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The Stunning History Of "All Cash" Home Purchases In The US

Tyler Durden's picture




 

Yesterday's news from the NAR that in February all cash transactions accounted for 35% of all existing home purchases, up from 33% in January, not to mention that 73% of speculators paid "all cash", caught some by surprise. But what this data ignores are new home purchases, where while single-family sales have been muted as expected considering the plunge in mortgage applications, multi-family unit growth - where investors hope to play the tail end of the popping rental bubble - has been stunning, and where multi-fam permits have soared to the highest since 2008. So how does the history of "all cash" home purchases in the US look before and after the arrival of the 2008 post-Lehman "New Normal." The answer is shown in the chart below.

This should not come as a surprise to regular readers, who saw this chart, along with our analysis of it last August, as well as the correct forecast that mortgage origination is slamming shut for virtually all financial firms. For those who missed it, here it is again.

* * *

Remember when housing was the primary aspirational asset for a still existent US middle class, to be purchased with some equity down by your average 30 year-old hoping to start a family in his or her brand new home, and, as the name implies, aspire to reach the American dream? Those days are long gone. Back in those days the interest rate on the 10 Year bond mattered as it determined the prevailing marginal affordability of leveraged real estate. That is no longer the case, at least not for about 90% of Americans, because as Goldman shows, while before the great crisis only 20% of home purchases were "all cash", since then the number has soared threefold, and currently the estimated percentage of cash transactions (by count and amount) has hit a record 60%. In other words, less than half of all home purchases are debt-funded, and thus less than half of all home purchases are actually representative of what middle-class America is doing.

Goldman's take:

Exhibit 4 shows the estimated cash transactions as percent of total home sales both by transaction count and by transaction dollar amount. Relative to the pre-crisis years, percent cash transactions has risen by about 30 percentage points. This change is broadly in  line with the increases suggested by DataQuick data. The 30 percentage point increase in percent cash transactions explains almost the entire decline in the “mortgage per dollar transaction” series (with the remainder explained by small changes in average LTV ratios per mortgage). We do not have data to assess who these all-cash homebuyers are, but presumably investors who have been purchasing distressed properties and turning them into rental units have played an important role.

The WSJ has a few thoughts to add:

The surprisingly large cash-share of purchases helps to explain why home sales have jumped over the past two years despite more muted increases in broad measures of new mortgage activity, such as the MBA’s mortgage application index.

 

There’s no exact way to know who is responsible for all of these cash purchases, though they are likely to include some combination of investors, foreign buyers, and wealthy homeowners that don’t want to go through the hassle of getting a mortgage before closing on a sale. Mortgage lending standards have sharply tightened up since the housing bubble, with banks scrutinizing borrowers’ tax returns and bank statements to verify their incomes and the source of their down payment.

Our personal thoughts: just like the stock market has been levitating on zero volume and virtually no broad distribution, so the entire housing market appears to have morphed into a "flip that house" investment vehicle used by the usual suspects (wealthy foreign oligarchs abusing the NAR's anti-money laundering exemption to park their stolen funds in the US, government sponsored firms such as BlackStone using near zero cost REO-to-Rent subsidies, and other 0.01%-ers) who piggyback on cash flows deriving from alternative cheap credit-funded investments and translate their profits into real-estate investments.

It also means that if nobody used leverage (i.e., mortgages) to buy houses before, they certainly won't do it now, all the more so with interest rates soaring and purchase affordability imploding in front of everybody's eyes.

Finally, due to the very thin marginal source of bidside interest (flipper flipping to flipper and so on), it means that most of America has not participated in this mirage "recovery", and all it will take to send the buoyant housing market crashing is for the one marginal buyer to become a seller. What they will next find, is that when dealing with a bidside orderbook that has zero depth, one indeed takes the escalator down from where the lofty heights achieved courtesy of Fed-funded stairs.

* * *

What is the implication of all the above? Simple: anyone hoping that bank profitability will surge on a steepening of the yield curve due to the imputed positive impact to Net Interest Margin will be disappointed for the simple reason that Americans increasingly refuse to borrow, either due to affordability of availability of credit constraints, and thus the borrow credit cheap, lend expensive arb trade for the banks will simply not work. Incidentally we wrote this in August of last year - since then banks have fired tens, if not hundreds of thousands of mortgage originators having arrived at precisely the same conclusion.

