Boomer’s Blog

Bloomberg had some interesting news about real estate investors earlier this month. “As the U.S. housing recession enters its fourth year, there’s no sign of a recovery because speculators account for most of the rise in sales.”

What is Recovery?

This got me thinking: How do they define recovery? In terms of the housing market, how will recovery ultimately be measured? Price stabilization? Fewer foreclosures?  More accessible home loans? More reasonable terms? Housing Inventories that don’t match the number burgers served by McDonalds?

Though some of us may look great in tights and a cape — members of or proud and independent profession are ill-equipped to go back in time and undo the havoc that has been unleashed on or economy by unbridled Wall Street greed and Main Street folly, but at least we’re doing or part to clean up the mess.

According to a National Association of Realtors (NAR) report released at the end of 2008, there were 4.2 million homes on the market in November, falling from a record peak of 4.6 million in July. What does Bloomberg call that? A death rattle?

The REI Light at the End of the Tunnel

Most signs of recovery seem to relate back to confidence in the market. If real estate investors are out there in the trenches, securing financing and taking chances on houses that the mainstream has written off as blight, aren’t we leaders on the road to recovery?

According to the FDIC, half of all U.S. purchases in November were foreclosures, and at the end of Q3, banks owned a record $11.5 billion of repossessed homes.  What do these data tell us?

Can Our Efforts Turn the Tide?

While much of the nation is sitting on the couch, watching the news and wondering why their credit cards suddenly stopped working, and lenders continue panhandling  Congress for their next financial bottle of Night Train, we’re out there in droves,sweating real bullets, replacing miles of copper wire that’s been gutted from abandoned (bank-owned) properties, finding homes for abandoned pets, painting, landscaping and committing other wanton acts of rehabbiness.

These efforts aren’t just entrepreneurial wizardry, they’re American in spirit. And it’s going to take a lot more of where that came from in every every economic sector to get this train back on the tracks.

If We Can’t Spur Recovery, How Can We Trigger the Next Crash?!

While the media may be slightly more reluctant than banks to give credit where it is due heading into 2009 with a fresh, new federal administration, this Bloomberg article does raise an interesting point about our mighty force in the rapidly evolving housing market.

Robert Shiller, father of the popular Case-Shiller real estate price index and current Yale University professor told Bloomberg: “You don’t have [the market] in strong hands, you have flippers. These speculators are preventing the market from crashing now, and when they get out, it could fall again.”

Is it just me, or is it ironic that the same article that prematurely credits us for the next crash gives us none when it comes to setting the recovery wheels in motion? Read the article for yourself and let me know what you think.

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Stay tuned for tips on using Google for free and effective online lead generation, a step-by-step guide for finding the best probate real estate deals in your market … and how A&E TV network’s “Flip this House” star Than Merrill just added REI Spy to his already illustrious resume.

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California foreclosures and the mortgage meltdown have been making international news headlines for some time. But this month, news  from the Golden State went from bad, to the Twilight Zone.

Much like the classic TV show, first made popular in the 1950s due in large part to host Rod Serling’s melodramatic gravitas, California’s housing market begs for a prelude to prepare readers for the truly bizarre. As Serling said: “There is a fifth dimension beyond that which is known to man,” He might as well been introducing late-breaking developments in California’s foreclosure crisis.

Here are the five most most startling, weird and ugly foreclosure stories to come out of California so far this month.

