The only momentum worth betting on right now is financial ruin in real estate and bankruptcy lawyers.
I was chatting with the top bankruptcy firm lawyers this afternoon in Phoenix. My wife used to work for them. They are my pulse on business. They are always busy but I just knew this was THE year. I did not need to ask, but of course it was my second question after how’s the family?
Although they are lawyers, these are indeed good people :) and not the types who like to see the pain their clients are in.
The housing numbers in this city are brutal with average days on the market up over 90 from 30 just a few years ago and 95,000 homes for sale today, up from like 25,000 at this time a few years ago.
Those numbers just don’t seem high to me, despite the percentage increase. I offer simple advice to friends not personally on the hook for their speculation…walk. Now. It is the calm before the storm, the storm of TIME.
It is definitely harder than selling a stock at a loss but why pour good money after bad if you are not personally liable. The banks are big boys…no?
Before you yell at me, those smart enough to consult bankruptcy attorneys will get pretty much the same advice for a $2,500 retainer. Don’t shoot the messenger. I am seeing the foreclosure list from local banks and it is FILLED with names of developers I recognize. People I see at basketball games on weekend.
The one thing you WON’T see is speculation like this again in our lifetimes (at least in Phoenix real estate). The city is booming and the combination of sun and air conditioning puts us in a long term everlasting bull market, but the cycle is a powerful thing. EVERYBODY, including me, has problems in their real estate portfolios. Even if you are short, you lose. Somehow and somewhere it affects us all. You just don’t get everybody back on the bike again after a reality shock like we are getting.
Fear and Greed creates momentum both ways.
Howard,
You ever looked into the Housing futures contract at the CME? Think they have a place in a real estate portfolio?
Howard
Am I correct in gleaning from your post that you feel this downturn in RE is going to get MUCH worse than it is now ? And if so, how would you quantify it in percentage terms as it relates to house prices – another 20% – 30% drop from current sales (not list) prices ?
Regarding foreclosures, since it’s very costly and time consuming for banks to go through the process, why don’t they offer to not only lock in ARMs to fixed rates, but also have the property in question reappraised at current 2008 valuations and base the payments on the reduced price ?
In essence, the banks would be taking the loss up front but in turn avoid going through the lengthy and costly foreclosure, thus saving them money. I think many original buyers could and would be able to make the mortgage payments if the property was marked to market.
What is frustrating to many RE investors is that if you call the bank to tell them that you’re not going to be able to meet the payment schedule and want to work something out, their first response is to say that there is no negotiation possible, and that you need to pay in full and on time, or else.
This is like sticking your head in the sand and hoping the problem goes away – it’s not going to work and it just pisses off the borrower.
Desperate times call for desperate measures, and this is a time when banks need to be much more proactive, IMO.
I am so happy I never got caught in the real estate trap. I just wish the govt. would quit bailing these people out. they are spending my tax money keeping people in houses that they have no right being in. I have no simpathy for them at all and hope all of them get foreclosed on. Remember, if you will, I called this housing bubble long ago.
But, hey, that is me.
Any thoughts on EPIQ Systems (EPIQ) as a play on bankruptcy? Stock chart looks terrible, but they seem to be in all the right businesses (leaders in personal and corporate bankruptcy administration). Think the stock is off as the market realizes near-term Street estimates are too high but I figure once 4Q is reported the market will get it right. Any thoughts?