Realtor's Say it Is A Buyer's Market

[MAXUM]

Originally Posted by Lakesrider

Wifi, I read through the while post intending to post that exact some thing. We had lots of folks look at our condo down in Nashua while it was for sale. No buyers. The realtors told us none of them cold get a lone....Banks are still holed up and very nervous about lending even though they got gazabillions from the Gov't.

Not entirely true. Banks will lend. Heck I had no trouble at all getting a mortgage on the place that I bought this year. However the fundamentals are simple - good debt to income ratio, 20% cash down, and decent assets above and beyond the down payment. Sadly many spend as much as they make, save little if at all and are carrying significant debt. Yes unlike in the recent past, these individuals are now being passed by as to risky and rightly so. Even if a bank gets 'gazabillions' from the Gov't, making a loan that is likely to default doesn't do anyone one any good.

[wifi]

Originally Posted by MAXUM

Not entirely true. Banks will lend. Heck I had no trouble at all getting a mortgage on the place that I bought this year. However the fundamentals are simple - good debt to income ratio, 20% cash down, and decent assets above and beyond the down payment. Sadly many spend as much as they make, save little if at all and are carrying significant debt. Yes unlike in the recent past, these individuals are now being passed by as to risky and rightly so. Even if a bank gets 'gazabillions' from the Gov't, making a loan that is likely to default doesn't do anyone one any good.

I respectfully disagree with your disagreement I have no debt outside of a mortgage, pay credit cards off each month, about 25% debt (which is only the mortgage) to income ratio, 60% down payment, no defaults or bankruptcies. This is all a current and ongoing event for me, maybe you slipped in under the wire earlier this year, congratulations on your new place

[codeman671]

Originally Posted by wifi

I respectfully disagree with your disagreement I have no debt outside of a mortgage, pay credit cards off each month, about 25% debt (which is only the mortgage) to income ratio, 60% down payment, no defaults or bankruptcies. This is all a current and ongoing event for me, maybe you slipped in under the wire earlier this year, congratulations on your new place

I agree with Maxum, not sure why you are having issues with numbers like that. What bank? Credit score ok? Did the second mortgage put your ratios too high? Is there something funky about the property or is it not appraising out at a value that makes sense? With 60% down it seems like a slam dunk.

We recently went for an approval to buy a 3rd house and got it, even though it put our ratios over 50%. We are in the process of selling the other two, so it would have been a short term situation, but chose against it anyhow. I don't know of anyone that has gone to get a mortgage that has been denied. Granted the banks aren't as lenient as they once were but as long as someone has decent credit, can afford it, and the value is there it should not be an issue.

[Rusty]

Originally Posted by wifi

I respectfully disagree with your disagreement I have no debt outside of a mortgage, pay credit cards off each month, about 25% debt (which is only the mortgage) to income ratio, 60% down payment, no defaults or bankruptcies. This is all a current and ongoing event for me, maybe you slipped in under the wire earlier this year, congratulations on your new place

You left one thing out and that is your income.

Are you trying to buy a house that doesn't fall within your income range even though you put 60% down? Does it put your debt to income ratio over 35%?

[jazzman]

We found that island properties didn't meet fanniemae/freddiemac lending guidelines even with nearly 50% down. Not sure if this extended to all seasonal places or if it was a no public road thing. Banks were of course happy to do private portfolio loans at 5+% fixed for 30 years.

We eventually found Franklin Savings Bank had a special agreement with fanniemae that let our loan go through.

Then you find out that everything on the lakefront is considered a flood zone these days...

Then you find out that most insurance companies don't do houses on piers...

Then you find out that the bank appraisal system is pretty random on island properties.

Lots of hurdles... These have to be taking some number of potential buyers off the books.

[MAXUM]

Originally Posted by jazzman

We found that island properties didn't meet fanniemae/freddiemac lending guidelines even with nearly 50% down. Not sure if this extended to all seasonal places or if it was a no public road thing. Banks were of course happy to do private portfolio loans at 5+% fixed for 30 years.

We eventually found Franklin Savings Bank had a special agreement with fanniemae that let our loan go through.

Then you find out that everything on the lakefront is considered a flood zone these days...

Then you find out that most insurance companies don't do houses on piers...

Then you find out that the bank appraisal system is pretty random on island properties.

Lots of hurdles... These have to be taking some number of potential buyers off the books.

Hit the nail on the head...

