Why doesn't 2+2 = 4? It doesn't. It's all screwed up.

It may be referred to as called pent-up demand and it says alot about what people are thinking. You cannot argue with historic interest rates and the fact that Real Estate cycles go up and  the current one is now down...People clearly are sensing that NOW IS THE TIME

And so it begins again...... We have not had that in this area and hopefully we will get some stability time before the crazy time settles in.

Dennis:

This is scary.  I don't want to go through another market like the one we had in 2007.  Sellers should realize now is the time to sell their homes.

I don't know what is so scary about the market conditions, they change, we change. Opportunity is there for all to find.

Dennis - Unfortunately, in this biz, things continue to change, sometimes almost daily, it seems.  We have to learn to adapt or we'll get buried!

I have heard of this before but I guess you are confirming this. Can't make sense for paying more than the home is worth especially in this market.  Buy based on a future market?  That doesn't fly, possibly it's just the bidding frenzy that you are experiencing just like Ebay?

Not every foreclosure is a good deal as we all see in the MLS every day!

We represent quite a few investors that are each flipping 5-20 properties per quarter.  For the last six months, their story has been exactly your point - sourcing product is becoming the biggest challenge.  There are too many people that don't know what they're doing lining up with cash to "get in the game."  

I get calls from "investors" at least twice a month who say "I want to buy foreclosed homes."  When you start asking them about their investment experience, expectation of returns, source of funds, partnerships, relationships with contractors, brokers, attorneys, expediters, etc., and market knowledge you realize they don't belong in the game.  They're the ones driving up prices because they don't have a clue how to price out the renovations, estimate the carrying and transaction costs, get the work done efficiently, and make a reasonable expectation of their profit.

In my experience, these investors' properties end up sitting on the market.  I got a call from one last week that gave me his lock box codes and asked me to see two resi properties and a large development site.  One of the homes had been in a fire, should currently be condemened by the DOB because of immenent threats to health and safety, and the neighbors came to talk to me to say they put a padlock on all the gates because homeless people were sleeping inside.  That evening I got a call from the investor who asked "does anyone in your office want to host an open house?"  That's the state of the flipper market.   

Would somebody be so kind as to inform Case and Shiller what we are seeing in the trenches?? I'm still seeing economists who are sure that The Sky Is Falling in real estate, and that's just not consistent with what I'm seeing in Vegas, what you're seeing in Phoenix, what many of you are seeing in California. So where are these areas that are "still overpriced"? Where are these Buyers Markets? What regions still have room to fall??

I work with a local contractor to find foreclosures in some of the cool hip transition neighborhoods.  It is tough!!!  He doesn't want to go to the courthouse steps so is trying to find something off the MLS.  Very competitive right now and several people trying to get in on the "flipping" business.  They end up paying too much and then their so so fip sits on the market because they have to price it high to make any profit.

I don't see this as scary at all Evelyn and Karen.  It is a matter of supply and demand and sellers who are not pressured to sell will hold off until they feel we are really in a recovery mode.  Uneducated buyers, be they investors or otherwise will continue to bid, which makes the sellers happy:)

It takes time to educate and re-educate buyers and sellers as market conditions change.   In my market area of the Rogue Valley in Oregon we are experincing a shortage of inventory.  But the media reports continue regarding "shadow inventory".  Agents who specialize in REO listings keep warning us of the back log that is ready to hit the market.  All of this supports the pessimistic outlook of buyers and sellers. 

The good news is if this boat load of foreclosures does hit the market there will be a line of buyers waiting and maybe the inventory will move through the market quickly and get us back to "normal", whatever that may be! 

Hi Big Daddy D ; )

I flipped property for about 9 years and found that buying homes at the So Cal courthouses was nearly impossible and not a "deal" at all. We have waaaay too much competition here, and there were a group of 4 guys that went to 4 different courthouses at once & communicated on multiple cell phones. They would always outbid everyone else, leaving very little room for profit after rehab & costs. After a while, I'm sure that they were the only ones that ever showed up because the other investors were tired of wasting their time. I can only imagine how crazy it is now at the courthouses, with such low inventory levels and multiple offers on most properties here in Orange County : O

Congratulations on the featured post & I hope you're having a great week!

Gina

Things are definitely changing and with so many hungry investors here in our city and multiple offer situations, many of these types of properties are really not a good deal anymore.

Some commenters are voicing opinions regarding what is and isn't a good deal.  If you don't think houses today are a good deal are you advising your clients not to buy?  You do have a fiduciary responsibility to them and you must advise this if it is how you feel.  A fair price is what someone is willing to pay.  Demand is high now relative to supply.  If you're an investor, you need to be ready to compete.  If one is looking for a home, getting a deal may be less important.  Things may slow down or more inventory may come on the market later, but interest rates are at all time low rates right now and they may rise.  Our job is to market properties we list as best we can and to find homes that fit their needs for people looking to buy.  We can show clients comparables, but it has to be their decision to buy. 

Personally, I bought 4 for invesetment purposes at the end of last year and then took a break.  Things are much more competitve now so we're widening our search parameters to find new deals that make sense.  We'll buy when we think it makes sense for us.  We advise others to determine their criteria and do the same.

The margins at the court house steps have been getting thinner and some have been loosing big. 

I'm glad to read about recovery in the housing market - but would hate to see prices go insane again. We don't need a re-run of the past few years.

Hi Dennis, I assume you are being facetious.  I am so glad the AZ market is doing so well.

The auction effect in action. I often used to follow up on these new level sales and there were many mistakes being met. On some there were economic factors in play and the buyers were not stupid but could have done better elsewhere. Some bid on junior liens unaware they were bidding on a home and the loan wasn't the most senior. Some were investors willing to do a deal at a level equal to earning a commission rather then sit and do nothing.

I am finding that buyers can get a much better deal on homes that are listed at a fair price by the owner.  Time after time I see moldy, run down homes selling at auction and short sale for much more than homes in better shape that are really for sale just by their owners.  It is kind of funny how much people will pay to get "a deal".