NJ Foreclosure Data
I’m still alive but been extremely busy with work and some old REI acquaintances. The rumor is that my REI friends have overseas investors interested in acquiring NJ property and they want me to be a part of this. So I’ve been busy poring over the latest foreclosure data and I’m utterly shocked by the damage that’s out there.
Within a six town radius of where I live (secret location), there are over 600 new default filings in the last 3 months alone. Stalwart places like Bergen County are mushrooming to levels I’ve never seen before when I was an active foreclosure investor. Back in the day I never went near Bergen County because the filings were so pitiful and the property would be snapped up in seconds by the retail market. Now its a different story, from 320 filings to over 2300 in four short years.
Part of me wants to organize the investors and start buying but the other part of my is scared shitless right now because its really bad and could get worse…
August 12th, 2008 at 4:49 pm
Tom - Ever thought about putting together an AI model for housing prices using Rapid Miner & data from Radar Logic? http://www.radarlogic.com/productsservices_rldp.html
I used that data to get an idea of what the Detroit, MI Metro area is doing. (I swear I live in a nice suburb and am not affiliated with the Detroit mayor or paying for his legal bills haha).
After messing around with some regression lines in excel, the chart looked like a clear downtrend, almost parabolic, and ironically enough, the regression line resembled a frown.
Also, I have some idea on how the banks try & sell the homes that they foreclosed on (atleast in Michigan) and know that there seems to be something like a stair-stepping method for dropping the prices until the property sells. i.e. They foreclose on a house for $250k & try and sell it for $250k for x months, if unsuccessful, they try at some percentage less than that, which is determined by some statistical model and then continue this process until it is sold. Because of this, I think there is a backlog of properties that the price will be reduced on because of these models, which will then cause the market to drop further. Keep in mind that my local area got hit really hard with foreclosures.
Just this past weekend I went house-shopping in Birmingham, MI and because of the state of the economy around here I am going to lease a house because its quite a bit cheaper than buying the same thing, especially when you factor in the negative appreciation. All of the houses I looked at, except one, were vacant. It may be worth your while to call up a realtor to see what % of houses that they show are vacant. Around here its 50%.
E-mail me if you want some more specifics.
Regards,
Eric
August 13th, 2008 at 5:30 am
Eric,
You can write an AI model for sure but I did one in the past using foreclosure data to identify the likely “market hot spots” in the future.
The banks, much like the homeowners, are in a state of denial right now. They send out their appraisers and they make up ridiculous valuations (much like during the bubble) and the property sits there.
Some time in the future, like what you said, the market is going to be flooded when all the banks realize they have to start liquidating. Watch out for the Tsunami then!
August 13th, 2008 at 5:08 pm
There is only two types of property if I had the money that I would buy: good rental property and well located business property. I think that rental property in the current enviroment nationally is really cheap. If property pops up at a value in good rental areas now is the time to snatch it up cheap and then earn modest returns on rent now, and great returns on rent in the future. I like business properties for the very same reason.
Now if I could only find a well priced laundromat in the city…..
August 13th, 2008 at 6:32 pm
Tom writes: “Part of me wants to organize the investors and start buying but the other part of my is scared shitless right now because its really bad and could get worse…”
If you weren’t scared shitless then there would probably be no opportunity. I would use your fear as a good sign that the opportunity is worth looking into
August 14th, 2008 at 2:01 am
well, if I was in your shoes I would organize the investors. Will it get worse? Maybe, then again maybe not.
The key here is if what you want to get will be better five years down the road.
I myself am looking at properties as well. We bought recently (for a good price), and we are looking on the French Riveria and Laurentians in Quebec Canada. Have we found anything? Yes, but we are not bidding because we have the patience to wait them out.
What we have now is a buyers market. You start putting everything together, budgeting and start talking and looking. And if anything crosses your path you say sure I will buy it. Calculate a fair value and knock off 20%. The worst they can do is reject it…
August 21st, 2008 at 5:53 am
@MJ: we are focusing on rentals right now but the price has to be right!
@Caprica: Yes the fact that I’m scared shittless probably means that its a good time to buy BUT the banks are still being stubborn. They send out their appraisers who tell them the house is worth some inflated price and then they give it to Realtors to sell. The PANIC is not there yet, close, but not there yet.
@CG: my first introductory meeting with investors didn’t go so well so I have to find some new ones. I’m the master of lowballing RE and getting a price I want, usually.