Monday, September 24, 2007

How are you guys finding me?

Seriously, I was just trying to self-Google.
I can just barely find the blog on Google.

When I try to find the blog on Yahoo, it suggests I cure my herpes.

And what's strange is people ARE finding me through the blog -- I got two emails on it over the weekend.

I'm just not ready to turn the reigns over to Little Tommy C, so I'll just have to live with the current results.

I'm not obessed with readership, that's for sure, but I am curious to see how the search engines are going to deal with this blog.

Any of you that found my blog because of the Pirate of Selby Avenue, I take no responsibility for any of that mess.

Tuesday, September 18, 2007

South Minneapolis is a bargain

I've got some buyers that have been taking me all over South Minneapolis.

I have to say, there are a lot of really freaking good bargains there. We are talking houses with views of Nokomis, houses with $40k kitchens, houses with the most incredible gardens. All for under $300k, and many, many under $270k.

It's not often I see houses that I love, but on the Realtor Tour today, I did see a great Summit Avenue mansion that has my name on it. The listing agent, a friend of mine, actually said, "Amy, you look terrific at the top of that staircase." I think if I sell 20 times as many houses next year as I did this year, I can afford it. And, if I sell 20 times as many houses next year as I did this year, I will also be dead from exhaustion. A girl can dream.

The 80/20 gets 86'ed

Word on the street is that Wells Fargo is no longer offering the 80/20 loans that many first time buyers use.
(For those of you that don't know what an 80/20 is: It is a first mortgage that pays for 80% of the house and a second mortgage that pays for the other 20% of the hosue. It is used to avoid paying the pesky mortgage insurance.)

That's not such good news. Getting a mortgage is getting harder. Other lenders are still offering 80/20s, so that's still a possibility, but options are drying up.

I think one of the reasons Wells Fargo stopped offering this is that it is actually a pretty risky kind of loan. They are financing the house 100%.
If the buyer goes into foreclosure, the first mortgage gets paid off first and the second mortgage gets extinguished. So all banks that do second mortgages take a risk-- the loan is tied to the property, but if the first mortgage goes bad, they take the house and the second mortgage is left with nothing.

How did we get here? Well, they started doing 80/20s in the past 5-10 years. They started doing them because who in the heck can save up $40,000 as a downpayment on a $200,000 house? No one.

Wednesday, September 5, 2007

It just gets worse

After all of the reading and thinking I have been doing on this real estate market over the past few months, I really believe the strong buyers' market (=crappy sellers' market) will be with us for the next few years, at least 2 years.
Our bigboss manager Barb came by today and was in a meeting with Warren Buffet, the one the ultimately owns Edina Realty. I am proud to say Warren is of the same mind I am - we're going to be in this mud for at least 2 more years.

Today had another good article. Some excerpts:
The index hit its lowest level since September 2001, and pending sales were 16.1% below their year-earlier level. The July data reflect trends before August's mortgage meltdown.

House prices are down 3.2% in the past year, the biggest decline ever recorded in the 20-year history of the Case-Shiller home price index. See full story. A year ago, home prices were rising at a 7.5% pace nationally. At the Federal Reserve meeting in Jackson Hole, Wyo., Robert Shiller, chief economist at MacroMarkets LLC, said 50% declines in home prices in some regions were entirely possible.

See entire article here:

I mean, I know that prices are dropping -- I can see that happen --but 50%!?!
Fifty-freakin' percent???

I do know that some areas are really hard hit by foreclosures -- see the Star Tribune's foreclosure map -- and in those areas, real, normal people sellers need to compete with the "everything must go" mentality of banks holding real estate. But will those areas drop 50%?!?!

All I can tell you is if you've got the change in your pocket, and the guts to do some real estate investing, step up to the plate buddy, because you're up to the plate and the pitcher isn't so hot. There are lots of ridiculously well-priced properties to be had, all conditions, all areas. And rental prices are coming up. All of the foreclosed subprime borrowers need to live somewhere, and it's gonna be in a rental.

So, I really think we have about 2 more years of a rocky ride. I know I am busy, and I am going to be hanging in there. But I think we will see a lot of realtors just getting out of the business.

Tuesday, September 4, 2007


Today, Chris Farrel of Minnesota Public Radio was talking "recession" because housing is tough right now and a drag on the larger economy.

He also mentioned "bail-out" --- a bail out of the housing problem, and the bail out would also affect the larger ecomony more.

I am sure you can hear this segment by searching MPR, but I was listening to this as I was half-asleep this morning.

Interesting times!

Foreclosure bail-out

You may recall a few posts ago when I wrote that the government and the banks need to get together to solve this foreclosure problem.

The government listened. I love it when the government listens to me!

The government is working out a deal that will help subprime lenders refinance. These are homeowners that have mortgages that are going to adjust -- the rate will rise from, say, 6% to, maybe, 8% or 10% and really crank up the monthly payment.

But, of course, there is a hitch. I think the program will only be available to homeowners that are current with their payments. I must say that most people don't really realize they are in trouble until they have missed a payment or two. I don't think that a lot of people will go and search out this program before they are in trouble. Keep in mind -- these are people with bad credit and probably don't understand a lot about how the financial world works. Not to mention whenever most of us are in financial trouble we hit the denial stage first. When you're in denial, you're not looking for a bail-out program.

I read a really nice article that McClatchy put out on this topic.
The article says this program will help, at most, 21% of the subprime borrowers that will need help. The article estimates about 480,000 homeowners could be helped by the program, but 2.2 million homeowners will be affected by the subprime meltdown.

Read that again: 2.2 million homeowners affected.

Here's the article:

While I think this is a good start, I also think it is a case of good intentions by the government that won't seriously help.

I think the psychology of the homeowners affected -- people with bad credit, people that probably don't have a good understanding about how credit and loans work, people that have been burned by loans before -- these are not people that tend to be organized and proactive in their financial lives. They're not people with financial advisors, or even good family role models.

If the program excludes anyone that has missed a payment -- that's too bad. I think many homeowners will be in denial about the problems they face until they start missing payments.

I would like to see the government work directly with the lenders to refinance the mortgages. Have the lenders and the government work out a deal to OFFER the homeowners a refinance option BEFORE the mortgage adjusts. But -- I really don't think that will happen.

Now featuring: Fewer annoying banner ads

Ameriquest, one of the companies resposible for some of those super-annoying ads that try to get you to refinance, has closed down. They stopped taking mortgage applications on August 1, and the rest of the company was sold to Citigroup. Ameriquest was mostly a sub-prime (bad credit) lender, so no one is very surprised.

Viewers of the internet thank you.