If the property doesn't meet fanny/freddy guidelines, it's a property that is only going to move to a cash buyer, or you're stuck having to screw with a construction loan to get the property to those standards and flip to a conventional loan. Can you say headache of epic proportions?

Insurance companies don't particularly care for seasonal properties period, even if they are on a full foundation. Not an impossible hurdle to overcome, just takes lots of explanation.

The appraisals are another killer since there is so much variation in water front never mind island property. It's not like most places are cookie cutter subdivisions, with lots of "like features", no you're stuck comparing apples and oranges which skew the comparable features to "like sold properties" and to much adjustment there raises red flags to the underwriters.

The key thing is to find the right lender that has the ability to deal with a little adversity. They are out there, stick with a local bank and you may find things are much easier than you have experienced thus far.

[wifi]

30% debt to income ratio. Local bank. I haven't gotten the appraisal report back yet, perhaps she got up on the wrong side of the bed that day. I've always thought the value of a house or land is what someone is willing to pay for it otherwise, its really subjective.

[secondcurve]

Originally Posted by wifi

30% debt to income ratio. Local bank. I haven't gotten the appraisal report back yet, perhaps she got up on the wrong side of the bed that day. I've always thought the value of a house or land is what someone is willing to pay for it otherwise, its really subjective.

It's not the Banks!!! It is the government. Please read the papers. The government started the housing crises by keeping rates artificially low and mandating that every stiff who could fog a mirror should own a home. Now the government is suing the banks for having made those loans even though the banks provide the lubrication for the economy to do well. Were there bad bankers, appraisers, borrowers, etc.? Yes. However, the banks took 95% of the blame. Put yourself in the banks' shoes. If you make a loan and fail to meet government guidelines you will be sued. Your President will condemn you for trying to screw the little guy, etc. etc. Fear not, this problem can be fixed and all of you, especially those residing in NH, will have the opportunity to do so next month.

[Diver Vince]

Originally Posted by secondcurve

It's not the Banks!!! It is the government. Please read the papers. The government started the housing crises by keeping rates artificially low and mandating that every stiff who could fog a mirror should own a home. Now the government is suing the banks for having made those loans even though the banks provide the lubrication for the economy to do well. Were there bad bankers, appraisers, borrowers, etc.? Yes. However, the banks took 95% of the blame. Put yourself in the banks' shoes. If you make a loan and fail to meet government guidelines you will be sued. Your President will condemn you for trying to screw the little guy, etc. etc. Fear not, this problem can be fixed and all of you, especially those residing in NH, will have the opportunity to do so next month.

Exactly correct! The government started this entire debacle with red line zones which forced the banks to make loans to those with inadequate financial solvency under the guise of "fairness". Now they blame the banks, the insurance companies and everyone but themselves. And to boot, the taxpayers have to foot the bill. Excuse me, but some of these folks in Washington think they are so bloody smart. They can fool some of the people some of the time, but certainly not all.

[tis]

Insurance is tough these days. Either your property is seasonal, or is a rental, is vacant, is too old, too new, has a wood stove, or is too expensive or in the wrong zone or something. If it wasn't for liability, I would self insure and forget them all!

I totally agree with you secondcurve.

[patman]

Originally Posted by secondcurve

It's not the Banks!!! It is the government. Please read the papers. The government started the housing crises by keeping rates artificially low and mandating that every stiff who could fog a mirror should own a home.

Originally Posted by Diver Vince

Exactly correct! The government started this entire debacle with red line zones which forced the banks to make loans to those with inadequate financial solvency under the guise of "fairness".

Nobody "forced" the banks to do anything. The combination of things being allowed (not mandated) and the banks' own greed was the problem. The wall-street geniuses that came up with bonds based on sub-prime mortgages that masked the true risk of those instruments created the demand. The banks saw $$ in closing costs and fees, and selling those mortgages to the bond managers, and supplied that demand. Immediate profit, no long-term risk. What's not to like? After all, the banks had no downside to protect, they had that FDIC safety net!

Sorry...wall street and bank greed is behind this one, not a nonexistent government mandate.

If you can stomach the truth, listen to this:

http://www.thisamericanlife.org/radi...-pool-of-money

Oh, and when you're itching to point fingers on this one...remember what administration was in office at the time. Hint: not the current one.

[tis]

That's wrong. Barney Frank and friends forced Fannie and Freddie to give out loans to almost anybody that could wait. They said everybody deserved to buy a home.