Which also means that the only core driver of revenue, in addition to IPO and M&A fees now that bank fixed income and commodity, not to mention FX, flow trading revenues are crashing, was and remains prop trading, courtesy of the $2.7 trillion in excess reserves parked on bank trading books, which continue to be used as generously levered (think 20 times and above) initial margin with which to keep chasing risk higher.

 

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Fri, 03/21/2014 - 13:02 | 4577543 LawsofPhysics
LawsofPhysics's picture

It nice to be close to the free money spigot.

hedge accordingly.

Fri, 03/21/2014 - 13:06 | 4577566 joego1
joego1's picture

You mean the free debt spigot?

Fri, 03/21/2014 - 13:11 | 4577589 DoChenRollingBearing
DoChenRollingBearing's picture

Were I in the new house market, I would buy small and use as little debt as possible.  SAVING money is more important than keeping up with the Jones...

Fri, 03/21/2014 - 13:35 | 4577695 NoDebt
NoDebt's picture

Finally sold Mom's old house last month.  Took 8 months to get it under contract at a price that was almost $50K under my original ask.  Only all-cash "investors" showed up to make an offer.  No big-boys buying up properties by the dozens- these were individuals who just buy and rent homes.  Period.  Not a single offer (or even a sniff) from anyone who said they wanted to buy the place to live in it.  NOT ONE.

Now, this was not a high-end house.  Just a regular-guy kinda place but in a good school district with low taxes.

I predict what I call "rental ghettos" in the next few years.

Fri, 03/21/2014 - 14:08 | 4577834 MeBizarro
MeBizarro's picture

Yup.  This is going to be a notable problem in several cities including Phoenix, Atlanta, and a few other areas and where huge tracts of a select ZIP/RUCA code were acquired by a single large financial institution/owner to rent out properties. 

 

Fri, 03/21/2014 - 17:00 | 4578421 Billy Sol Estes
Billy Sol Estes's picture

It's already happening in Houston's suburbs.

I rent  a 1 story in a culdesac full of rentals, though some own. In the 2.5 years I've lived there I've had 4 different neighbors just to my left and right.

Our current right neighbor is from Idaho where he claimed they lost $400k in equity on their house in the crash so they moved down south (must have been a damn big house though because no house in our neighborhood is worth that much, might have been a stretch). He moved in in October but said he is leaving in the summer to find another house (previous renter shit the bed literally and left food and trash to rot in the Texas summer heat as the power was turned off).

He said while looking for a rental, he offered $10k down in an area nearby for a similar house, $1800 a month at their current house, which paid 4 months rent  +  deposit but they couldn't move in until 1 month. The owner turned them down flat and said he could have someone living in the house next week.

Fri, 03/21/2014 - 18:17 | 4578718 goldinpenguin
goldinpenguin's picture

Homeowners live differently than renters, it's just human nature, they have"skin in the game", it lifts (or depresses the whole neighborhood)

Single family "buy to rent" schemes are extremely labor intensive (and often confrontational). Individual landlords can make good ROI because their handy man services are "free" , Blackrock will see their ROI evaporate when they have to pay a couple hundred a pop to an endless procession of plumbers and electricians fixing stuff for single moms with a couple kids. Single family rental homes also age rapidly.

 

 

Sat, 03/22/2014 - 11:16 | 4580236 unitwar
unitwar's picture

In the Houston Suburb of Sugar Land, you can't even buy a house with a mortgage.  If you bid on a house with credit, there will be 3 other cash offers from Chinese, who havent' even seen the house in person.  No option, no inspection, cash sight unseen.  My girlfriend is Chinese and just bought another house with cash there.  She owns 4 now.  Poor dumbass American middle class people (soon to be serfs) bid on the house with a mortgage.  Never had a chance.  In China, you are only allowed to buy 2 houses so the Chinese are buying up properties with their savings.  They will rent them but don't even care if they can't rent them and they sit empty.  They see a house as a safe place to park their savings.  Unlike Americans, the Chinese don't trust the stock market.  All of their money goes into houses.  Of course when this whole thing blows out, those houses will only be worth half what they paid.  The bubble in Houston is pricing out normal middle class wage earners.  They have to move to the ghetto or 50 miles outside of town to be able to afford a house with a mortgage.  The cash buyers are all Chinese or private equity.  

