Anyboby smell blood yet. - Posted by George Fescos

Posted by George on April 13, 2000 at 15:48:49:

I was just being provocative, but I think that the last 2000 points of the nasdaq were fueled by margin borrowing and mortgage borrowing. Also, a number of Mortgages were given based on the applicants stock/option holdings. We will find out who was left standing when the music stops.

Anyboby smell blood yet. - Posted by George Fescos

Posted by George Fescos on April 12, 2000 at 19:42:20:

With the collapse in tech stocks, most of which were bought with borrowed money, it seems that alot of people will have trouble maintaining their lifestyles. Some people need to down size their property ownership.

Has anyone seen anything unusual, at foreclosure auctions for example.

WAY too soon for that to happen - Posted by Mark (SDCA)

Posted by Mark (SDCA) on April 13, 2000 at 11:26:17:

NODs wouldn’t go out for probably another 3 months.

There’s always some blood in the water, just make sure it isn’t yours - Posted by Eric C

Posted by Eric C on April 13, 2000 at 04:12:46:

Hi George -

I don’t think that the tech stocks have collapsed – not yet. Personally, I’m uncomfortable with some of the multiples (and prices) I see in the market – but then I’m not playing the market. I only have to “win” in my area of the market and that’s much easier to do.

In the next five years or so, I think you’ll see the end of the “efficient market hypothesis” and other such nonsense. The market may be in the PROCESS of becoming efficient by responding almost immediately to all available information, but the gap between “almost” and “immediately” is all I need.

The RE market is no different. It’s just moves at a much slower pace and technically speaking, is considerably less efficient. Let me spell that for you “P-R-O-F-I-T”.

Banks are now lending (in my area) to anyone who can meet any of two of three current criteria: you must have a pulse, walk upright, and possess the ability to sign the proper paperwork. If you can do either of the first two, but are unable to perform the last task, they will assign someone to help you with this chore. X marks the spot, you know. Drooling, is optional and can sometimes get you extra bonus points.

I’ve always made more money in down times than in any of the booms. Unfinished construction projects around your town are often an early warning sign. A small amount of blood here?

Clinton just signed a bill making it a crime for lenders and conduits (Fannie Mae and Farmer Mac) to purchase (or fund) “predatory loans” and calling for a higher level of scrutiny for sub-prime borrowers. This is aimed squarely at a large growth (and profit) area for housing loans. Could that be another drop of blood?

On the other hand, there’s talk of reducing or eliminating the requirement that banks make local loans (Community Reinvestment Act) at all. Oops, that blood stain is definitely getting larger.

Does this make sense? Of course, not. Did I mention that last year we had the highest number of bank failures since the 80’s bank crisis? Where is that band-aid when you need it?

Some areas of the economy and the real estate market are experiencing great times, but there are others around which the sharks already circle. It has always been so.

Worried? Not at all. Opportunities are everywhere. Change always favors those who have the courage to embrace it.

So, although there may indeed be a large group of buzzards circling within view, I can rest easy knowing they are not circling me.

Anybody for shark’s fin soup?


Eric C

Re: Anyboby smell blood yet. - Posted by Jim V

Posted by Jim V on April 12, 2000 at 22:45:40:

If any result does occur in the foreclosure arena, it will still be some months(or more) off. Good forward thinking, I’d personally look for a softening in many of the “hot” real estate markets if there is a longer-term stock meltdown.

Jim V

Re: Anyboby smell blood yet. - Posted by JD

Posted by JD on April 12, 2000 at 22:44:31:

My best guess would be that by and large (I can think of one exception) the people that have lost a lot of money in high tech stocks during the past two weeks, had a lot of money to burn and are not going to be facing foreclosure anytime soon. I think the current market fears may result in money flowing into hard money loans/investments (similar to what Ben says he has observed), and hence reduced hard money costs.

Increased competition at tax sales - Posted by Ben (NJ)

Posted by Ben (NJ) on April 12, 2000 at 21:52:51:

suddenly every Tom, Dick and Harry wants to buy tax liens. I guess a low risk 18% interest rate seems good when your stock portfolio is plummeting.