Re: Forclosure Rates Up Nationwide - Posted by Daphne Lowe
Posted by Daphne Lowe on June 14, 2006 at 13:40:18:
Foreclosures may rise, but I don’t think it will lead to widespread retail price corrections in SFR, with the possible exception of some hysterically high appreciation places (like coastal CA) or places with rampant investor speculation (like condos in Miami). But an increase in the supply of foreclosures combined with tightened lending standards could result in a large reductions in wholesale prices. That is what I think will happen. Auctions will return to being a place where experienced investors with expertise and capital can buy properties at profitable margins. Instead of calling a realtor, REO departments will return to catering to those investors who can solve their problems.
The bursting of the credit bubble will bring about the beginning of a new boom for MHPs. The pool of quality residents has shrunk as they were siphoned off into SFR purchases. When underwriting standards increase (and the insane loan products that put people into homes they can’t afford goes away) it will be harder for people to qualify for mortgages and affordability will decrease (also helped by increased interest rates), so MHPs will attract a larger and better clientele.
When the money supply tightens, those who have cash (or access to it) will dictate the rules. I am preparing for this by increasing my cash flow, continuing to focus on gaining expertise in my niche and by developing relationships with bankers and passive investors. Everyone wants to place their bets on the jockey who knows how to ride their horse to victory. When the crunch comes, I’ll have a proven track record and have gained the confidence of folks with capital.
When real estate isn’t the fad du jour and it returns to those who are in it because they love the game, it will be a blast. And that’s saying something because its a lot fun even now.