Fri, 03/21/2014 - 14:53 | 4577974 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

money is free

Fri, 03/21/2014 - 15:17 | 4578116 pelican
pelican's picture

Only for those in the "in club"

Fri, 03/21/2014 - 16:45 | 4578455 IPA
IPA's picture

I think it may have been a zh article, but it was talking about the rental limit on neighborhoods before they go to shit, it was like 1/3 or something. 

Sat, 03/22/2014 - 17:38 | 4580909 Theosebes Goodfellow
Theosebes Goodfellow's picture

That may be so, but I think it is more due to the "new" normal. It wasn't like that in neighborhoods in the 1960s & 70s, (i.e, back when the American Dream was alive).

Fri, 03/21/2014 - 21:01 | 4579184 PT
PT's picture

It's a big club and if you aren't in it then you are being repeatedly clobbered by it.

Fri, 03/21/2014 - 18:17 | 4578716 tweedle dee
tweedle dee's picture

I agree rental ghetto's where once there

 were nice middle class neighborhoods.

Fri, 03/21/2014 - 21:54 | 4579304 PT
PT's picture

DCRB re " ... use as little debt as possible ..." :

That's exactly what I thought ~ 15 years ago so I bought a pocket of an egg carton when an extra 20 grand would have bought me a cardboard box.  Now to trade in the pocket of the egg carton for a cardboard box would cost me an extra 200 grand.  It seems I also should have entered differing inflation values re real estate vs wages into the equation.  I understand why others don't want to copy me.

Good choice?  Bad choice?  Well, if I had've bought anything more expensive then I might have been homeless by now and I have done one or two things that others don't do, but I can't say I'm better off.

If we ever get hyperinflation then those with the most debt will win.  I wish the system was as simple as you suggest but it is not.  

 

Fri, 03/21/2014 - 13:13 | 4577604 LawsofPhysics
LawsofPhysics's picture

If you are using freshly printed cash to buy a house, your name is on the title, debt free.

As for the society behind that paper promise (fiat), not so much. 

Nothing changes until this fundamental inequity is addressed.

tick tock...

Fri, 03/21/2014 - 13:17 | 4577606 El Oregonian
El Oregonian's picture

It would be better to hedge against the dollar collapse by aquiring wealth through PM's instead of aquiring a fizzing time bomb of debt. Hedge accordingly.

Fri, 03/21/2014 - 13:18 | 4577629 LawsofPhysics
LawsofPhysics's picture

Might be good to have a few homes for your tribe of sharecroppers.

Fri, 03/21/2014 - 13:17 | 4577627 TideFighter
TideFighter's picture

Remodeling our offices-the contractor told me he is busy submitting large houses to be sectioned off into 2-3 condos. Selling to all-cash buyers too. 6,000 square becomes 3-2000 square condos. Interesting. 

Fri, 03/21/2014 - 13:36 | 4577709 cougar_w
cougar_w's picture

It's mostly Chinese hot money. As their own economy has started to implode they are getting themselves and their wealth out of the country and into hard investments in Canada and the US. Not sure it will do them any good, but they might be betting that the US will protect them from Chinese claw-backs to keep the cash in the States.

Fri, 03/21/2014 - 13:41 | 4577726 thinx
thinx's picture

Anecdotal, but perhaps more typical than I thought.  Three of my neighbors sold last year - they were all boomers and had been living there about twenty years or more.  The new buyers (young, two-income couples with kids) are first-time buyers who appear to have bought using mortgages.

The sellers of these houses - the boomers - all downsized into much smaller homes, purchased with cash they got for their old house.

Out of a total of six transactions, three were done with mortgages and three were for cash.  In this admittedly miniscule sample set, that is 50%.  If this trend is happening on a wider scale, it might explain some of the increase in cash deals.

Fri, 03/21/2014 - 14:24 | 4577875 Offthebeach
Offthebeach's picture

I know of private party mortgages for working stiffs at 10%. Kind of like PayByTheWeek car lots at +30%.

Fri, 03/21/2014 - 13:05 | 4577563 maskone909
maskone909's picture

I really dont understand why the MSM keeps pumping housig. Dont they understand that there is no market?!? There is no more middle class. The only hope to get the ball rolling is to bring back ninja loans

Fri, 03/21/2014 - 13:09 | 4577582 i_call_you_my_base
i_call_you_my_base's picture

And they will.