[patman]

Originally Posted by tis

That's wrong. Barney Frank and friends forced Fannie and Freddie to give out loans to almost anybody that could wait. They said everybody deserved to buy a home.

Forced or allowed? Big difference. Citation?

[SIKSUKR]

Absolutely forced. Read the bill.

[patman]

Originally Posted by SIKSUKR

Absolutely forced. Read the bill.

Again, citation?

If you're talking about the Community Reinvestment Act, it mandates that they offer loans to all qualified individuals without discrimination...not that they ignore safeguards against making unsound loans. The risky loan idea was all from the banks, fueled by the bond market appetite. If it works, they win. If it didn't, FDIC bails them out. There was no mandate, just no downside, and greed kicked in.

From Wikipedia...(I know, it's not the bill itself, but it's a good summarization) http://en.wikipedia.org/wiki/Community_Reinvestment_Act

The Community Reinvestment Act of 1977 seeks to address discrimination in loans made to individuals and businesses from low and moderate-income neighborhoods.[7] The Act mandates that all banking institutions that receive Federal Deposit Insurance Corporation (FDIC) insurance be evaluated by Federal banking agencies to determine if the bank offers credit (in a manner consistent with safe and sound operation as per Section 802(b) and Section 804(1)) in all communities in which they are chartered to do business.[3] The law does not list specific criteria for evaluating the performance of financial institutions. Rather, it directs that the evaluation process should accommodate the situation and context of each individual institution. Federal regulations dictate agency conduct in evaluating a bank's compliance in five performance areas, comprising twelve assessment factors. This examination culminates in a rating and a written report that becomes part of the supervisory record for that bank.

The law, however, emphasizes that an institution's CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution. An institution's CRA compliance record is taken into account by the banking regulatory agencies when the institution seeks to expand through merger, acquisition or branching. The law does not mandate any other penalties for non-compliance with the CRA.

Furthermore...from the bill:

Sec. 802.
(a) The Congress finds that—
(1) regulated financial institutions are required by law to demonstrate that their deposit facilities serve the convenience and needs of the communities in which they are chartered to do business;
(2) the convenience and needs of communities include the need for credit services as well as deposit services; and
(3) regulated financial institutions have continuing and affirmative obligation to help meet the credit needs of the local communities in which they are chartered.
(b) It is the purpose of this title to require each appropriate Federal financial supervisory agency to use its authority when examining financial institutions, to encourage such institutions to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions.

Sorry, I don't see anything that requires them to make bad loans, and in fact it says 'consistent with the safe and sound operation', which means to NOT make bad loans.

[Mink Islander]

Talking about the local real estate market is interesting.

Bloviating over who is to blame for the mortgage crisis -- not so much.

[patman]

Originally Posted by Mink Islander

Talking about the local real estate market is interesting.

Bloviating over who is to blame for the mortgage crisis -- not so much.

Agreed...my apologies for taking the bait, this is not the appropriate venue for these sorts of discussions.

[Billy Bob]

Originally Posted by patman

Forced or allowed? Big difference. Citation?

Actualy George Bush had a large say in increasing the percentage of homeowners to levels that were not sustanable . Lots of room to find fault .

Lax lending and low downpayments led to buyers with no skin in the game and when values went down they headed for the hills

[Belmont Resident]

Originally Posted by Billy Bob

Actualy George Bush had a large say in increasing the percentage of homeowners to levels that were not sustanable . Lots of room to find fault .

Lax lending and low downpayments led to buyers with no skin in the game and when values went down they headed for the hills

Just because the bank did this or the government did that the bottom line is the person applying for and buying the property got themselves into the situation.
You can lead a horse to water but you can not force it to drink.
People got themselves into the predicament by over extending themselves and buying property that they could just barely afford to begin with.
The banks did allowed them to fail, but in the end they made the decision to purchase the property.

[Rusty]

Originally Posted by wifi

30% debt to income ratio. Local bank. I haven't gotten the appraisal report back yet, perhaps she got up on the wrong side of the bed that day. I've always thought the value of a house or land is what someone is willing to pay for it otherwise, its really subjective.

So has your local bank actually turned you down for the loan or are they still reviewing the appraisal report and it could possibly be approved?

[BroadHopper]

One could get a bridge mortgage in the case you are buying a home when you have your present home on the market. When you sell the first home they will refinance. Today, it is not so. Either your current home is sold or no loan. This makes it harder for someone to move to a new location. Large corporations will reluctantly purchase a new home in a new location until you old home is sold. Then the corporation will sell you your home.

