,............... is down 33% for May after the April 30th expiration of the $8k home buyer tax credit.

The article is summed up nicely by one commenter who expressed;

"What we have learned today boys and girls is that the economy is so weak that 1/3 of home sales require a federal subsidy."

http://www.marketwatch.com/story/new-home-sales-plunge-33-to-record-low-in-may-2010-06-23

Our bank, and many others are out of the spec lending business now, and for probably the next 3-5 years. One exception would be a person who has significant liquid assets (like enough to pay off the entire cost of the note), goes into the transaction with a significant amount of cash, and has been a proven performer in the past.

Real estate equity in a project won't cut it any more.

My chickens taste great. (good news)

Happy now?

Just the facts ma'am

To bury our heads in the sand and pretend there isn't a problem won't get us anywhere.

The news is good or bad depending on where you're coming from. If you're a buyer,....this is great news. If you're a seller,.....not so much.

A very wise move IMO DF.

Although what % of your bank's home lending biz was made up of spec's in the past 7-8 years?

Great time to buy. I am seeing super low lot prices, so new homes are becoming more affordable then existing. This will keep foreclosures high. Expect two years for the lot inventory to start to disappear. Hopefully, foreclosures should start to drop as the economy stablizes. Once these two things happen, prices will start to climb again. I expect that interest rates will slowly increase starting later this year. If they don't when prices do start to climb an increase in interest rates could stop it immediately. This latest dip is just a result of increased demand as buyers rushed to get the rebate. I am seeing increased demand in the last month, so I expect that numbers for june will look better.

Great. We've got a condo we need to sell. The elderly lady next door had to move to AZ because of health issues, so her unit in on the market, as is one other in our 36 unit complex. We may have to sit on it and try to rent it out for a year or two, possibly for less than the monthly costs.

Sg

Expect foreclosure numbers to remain high through 2013 as OptARM loans and other 5yr IntOnly ARM's have their preliminary payment terms expire. Those loans were not as popular here in the PNW as they were in say, California. Although there were a number of them written in this area.

Also consider that the banking industry's "shadow inventory" of foreclosed homes that are not listed on the MLS is at astonishing numbers. Saw a report somewhere that the current number of foreclosed homes in the shadow inventory is more than all previous foreclosures listed to be sold from 2006 to now. Total number of shadow inventory homes would take around 103 months to clear,.....or about 8.5 years.

Salmo,

Depending on your equity position it would probably be wiser to rent it out for as much as you can for as long as possible. Short that you could list it to compete with the two other condos in your building. Otherwise I would probably watch the other two very carefully to see what they end up selling for.

My parents are stuck with a condo in Puyallup they will have to hold onto for years. Being a landlord sucks and it would be near impossible to sell for what they owe. They're only real option is to pay the extra payment, pay the note down as much as possible, and sell when they see that they can get enough to get out of it.

Prior to buying a bank in Bellingham in 2004, we really did very little spec lending, with maybe 4 or 5 builders and the occassional one-off deal. The Bellingham unit did a fair amount, and I had been buying participations from them for a few years prior to the merger. Most of our issues are up there. Our region in GH has no problem spec deals, at the moment.

We started cutting back on spec in 2007, and yet still got caught in a few messy deals. Every one I had, we made it out whole (knocks on wood), but I only had 3 individual loans. We are a traditionally commercial bank. 85-90% of credit is commercial on average. We were at 347% of equity on all NOO CRE at year end 2008, and we are currently in the range of 270% in NOO CRE now. This includes spec, hospitailty, Apts, etc. Don't have a specific spec only concentration for you, but it is low, considering that we have traditionally been heavy in hospitality.

C&I and CRE are our primary targets (timber, fishing, hospitality), and we are winding down concentrations in hospitality and other NOO CRE like storage units, apartments, etc. Healthy C&I credits are a challenge to find right now, but there are some.

You know how interesting GH is to bank right now. A few solid performers, and then the rest who are sucking wind. Renewal season is upon us, and downgrades are happening. How is your pipeline of 30-90 delinquent loans? That is the one measure that really needs to be included in the "quick & dirty" Texas ratio. A few in our area have a pretty good supply there, and it is only a matter of time before a good portion of those tip over. Thankfully, I guess, we are seeing those figures decrease steadily.

PM sent DF.

SW,

Being a landlord will be a last resort I think. It was a $100k unit when purchased over 10 years ago. It was refinanced and is 7 years into a 15 year mortgage now. They were selling in mid- $190s two years ago, and the last one sold at $172 K I think. Neighbor lady's has some damage to it and is listed at $152 K, so it might be hard to get over $170 for one like ours that's nearly pristine.

What we'd like to do is combine condo equity with other money I have in savings and buy down or refi the new house so as to have a smaller mortgage as I plan for retirement. Would also like to make the change on this mortgage before interest rates move very far north. So maybe it would be worth getting whatever we can for the condo just to not have to deal with it and get the cash. Otherwise I think we might have to hang on to it for a lot longer than we'd want to. If it won't sell, the choice will be made for us.

Sg

Sounds like you're in a better position than most Salmo. Some don't have the luxury of just shaving off a bit of equity in a potential sale. Sell while you can now is my humble advice,.....especially if you have no interest in renting the place.