Fri, 03/21/2014 - 13:13 | 4577603 Cursive
Cursive's picture

@maskone909

Re the MSM not understanding; you forgot to add "/sarc"

Fri, 03/21/2014 - 13:13 | 4577607 seek
seek's picture

The MSM is working for the banks, hence pumping housing.

Fri, 03/21/2014 - 13:20 | 4577635 maskone909
maskone909's picture

I get who they are working for... But the banks should know better than most that there is no middle class/no market. Banks number1 client is the fed buying up their treasuries.

Fri, 03/21/2014 - 16:54 | 4578485 Seer
Seer's picture

The Easter Islanders continued to build their statues.

The show must go on... (until it doesn't)

Fri, 03/21/2014 - 17:06 | 4578514 Brindle702
Brindle702's picture

Great comment!

Fri, 03/21/2014 - 13:19 | 4577625 SDShack
SDShack's picture

The lamestream media doesn't serve the middle class. Hasn't for decades. They only pander to the extremes... the elites and the serfs. The lamestream media is nothing but a conglomeration of sycophants. This makes them the perfect tool for TPTB. They pump housing to curry favor with the elites that are using all that stock market profit to buy real assets that are rented to the serfs. This is just wealth redistribution from middle class to elites. It's just another example of what I call the New Feudal World Order. The lamestream media is just the propaganda arm of the new Kings/Queens and their Lords in the security state. Much like the church was the propaganda tool in the dark ages.

Fri, 03/21/2014 - 15:03 | 4578030 Offthebeach
Offthebeach's picture

The commercials are the real TV, the actual "show". Every thing else is fluff, a cost. If surgically altered, well spoken Chinese actors could do it, they'd be satellite beamed from a studio in rural goat fuk.
So you get junk. Junk aimed at the low watt, public edgamakated, pink slime mindless pie hole stuffing, Barco l ounger Amerkin.
turn
it
off

Fri, 03/21/2014 - 16:39 | 4578427 bigrooster
bigrooster's picture

If there is no more middle class then what are you?  Is everyone here on ZH rich, or poor welfare fucks?  There is still a middle class because everyone that I know that makes over 100k > 200k is doing just fine.

Fri, 03/21/2014 - 13:08 | 4577577 PlusTic
PlusTic's picture

the PE guys have taken over this mkt...buy/lease in single family residential is huge now

Fri, 03/21/2014 - 13:09 | 4577584 Payne
Payne's picture

People cashing out of IRAs and other accounts looking for a rate of return over 2%.  They too will get burned.

Fri, 03/21/2014 - 13:13 | 4577586 oak
oak's picture

American realize that house is a place for family to live, not for leverage investment.

Fri, 03/21/2014 - 13:40 | 4577719 JR
JR's picture

There was a time when property was part of the freedom to build your estate – an investment in the future. But the bankers won’t have it.

Your house is not your home or your future, just live in, pay your mortgage, and shut up. Don’t expect to have your labor turned into growth by owning a house and, consequently, beat Fed inflation. Don’t put your saved labor into savings to be zirped.

No. If you really want to invest your money, throw your chips in with the high frequency traders and keep your fingers crossed that you won’t be dot-commed 2000.

Rex Nutting wrote on MarketWatch July 8, 2011:

A lot of people say they are deeply puzzled by the slow recovery in the U.S. economy. They look at the 9+% unemployment rate and the mediocre growth in national output, and they scratch their heads and wonder: Where is the boom that inevitably follows a deep bust, such as we experienced in 2008 and 2009?

“But there is no mystery. What other result would you expect from the financial ruin of the once-great American middle class?

“…if you wanted to focus on just one number that explains why the economy can’t really recover, this is the one: $7.38 trillion.

“That’s the amount of wealth that’s been lost from the bursting of the housing bubble, according to the Federal Reserve’s comprehensive Flow of Funds report. It’s how much homeowners lost when housing prices plunged 30% nationwide. The loss for these homeowners was much greater than 30%, however, because they were heavily leveraged.