1. California REO Foreclosures Selling like Ipods
   This month, the LA Times reported that in April, California home auctions sold nearly 23,000 foreclosure properties at courthouses throughout the state. That’s is a 44 percent jump from the number of REO auctions reported for the state in March. That’s 1,000 homes sold at auction each business day for an entire month.
2. IRS Tax Delinquency, Lies and the Lawmaker
   Although she denied it earlier this week in a written statement, public records show that California Congresswoman Laura Richardson’s Sacramento house was sold via foreclosure auction on May 7. When she bought the 1,600 square-foot home in 2007, she paid more than $535,000. By the time it sold at auction, she owed $600,000 in unpaid loans and fees, including nearly $9,000 in property taxes, reports Capitol Weekly.
3. Countrywide Exec’s Email Debacle
   When an e-mail sent by a distressed homeowner inadvertently landed in his in box, Countrywide Financial Chairman Angelo Mozilo mistook the “reply” button for the “forward” button and sent his caustic response directly to the sender. The LA Times reports that not only was he unsympathetic in his response, he characterized the online foreclosure counseling service that encouraged the homeowner to contact his lender as “unbelievable” and “disgusting.” Mozilo has been under fire for cashing out while Countrywide, and the rest of the mortgage industry was tanking. In 2006, Mozilo was paid nearly $50 million in compensation; between 2006 and 2007, he cashed in stock options then valued at $140 million.
4. Never Neverland Again?
   Mid-month, entertainer Michael Jackson averted the scheduled foreclosure sale of his 2,700 acre Encino Neverland Ranch when his $23.5 million loan was purchased by real estate investment giant Colony Capital, according to Reuters.com.
5. REO Lender Takes the Bat to Canseco’s Portfolio
   At the beginning of this month, news got out that baseball great Jose Canseco let his 7,300 square-foot Encino home slide into foreclosure. He bought it in 2005 for $2.8 million, and when foreclosure struck, the property already had an IRS lien from a judgement levied against Canseco for starting a fight that leveled a Miami night club several years ago. This week, the Chicago Tribune reported that Canseco, who blames his two divorces for his financial woes, intends to generate wealth in his new career as a celebrity boxer.

Bloomberg.com: A Slice of Manhattan for a String of Beads?
Analysts say that, with the Fed-brokered purchase of Bear Stearns for about $240 million, JP Morgan stands to gain the firm’s six-year-old, 45-story office building, which currently is valued at $1.5 billion, or more than $1,200 a square foot. According to a JP Morgan spokesperson, the purchase also is prompting JP Morgan to reconsider its plans to build a $2 billion, 40-story skyscraper at the Ground Zero re-development site. Bear Stearns stands across the street from JP Morgan’s midtown Manhattan offices and offers underground access to Grand Central Terminal, where nearly 1,000,000 commuters travel daily

Reuters: Residential Rentals Soar from Grounded Markets
As the market for offices, retail space and lodging falters, and the foreclosure rate rises among homeowners, a Pricewaterhouse Coopers survey finds that demand for rental apartments is surging ahead, as a growing number of people suddenly find themselves competing for rental units.

Boston Globe: Tsunami Hits Wall Street
The Fed is scrambling to avert a total global financial crisis, but the turmoil on Wall Street already is hitting consumers, businesses and homeowners. The Standard & Poor’s 500 index is down 13.1 percent so far in 2008, and the dollar has plummeted against foreign currencies.

MarketWatch: Major Rate Cut Ahead
The Federal Reserve is expected to orchestrate a rare cut of one percentage point in interest rates before the policy-setting Federal Open Market Committee convenes amid economic turmoil on Wall Street.

Fortune: Mortgage Crisis Intensifies
A crisis that began in subprime lending is likely to continue its domino-effect, leveling markets — and the economy — until 2010, New York Times columnist and economist Paul Krugman predicts. This is likely to result in an average property value drop of 25 percent for homeowners, he says in this interview with Fortune’s Jia Lynn Yang about the economy, home prices, and the future.

MarketWatch: U.S. Home Builders’ Confidence Remains Low
The National Association of Home Builders and Wells Fargo housing market index remained at 20 in March, close to December’s all-time low of 18. Analysts say that the index shows that 20 percent of home builders have a positive outlook and that perception has held steady for nearly a year.

CNNMoney.com: Fed Strives to Neutralize Mortgage Turmoil
The Fed reports to consumer advocates that it is working to curb unfair lending practices to protect adjustable rate mortgage (ARM) holders by moving to ban lenders from issuing loans that borrowers cannot repay.

Studies: Lenders Remain Uncompromising on Mortgage Rates
Most homeowners who have trouble paying their mortgages remain unable to convince lenders to modify their loans, according to the California Reinvestment Coalition. The organization has been tracking homeowners who seek help with their mortgage problems woes, culminating in two reports: “The Chasm between Words and Deeds” and an updated version of the report titled “The Growing Chasm Between News and Deeds.” Both documents report on nonprofit home loan counseling agencies in California who are working to help families keep their homes. The latest word is that 72 percent of these agencies report that foreclosure is a very common outcome for people who seek their help, up from 57 percent in the first study.

Associated Press: Frustrated Homeowner Sells Creatively
A Colorado woman whose home has failed to sell for three consecutive Summers has decided to award her home to the winner of her essay challenge. So far, she’s made $5,000 in entry fee levies, with applicants all vying for her four-bedroom home valued at more than $169,000.