainly not. There is plenty of money being made every day by investing in real estate. There are plenty of investors who are doing well and are capitalizing handsomely on the current market.

That is: there are still areas of the housing industry that are thriving.

For example, for those who can get them, mortgage rates are exceedingly good right now. For borrowers who can put significant amount down, who have excellent credit, and who are looking to borrow less than the conforming $417,000 limit, interest rates in the fours are not uncommon; and the smart investors are marketing their properties to these purchasers.

It’s not as easy as it used to be, and investors may not be making as much as they used to, but the profit is still there for those who are willing and able to adapt to the market at hand.

Down, but not out.

CNN Money just ran an article from Investors Business Daily on the effect of the current housing market on some real estate investors. On the whole, it’s a good read and echoes a number of the things we’ve been saying for a long time.

Subprime Mess on 60 Minutes

For most real estate investors, the boom times of the past few years was fueled by easy access to money given by the big mortgage companies like Countrywide, Homebanc, and New Century. Money, as they say, flowed like water.

The “subprime mortgage crisis” has pretty much put a stop to that, and our real estate investor clients are finding new and different ways to profit in this challenging market.

60 minutes recently ran a segment which does a fairly nice job of detailing the relationship between simple homeowners, mortgage lenders, Wall Street, and international banking. It’s an interesting watch.

Some Things Never Change

Two pieces of not-very-surprising news today:

First: Foreclosures soared last year, with the numbers in 2007 increasing over 2006 by 75%, according to RealtyTrac. The December-to-December increase itself was 97%.

And it doesn’t appear that the foreclosure numbers will be getting better any time soon. First American Core Logic is reporting that the risk of foreclosure has jumped 22% from last January.

Second: The S&P Case/Shiller Home Price Index is out for November 2007, and it’s showing the largest year-over-year price decline on record.

Both the ten and twenty-city indices were down: 8.4% for the ten-city and 7.7% for the twenty. The 8.4 percent decline in the ten-city index is a new record low, smashing the previous record of 6.7%, set only last month.

Once again, home prices in Atlanta lost ground. The monthly drop increased from 1.2% seen last month to 1.8%. Year-to-year, prices declined 2%.

The largest drop was once again in Miami, which saw homes shed over fifteen percent in year-over-year value.

Hudson and Marshall Acution on CNN

CNN report on the recent REO auctions in Atlanta.

Atlanta Foreclosures Hit Record High

From the AJC: Metro Atlanta foreclosure notices in January hit a record 6,992 according to Equity Depot, up 45% from a last year.

One of the main culprits? Resetting interest rates of adjustable rate mortgages. And as subprime mortgage resets don’t peak until later in the year, the number of foreclosures, already at an all-time high, should increase.

This is not anything really new; we’ve been saying for months that the number of foreclosures is going to keep increasing.

For investors, as with much of the housing news these days, this is mixed news. On one hand, investors looking to sell houses are competing with these foreclosures, and as we know, prices are being driven down and it is becoming increasingly harder to sell property.

On the other hand, the opportunities for buying houses are unprecedented. Almost every property these days presents a short sale possibility. Hudson and Marshall is conducting cut-rate REO auctions. And with an unprecedented wave of REO properties coming, the number of opportunities presenting themselves to investors is only going to increase.

The Word of the Year

According to the American Dialect Society, the 2007 word of the year? Subprime.

w00t!

And in other news: According to the National Association of Realtors, pending home sales have fallen 2.6% in November, well beyond the 0.8% decline predicted by economists.

The NAR does not now see a rebound in housing until 2009.

UPDATE: The head of Fannie Mae is now predicting that housing won't recover until 2010.

Investor Alert: REO Auction

Hudson & Marshall, the country’s largest REO auction firm will be auctioning off more than 500 Atlanta-area foreclosure properties between January 15th and the 20th.

The auctions will be conducted throughout the state, though the great majority will be held in here in Atlanta.

A full listing of auction times, locations, and available properties is available on the Hudson & Marshall web site.

There are no minimum bids for the properties to be auctioned. Winners will be required to make a deposit of $2,500.00 or 5% of the bid price, whichever is greater. Buyers then should have 30 days to secure financing.

Estimated values of the properties range from $30,000.00 to $700,000.00 according to the Hudson & Marshall press release. Homes additionally come with owner’s title insurance, paid for by the sellers.

This is not the first REO action of Atlanta-area properties held by Hudson & Marshall, and a number of our clients who attended the first auction reported that properties were being sold at tremendous discounts.

For real estate investors looking at REOs, either as long-term holds or as quick turnaround sales, these upcoming auctions may present a tremendous opportunity to acquire properties at significantly below-market prices.