Leverage is an amazing thing: When prices go up, the borrower gets all the gains. And when prices go down, the borrower takes all the losses. Some families lost everything when the bubble collapsed, others lost very little. But, on average, American homeowners lost 55% of the wealth in their home…

“Most middle-class families didn’t have much wealth to begin with — about $100,000. For the 22 million families right in the middle of the income distribution (those making between $39,000 and $62,000 before taxes), about 90% of their assets was in the house. Now half of their wealth is gone and it will never come back as long as they live…” 

http://www.marketwatch.com/story/how-the-bubble-destroyed-the-middle-class-2011-07-08

Fri, 03/21/2014 - 14:51 | 4577969 Steve in Greensboro
Steve in Greensboro's picture

Ah, yes.  Rex Nutting.  His name says it all.

Fri, 03/21/2014 - 17:08 | 4578517 JR
JR's picture

All what?

What’s wrong with Nutting saying that “of course, rich folk lost lots of wealth during the panic as well.” But, in that ”their wealth is mostly in paper not bricks -– stocks, bonds, mutual funds, life insurance…the rich recovered; the rest of us didn’t”?

OR : “If losing half your meager life savings weren’t bad enough, the middle class has also been falling behind in terms of income for decades. Families in the middle make most of their money the old-fashioned way: Working their fingers to the bone for 40 years for wages and a modest pension"?

THAT: “The middle class has been getting a smaller and smaller share of the pie over the past 40 years"?

AND: “Their wages have been flat after adjusting for inflation. In the late 1960s, the 20% of families right in the middle were earning almost their full share of the pie: they had 17.5% of total income. Their share has been falling steadily ever since. Now, that 20% is earning just 14.6% of all income. Meanwhile, the top 5% captured a growing share, going from 17% in the late 1960s to 22% today (mid-2011)”?

Hmmm?

Fri, 03/21/2014 - 16:59 | 4578498 Seer
Seer's picture

But, but...  That $7.38 trillion (how in the fuck can that get that precise?) came from the bubble, no?

From whence it started is to where it will go...

Fri, 03/21/2014 - 17:29 | 4578578 JR
JR's picture

Don't you realize that people based their lives, their plans, their borrowing habits, their first home purchases, their upgrades, on rising prices? It''s easy to look back and realize it was a bubble and be critical of the millions whose decisions hung on the advice of the government, the real estate industry and Wall Street--and, the fear of prices going even higher. As such, could someone tell us what's bubbling now and save us from the next calamity?

Thanks. And, oh, FYI:

U.S. Federal Reserve Chairman Alan Greesnpan said in mid-2005 that "at a minimum, there's a little 'froth' (in the U.S. housing market)"

Dr. Bernanke said in 2005: “We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”

Dr. Bernanke 2007: “It is not the responsibility of the Federal Reserve–nor would it be appropriate–to protect lenders and investors from the consequences of their financial decisions.”

Dr. Bernanke 2008:“The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.” 

Result: The financial crisis of 2007–2012 was related to the bursting of real estate bubbles around the world, which had begun during the 2000s. (Wikipedia)

Fri, 03/21/2014 - 13:15 | 4577620 q99x2
q99x2's picture

I want more free money, debt I don't care I'll take it. I need more.

Fri, 03/21/2014 - 13:18 | 4577630 madbraz
madbraz's picture

"interest rates soaring"?  you lost me there.

Fri, 03/21/2014 - 13:27 | 4577662 Tyler Durden
Tyler Durden's picture

That text was as of last August. What is worse is that now that rates have dropped back to mid-2013 levels, mtg applications are still as muted as before, meaning the situation is even worse, as the demand for mortgages has little to do with the actual 30 Year mtg rate.

Fri, 03/21/2014 - 13:30 | 4577671 maskone909
maskone909's picture

Ominous. There is no market. Period.

There is no employmnt. Only food stamps, disability, and unemployment.

Fri, 03/21/2014 - 15:24 | 4578148 pelican
pelican's picture

Don't forget fire arms.

Fri, 03/21/2014 - 15:28 | 4578165 Offthebeach
Offthebeach's picture

BS.

Why in the wealthy state of Massachusetts, home of legions of uber bright Harvard/MIT urban planners, economists, social scientists, and other mini-me institutes, we have piles of metropolis thriving on Poverty, Inc. Lawrence, Lowell, Springfield, Brockton, Fall River, New Bedford, Hyannis, Lynn, Holyoke. ......

You get in the right poverty farming racket you can pull in $200k/yr, no heavy lifting.

Fri, 03/21/2014 - 13:19 | 4577631 Eastwood
Eastwood's picture

This will end well.

