CR GREATEST HITS©
1. For 2010 and beyond the banks will be controlling the real estate market. (NEWS proof) In fact, the banks will ruin the market for the home builders and you will see the home builder stocks drop significantly. In fact, you may see many go out of business as the banks will be selling homes for prices less than the cost of construction.
2. Banks will also make it very difficult for sellers to sell their properties. With the market flooded with bank-owned inventory they are willing to dispose of at fire sale prices.
3.) This will push the people who are barely making it now over the edge and there will be another wave of foreclosures sending more inventory back to the banks. With all this inventory coming from new foreclosures, the banks will have enough inventory to sell through 2013 and into 2014.
4.) The part of the country that will do better with real estate is the East Coast – primarily around Washington DC, Maryland, and Virginia because of the growth in government.
5.) The worst areas for our real estate outlook will be California, Arizona, Florida and Nevada.
6.) People will have many tough decisions to make regarding what they thought was the best investment they ever made. People will decide to walk away if they are upside down.
7.) People need to apply this information to their life at this time because they have never seen times like this in the past. Everybody’s idea about real estate investing needs to change.
ANSWER: The real estate market has not bottomed out as many predicted over the last 2 years. Some forecasts in 2009 said that the housing prices would bottom out by 2010, but they haven’t. We see prices continuing to decline, more foreclosed inventory bulging the system, and many more legal challenges and lawsuits coming for the lenders. Prices will not bottom anytime soon; much less will there be a recovery. We predict real estate prices to continue falling through 2013. The amount of shadow inventory sitting on the horizon waiting to be foreclosed on and the number of people deciding to just walk away when they are upside down on their mortgage is enormous. These properties could increase the number of houses owned by lenders to between 5,000,000 to 6,000,000. In the end there will be over 10,000,000 homes in foreclosure, in default, or owned by banks. Sales will continue to slow down in 2011 for homes as people with bad credit won’t be buying. You may see many people never buying a home again in their lifetimes. Tougher lending requirements will also screen out millions of people who want to buy a home and can’t due to their credit score. Also, loan modification programs will slow down as the lenders see more than 50% of the people getting a modification defaulting again within a year. Re-fi’s will also slow down as people who wanted one find out they have much less equity in their home than they thought and their home’s appraised value is a lot less than they thought. They will come to the realization that they are way upside down and many will decide to just walk away. Others will be prohibited from buying because they will have lost their jobs as unemployment continues to grow. When the springtime comes, around April, you will see a tsunami of foreclosures hit that the banks are just now preparing. The lenders have held off with foreclosures during the holidays and needed a break to get away from all the negative publicity about fraud and robo-signers or missing or made up documents. During the first half of 2011, you will see millions of new foreclosures and walk-aways. There will be no recovery in the real estate market until prices stop falling.
QUESTION: In this long drawn out real estate decline that you said will continue through 2013 – who will be the last to get hurt by this?
ANSWER: The people who own their homes will be staying in them because they can’t sell nor compete with the banks. They are stuck there paying higher real estate taxes and higher utility costs. The people who own their homes will be bringing in people to rent part of it, maybe even family members who lost their jobs and homes. The other group that has continued paying their mortgage no matter what will find that they paid for about 2 years too long. They should have bailed out as soon as they went upside-down on their mortgage because now they’ve lost their equity plus 2 years of payments while the value of their home was declining. The smarter people, knowing that they could never pay off a declining asset faster than it’s falling in price, will walk away by the hundreds-of-thousands in 2011.
QUESTION: You said that the number of homes that banks own will increase to between 5,000,000 and 6,000 000. Right now, banks claim to own 600,000 – 700,000 homes. So by December 2011 they could own about 6 million. What will this do to housing prices by the end of 2011?
ANSWER: Banks will not be able to stop the huge numbers of foreclosures as people default, lose their jobs, and as more people walk away every month. The only thing that will halt foreclosures is a national moratorium. The housing industry will complain so loudly to Washington when home prices drop another 15 -20% that the government may impose a moratorium on further foreclosures.
QUESTION: What’s going to happen to people when their credit is ruined?
ANSWER: Many who walked away will just pay rent in advance with cash, but those who have ruined credit may have trouble renting anywhere unless the landlord is willing to take a chance.
QUESTION: What will the property tax scenario look like over the next 3 years?
ANSWER: Since municipalities are not getting much revenue from new building permits, they will continue trying to keep valuation on properties high in order to collect higher property taxes. This will become a major issue over the next 5 years as people will contest every tax bill they get. If cities can get it though, they will tie emergency tax measures to the community’s ability to survive and keep property taxes high this way. As values have dropped, and taxes kept dropping because of lowered values, this just exacerbated the problems with municipal budgets. Property taxes will be different across the country, but some areas that aren’t hit as bad with foreclosures will try to get property taxes up 10-15%.
QUESTION: For the people who have lost so much money in real estate what can they do to recover?
ANSWER: Many who play the stock market should short the home builders stocks during the 1st quarter of 2011 and also short banks as the foreclosure fraud mess continues. Buying some precious metals will also help you hedge – and just stopping your payments if you’re upside-down will save you money.
QUESTION: Recap the most important points in your message today?
ANSWER: Our message is that the real estate market is getting set up to take another big leg down and you need to be prepared.
QUESTION: Why is this information timely?
ANSWER: This information is timely because you hear every day how the economy is recovering and that the housing market is stabilizing. You hear nothing but doctored, false reports.
QUESTION: Tell our readership the best way to apply this information to their life right now?
ANSWER: Start by hedging against your declining real estate. Buy investments that go up when times get bad. You could make all your real estate losses back if you make the right investments now.
COMMENTARY: Most people are bewildered about if and when they should stop paying on their real estate. Next, people are wondering what they can do to recover from their losses. As real estate takes its next big leg down it’s time to take action. Take action before it’s too late and reinvest whatever you have left correctly and you’ll no longer be feeling emotions of defeat. It may take a few years to see your new investments pay off and when they do, it will be a sad time for most everyone else who was waiting for everything to come “back to normal.”