Thursday, September 22, 2011

In an ABC news interview ‘Time to Buy, Sell or Walk Away’, Susie Orman said it could be decades before home values start to rise and predicted that more than half of Americans will be renters instead of homeowners. A staggering 1 in 4 homeowners are underwater, and many experts, including Orman, often recommend just walking away. http://abcnews.go.com/WN

For well over a year I have been pointing out on this blog, that to continue to pay mortgage rates from 2005-8 in the face of condo prices at NCC being 50% of what you paid for them was foolish.

Orman continued: “People who are 20 percent or more underwater should ask the bank for a short sale, or selling the house for market value, even if it is less than what is owed . . . If the bank won't work with you stop making payments and save that money until the bank forecloses. . . Of course, you should walk away if the bank isn't willing to help you”

==================== From 6/19/11   ===================

Prices here will never get back to the 2006-7 level

I look at prices here weekly and see some unrealistic expectations in how owners price their condos. One 2/2 is on the market for $150,000, you can get a 4/3 for $99,700 (#405 formerly belonging to Kennedy), 50k less than that and for a much larger unit, so why bother listing at a price no one would even consider?

I paid $165,900 for my unit 5/07, paid it in cash, no mortgage. The condo upstairs of me was one of the Waterstones 4 foreclosures and it sold 9/9/10 for $84,000, or 50.6% of what I paid. All it needed was a paint job and the carpet cleaned. The other 3 Waterstone units went higher, but all in the 80-90k range.

Realistically my unit is worth 50% of what I paid for it and yours is also! If you paid cash you can probably sell immediately (3-4 months) for half price, if you have a mortgage you can just live in it, 'try' for a short sale or just mail in the keys and walk away from it.  The condo above went for 40%  of the original sale price and the market will continue to decline into 2012.

Some owners rent them out or try to. They are in competition with the Developers 56 unsold units which are priced as low income housing and will rent first. Even if you do rent it out you won't make enough rental income to equal your mortgage payments each month. Every month you will be in the hole. This is called deficit financing and when the government does it, they just print more money. When you do it you will find it to be a short term solution that will go on until the market recovers or you run out of savings to make up the difference (guess which is going to happen first).

Keep in mind that there are many more foreclosures to come at NCC and your pricing will always be in competition with these. There is no light at the end of this tunnel.  The 'old' owners who purchased at list price, or close to it, will be replaced by a new crop of owners who come in at the much lower foreclosure prices.

Nautilus Cove isn't going away, it is just going to be owned by a new crop of people who paid a lot less for their condos than we did.