Fri, 03/21/2014 - 15:32 | 4578180 Kirk2NCC1701
Kirk2NCC1701's picture

<--- Well, this will end.
<--- This will end well.

Fri, 03/21/2014 - 13:31 | 4577683 pashley1411
pashley1411's picture

The article is correct.   Like most other signs and artifacts of the sheeple-formerly-known-as-the-middle-class, single family mortgages are going the way of the buggy whip.

Slap a couple of the documents in a time capsule.    Late 21st century people will be amazed that anyone other than oligarchs, politicians (i repeat myself) and government entities owned real estate.   How weird.

Fri, 03/21/2014 - 13:39 | 4577716 cougar_w
cougar_w's picture

It's not going to turn out that way. Projections from the recent past into any distant future are useless. Nothing we now know is going forward. I don't know what will replace current expectations, but it will not look familiar to anyone living now.

Fri, 03/21/2014 - 14:20 | 4577872 MeBizarro
MeBizarro's picture

Ridiculous comment to make that completely doesn't reconcile with any long-term trend in US history dating back to the 18th century. Only way that would occur is if almost everyone is forced (whether compulsory or due to economic issues) to live in densely-populated geographic areas that are owned by the groups you stated above.  Yeah it might happen but it is such an extreme outlier as to be almost worthless to consider.  

Fri, 03/21/2014 - 16:16 | 4578341 Real Estate Geek
Real Estate Geek's picture

Outlier scenario? Actually, it's the plan. Look into Agenda 21.

Fri, 03/21/2014 - 13:37 | 4577710 Save_America1st
Save_America1st's picture

I pay cash....for SILVER, bitchez!!!  And my next place of residence will be funded by that silver sometime down the road when we see triple digits in the shiny!

Fri, 03/21/2014 - 13:41 | 4577727 cougar_w
cougar_w's picture

You probably won't ever see "triple digits" however a general and savage deflationary period would probably get you where you want to go anyway.

Fri, 03/21/2014 - 13:52 | 4577775 riot-police
riot-police's picture

I admire your optimism. You forgot to mention the unicorns you will ride into the eternal, sunsine on a rainbow of gold.

Fri, 03/21/2014 - 13:43 | 4577733 combatsnoopy
combatsnoopy's picture

Speaking of the housing settlement:

SCOTT OLSEN (Vet who protested with the Occupy movement) GOT A $4.5 MILLION SETTLEMENT FROM THE CITY OF OAKLAND FOR HIS INJURIES.
http://www.sfgate.com/default/article/4-5M-settlement-for-Oakland-protes...

Only a bunch of assclowns like the sick cult of John Lennon worship would tell people to hate themselves to condone criminal wrong doings by the government against their people.  Well until it came to the Kent State Massacre.   I'm just saying. 

You can cry about the $4.5 million, but Jamie Dimon is probably watching this from a penthouse that costs more than small countries.

That abused American taxpayers were robbed for, kicking and screaming.

 

Fri, 03/21/2014 - 15:12 | 4578091 chunga
chunga's picture

It's incredible that the cop who nailed him in the head could not be identified.

That was malicious and deliberate.

Fri, 03/21/2014 - 13:48 | 4577758 IREN Colorado
IREN Colorado's picture

Nothing surprising here. It is better to hold a deed on real estate than be caught holding an equity when the ponzi scheme of the stock market evaporates. Again.

Note though: Even though you are simply trading one Ponzi for another Ponzi by buying real estate, at least you will be holding a tangible asset after all is said and done. It is also an asset the Government will help you gain a cash flow from through housing assistance programs to the sheeple. I wonder what the new cash will look like?

That about covers it...........

Fri, 03/21/2014 - 16:51 | 4578475 Billy Sol Estes
Billy Sol Estes's picture

With a paper equity, you are left with a slip of paper.

With a house and a title, you are left with a house, in a sea of probably millions of other people who defaulted.

Would take the banks a long time to get to you on "the list" and they most likely wont make that effort.

Squat away!