Bottom line is it takes money to move to a new location, something most of us do not have.

I had a chance to buy an inn a couple of years ago for 900K. Banks told me I need enough liquid assets to cover the commercial loan. The property never sold and today it is foreclosed for 600K. Now the bank has change the rules, too late, and I can afford the property. The property is no longer attractive as it has fell into disrepair. Go figure.

Banks loves to 'shoot themselves in the foot.'

[ishoot308]

Here's a perfect example of why it's a buyers market...

http://www.zillow.com/homedetails/76...92810734_zpid/

This house on Varney Point Rd. left was originally put on the market last year for 2.2 million. It finally sold and was closed on last Friday for 1.5 million!! Can you imagine what this house would have sold for in 2007!! It's not just houses in this price range either that are being drastically reduced, there are great deals to be had in all price ranges.

Dan

[fatlazyless]

Originally Posted by ishoot308

Here's a perfect example of why it's a buyers market...

http://www.zillow.com/homedetails/76...92810734_zpid/

This house on Varney Point Rd. left was originally put on the market last year for 2.2 million. It finally sold and was closed on last Friday for 1.5 million!! Can you imagine what this house would have sold for in 2007!! It's not just houses in this price range either that are being drastically reduced, there are great deals to be had in all price ranges.

Dan

The property taxes for this Varney Point waterfront single-family house for the last year shown, 2011, are $28,992/year to the Town of Gilford, or $2416/month.........wow......and I figured that I pay a lot....about $9000/year ......for my 55'wf and quarter acre with a 60-year old, moldy oldie, mongrel cottage in Meredith. That is a huge amount of money in taxes especially if it is to be a second home, and basically unoccupied from Labor day to Memorial Day.

[jazzman]

Could be worse... The tax rates in the "vacation" communities are about 1/2 of what the rest of the state pays. Of course the houses are worth more, but that's real $$$ you get to keep if you ever sell.

My prior lakehouse in Hillsboro NH was about 2.5% of it's value per year in taxes. Here, closer to 1.25%.

[secondcurve]

Originally Posted by jazzman

Could be worse... The tax rates in the "vacation" communities are about 1/2 of what the rest of the state pays. Of course the houses are worth more, but that's real $$$ you get to keep if you ever sell.

My prior lakehouse in Hillsboro NH was about 2.5% of it's value per year in taxes. Here, closer to 1.25%.

True but the average vacation home owner gets very little in the way of services for his/her tax payments. As a result, tax rates should be low!

[jazzman]

Maybe true, but be happy you own a vacation house in a low tax town... It could be way worse. A 500k vacation house in many towns = 12K tax bill and how many Winnipesaukee houses can be had for 500K? Imagine what a 12k tax bill does for the resale value of your house.

The expensive tax towns are going to become more and more expensive when all the retirees move out and everyone who lives there have kids that need schools.

The NH tax system is clearly broken.

I don't know what the right answer is, but a system where people pick towns a few miles apart to live in because of local real estate taxes is broken.

And what happens when 2nd home real estate taxes aren't deductible on your federal taxes any more???

[Woodsy]

Jazzman....

I have to disagree with you. The NH tax system work just fine. Its supply and demand. Properties on or close to the water or properties with a view are worth more than an average property. They are worth more because people will pay more to purchase them. Blame it on human nature! A prime example is the new $500K - $600K CONDOS for sale on Scenic Road.... because they have an awesome view. Less than a mile away, you can buy a townhouse condo for $130K.... (not exactly an apples to apples comparison, but the HUGE price point difference is because of location) To this day, property on the Meredith, Laconia & Gilford side of the Lake is more valuable than similar properties in Moultonboro, Center Harbor & Tuftonboro. Why? Because for whatever reason, people desire to be on this side of the lake instead of that side.... go figure!

If anyone can afford to buy a desirable property on/near the water or with a spectacular view I am happy for you. I dont think complaining about the taxes or mortgage on your property is a viable argument. If you can afford the house, you can afford the taxes. If you dont like the way the town is spending your tax $$ then move up here and become a resident and vote your opinion. Its that simple!

I do feel a little bad for families who have had these camps/cottages forever, and thier tax bill is making them unaffordable to keep. That being said, None of those families complain when the $20K camp thats been in the family since the 60's (and you were rich in the 60's if you could afford a $20K camp) and gets sold for a $500k profit.

