March 14, 2007

Study of luxury home buyers – California focus

This San Diego article discusses buyers of luxury homes and says 96 percent of multimillion-dollar home buyers are self-made millionaires with new money. Luxury home buyers typically put a 20 percent to 30 percent down payment on a million-dollar-plus home, and 25 percent are putting down 30 percent to 50 percent, according to the study. ” To put it in perspective, some of these buyers are putting down between $400,000 and $600,000 cash on a $2 million property,” said Hoffman. ” Clearly these home buyers have worked hard to earn their money and are willing to spend it to live well.” He said home buyers are putting more of their…

March 14, 2007

Summary of sub-prime lending situation

This is from thestreet.com last Saturday but it’s a good quick summary of the sub-prime lending situation from a stock investors point of view. The banks that financed the mortgage companies are now forcing the mortgage companies to buy back some of these bad loans and cutting off further credit for new lending. Three subprime lenders, including Mortgage Lenders Network USA, already are in Chapter 11 bankruptcy for reorganization. The second-largest subprime lender, New Century Financial (NEW – Cramer’s Take – Stockpickr – Rating), plunged 75.6% for the five trading days ending March 8, as it was forced to buy back loans it had previously sold. The company’s lines of…

March 11, 2007

Sub-prime disaster scenarios

This is a great article on the U.S. sub-prime loan sector although it focuses on total nuclear destruction scenarios. Read it. Mortgages requiring little or no documentation became known colloquially as ” liar loans.” An April 2006 report by the Mortgage Asset Research Institute, a consulting concern in Reston, Va., analyzed 100 loans in which the borrowers merely stated their incomes, and then looked at documents those borrowers had filed with the I.R.S. The resulting differences were significant: in 90 percent of loans, borrowers overstated their incomes 5 percent or more. But in almost 60 percent of cases, borrowers inflated their incomes by more than half. I expect to see…

March 10, 2007

Coachella Valley, California commericial vacancy rates

Okay, I know this is a bit far afield but this is the first really negative article on commercial real estate I’ve seen in a while. And, yes, I know it’s only Coachella Valley. In Rancho Mirage, for instance, the office vacancy rate is hovering around the 30 percent mark, and there’s another 240,000 square feet of space in the pipeline. That’s in addition to 157,000 square feet of space currently available for lease in the city, he said. In Cathedral City, the office vacancy rate is at 28 percent, and it’s about 15 percent in Palm Springs. Investors who were previously buying office properties at $275 or $300 per…

March 10, 2007

Case for Buying a House Now Before the Price Goes Up in Washington D.C.

It was written about the metro Washington D.C. real estate market but this article sure sounds like it’s describing the metro Phoenix real estate market. The ” super hot” housing market in the Washington area began to normalize in mid-2005. Housing supply increased rapidly as investors dumped their units onto the market in an effort to capture the value gained in the preceding years. Simultaneously, demand conditions softened temporarily during the second half of 2005 in response to higher energy costs, interest rate fears and media-fueled concerns over the housing market’s gradual slowdown. This normalization process continued in 2006 and was accelerated by further energy price increases during the year’s…