Fri, 03/21/2014 - 13:49 | 4577765 whoopsing
whoopsing's picture

I see very few if any moving trucks in my area. I did see three households kicked to the curb this month though. Those houses and many, many more will remain empty and slowly return to the earth. On a good note its beautiful here in the summer though

Fri, 03/21/2014 - 15:16 | 4578113 Offthebeach
Offthebeach's picture

I've been doing foreclosures for years. The clean up, remodel part for flippers. We call'em "Dumpers". On account of the 20 yard dumpster, or two, that we need to throw out all the furnishing, clothes, toys, photos. Had one sad case old lady came back wanted the family albums, especially of her son killed in Viet Nam. I remembered them as there were quite a few. But they went out the 2nd story chute into the dumper which had long been switched out with another.
Still feel bad about it.

But, hey.....Forward!

Fri, 03/21/2014 - 15:25 | 4578154 pelican
pelican's picture

Anyone shoot at you yet?

Fri, 03/21/2014 - 15:46 | 4578233 Offthebeach
Offthebeach's picture

The houses are like Egyptian tombs. Been in bank world for 3-5 years. Sometimes have to wear tyvek suits, double gloves, repesperators on account of black mold carpet and wall board, feces from homeless, food in refig/freezer. Once found a dog skeleton in a overgrown pen. Chained up.

Very few jobs rate sympathy. In a pop archeology way the houses radiate cheap bling, crap photo finish furniture. Usually poorly maintained. Confusion, kids rooms with bad poetry on walls, or painted black.

Fri, 03/21/2014 - 14:16 | 4577859 MeBizarro
MeBizarro's picture

This has happened to me twice in the last 2 months.  I have a network or real estate contacts/agents along with people who have known my uncle (well known contractor) and my godfather who always give me the heads up on a good investment property. 

There was a great piece of property we were going to buy for $525k that kicked off impressive cash flow due to 2 buildings that had tenants & strong occupancy, several acres that could be timbered and sold, and 3 acres of undeveloped property that just need a bit of finishing to develop and sell to either a builder or a private individual.  Property had been on the market for more than 180 days because of the owner's difficult nature (on site and 82).  We made what he thought was a competitive offer only to get smoked by an all-cash offer that came in at asking price of $575k.  Guy from DE who came in, paid cash, and flipped it not a week later for a $50k gain because he knew a homesteader who wanted to settle his family there (in PA towards Allentown but in farm country).

Buying homes right now is a like a poker game.  Either you have a big stack of chips and can bully others or you shouldn't even be playing really.  

Fri, 03/21/2014 - 14:34 | 4577908 besnook
besnook's picture

in an world of zero return on savings one of the best ways getting a "safe" return is to buy a repossessed house at a discount to present value, cheaper than normal market value, and rent it for a safe return in cash and a future play for the return to the mean. if these sales start running out then it means the returns are diminishing for cash. it doesn't mean there is a bubble that is going to pop. this is actually one of the mechanisms that worked in the post bubble market. investors have bought up all the repossessed homes onthe market as soon as they are available. banks began to accelerate the release of these homes when the fed started the mbs purchase program. as the sales begin to taper off the percentage of sales will drop and the market will go back to local and back to equilibrium. in the meantime, let the market clear and let the scavengers clear it.

Fri, 03/21/2014 - 16:13 | 4578335 venturen
venturen's picture

But Obama told me I would have a good job and things would be different. He did tell me he was only working for the ultra wealthy and the media is completely complicit in selling out the middle class. 

Sat, 03/22/2014 - 16:23 | 4580789 SilverMoney1
SilverMoney1's picture

You have to be delusional to believe any of this.

Look.. conventional and cash purchases since 1990: http://research.stlouisfed.org/fredgraph.png?g=u2o

Nothing has changed. 

Sat, 03/22/2014 - 17:06 | 4580861 Midnight Rider
Midnight Rider's picture

Delusional? Not sure exactly what that chart shows. Cash and Conventional housing purchases both up 40% year-over-year? Not sure that jives with another other statistic being quoted around the rest of the planet.

From the AP:

"Sales of U.S. existing homes slipped in February to their lowest level since July 2012 as severe winter weather, rising prices and a tight supply of homes discouraged buyers."

Mon, 03/24/2014 - 22:58 | 4585998 rayschmitz
rayschmitz's picture

Exactly how is the Goldman chart to be reconciled with NAR data?  

The seasonally adjusted annual rate for exising sales is currently in the 4-5 milloion range, an order of magnitude more than for new homes.

The count of monthly existing home sales so far exceed new home contracts that it is not possible go from NAR's 35% up to over 55% as shown in the chart by adding in only new homes.  

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