Woodsy

[DickR]

The valuation on which the RE tax is supposed to be based is some (crude) measure of what someone else likely is willing to pay you for your property. The claim that "if you can afford to buy it then you can afford the taxes on it" loses validity as time goes on. The case of the property bought decades ago is a good example. The wealth of people of means who can afford vacation homes keeps bidding up the going prices (over time). The long-time owner essentially is paying a tax on someone else's ability to pay it.

The present system of leaning heavily on the RE tax is a sweet deal for towns on the major lakes, as they see a huge chunk of money coming in from people who don't use much in the way of services and also who have no say in the matter. I don't see this changing soon, but if it did, lakefront towns would be seriously impacted.

[Woodsy]

Originally Posted by DickR

The valuation on which the RE tax is supposed to be based is some (crude) measure of what someone else likely is willing to pay you for your property. The claim that "if you can afford to buy it then you can afford the taxes on it" loses validity as time goes on. The case of the property bought decades ago is a good example. The wealth of people of means who can afford vacation homes keeps bidding up the going prices (over time). The long-time owner essentially is paying a tax on someone else's ability to pay it.

The present system of leaning heavily on the RE tax is a sweet deal for towns on the major lakes, as they see a huge chunk of money coming in from people who don't use much in the way of services and also who have no say in the matter. I don't see this changing soon, but if it did, lakefront towns would be seriously impacted.

DickR

When you own something that someone else covets, be it a piece of property, an old musclecar a rare toy or whatever, the value of that item will proportionally increase relative to the desire of the person who covets it most.

On one hand I do agree with you that the long time property owner is paying taxes based on what others are willing to pay for that property or a similar property. Not to be heartless but so what? That same long term property owner is going to be laughing all the way to the bank when he gets a huge $$$ amount when he sells the property. The same way the original owner of a 1965 Shelby Cobra is going to laugh when his $6000 sports car fetches 1.1 Million at auction.

Real Estate can fluctuate in value... I feel bad for the people who bought when the market was artificially high... alot of them are now upside down in thier mortgages or have watched thier home devalue dramatically. Hence all the foreclosures and short sales. On the upside, for other people its def a time for some real bargains. It is what it is. When some people lose, others win. It all depends on your perspective.

I blame the banks for the most part... the Feds def had some complicity. The Feds pushed banks into writing mortgages for lower income people. The banks said SURE! But instead of writing easy stable long term fixed rate mortgages, they wrote variable rate mortgages, knowing full well that once the gates were open and flood of people started buying house, the housing prices would go up, as would the risk of inflation and that would force the Fed to raise the Prime Rate to slow it all down.... the BANKS knew this when it all started. They knew it was a bubble that would eventually pop!

The banks could have very easily rewritten the shakey notes to avoid the meltdown... they chose not to. They didnt want to hurt thier bottom line. EVERYBODY involved in the process made alot of $$$.. and the taxpayers got stuck with the bill!


Woodsy

[CateP]

Having just gone through selling and buying this past year I would definitely agree that it is a buyers market. I could not get a loan for a new house until I sold the old house. I sold my old house for almost $100k less than original list and $20k less than town assessment. (boo hoo) BUT then I bought a beautiful house in Wolfeboro for $40k under town assessment and $150k less than buyers paid.

It's all relative. Had I sold my house back in that crazy time around 2004-2007, I would have gotten a LOT more money for it and it probably would have sold within weeks. AND I probably would have paid a LOT more money for my next house and maybe even gotten involved in a bidding war, only to loose any equity I thought I had.

In retrospect I am glad the market took a nose dive and I bought and sold when I did. It all feels so much more sane AND I feel like I got the real value of my new house, not some inflated price driven by greed. (which by the way was the real culprit for the housing crisis by many parties)

[MAXUM]

Originally Posted by wifi

30% debt to income ratio. Local bank. I haven't gotten the appraisal report back yet, perhaps she got up on the wrong side of the bed that day. I've always thought the value of a house or land is what someone is willing to pay for it otherwise, its really subjective.

What you are willing to pay and the appraised market value are two entirely different numbers.

The appraisal value is based on the actual sale price of "like properties" within a certain distance of the subject property. Price weighting is done to even the score between comparable properties. So if one has more SQFT than another the price difference is calculated as such as a line item on each comp listed as ether +/- X number of dollars. Banks could care less what you want to pay, they want to know what stuff is actually selling for. Trouble with this is if there is to much skew between "like properties" that raises all kinds of red flags and yes can kill a loan as quickly as bad credit.