Here is an interesting news story about what is happening in “boom/bubble” States like Nevada, California and New Jersey. I have been saying it for a while – just like the 25% Interst credit card from Home Depot and Lowes which just seems like a good idea at the time – the interest only mortgage sounds like a win-win situation in the beginning.

The homeowner gets the low rate, 100% tax deduction and banks get more customers which may not have bought homes if not for the low interest only mortgage. What nobody seems to be bothered about is how sensitive these loans are to Prime rate changes.
If you had a home equity line of credit 3 years ago and if you still have it check you statement – gone are the goold old days of 3.75% money – instead you have almost double the rates depending upon your credit and bank.

Real estate foreclosure danger increases:
There are some warning signs that the Las Vegas-area housing market is slowing down, according to Alexis McGee. Price appreciation is flattening and existing-home sales are dropping, which "could indicate that the price boom in Clark County, Nev., could be coming to an end," McGee reported in an announcement today.
There were 5,728 new for-sale listings in August in Clark County, with the median list price of $349,000 – the same as in July, McGee reported.

"However," she said, "the actual median sales price in August was $309,000. That was still a record, but the appreciation curve is essentially flat. The situation in Las Vegas is exacerbated by the high percentage of home purchases by speculators. Normally, foreclosure is a lagging indicator of financial distress in a household, but speculators often have negative cash flows in their properties. When price appreciation slows or stops they run for cover, and now may have more difficulty selling quickly to cut their losses."

New-home prices had increased about 27 percent year over year, while resale year-over-year home-price appreciation was 13.1 percent, and the average time on market was now 48 days for new listings.
McGee also said that a steady decline in foreclosure activity in California had leveled out, and a combination of slowly rising interest rates and a shift to a buyer's market would make it harder for distressed homeowners to refinance or sell their way out of trouble.

"Foreclosure activity in California is no longer declining," she said. "And this activity is now actually below historic baselines in several markets. The default rate has nowhere to go but up."
According to Trendgraphix Inc, the Sacramento metro area saw 2,318 price reductions in May of this year. In July, there were 4,100. August, at mid-month, was on track for 4,500. "That's a cooling market," McGee said. "We see a plateau forming with modest price corrections in overheated markets. Real income growth has to catch up and restore lost affordability."

Also, she added, a period of increased defaults was on the horizon partly because of the use of exotic loan programs, such as interest-only loans and so-called option ARMS (also known as negative-amortization loans).

In New Jersey, there were 3,196 notices of default and notices of trustee sales, McGee reported, followed by 1,992 in July and 1,929 in August.

My Comments: Read this paragraph if you have ever wondered why houses go into foreclosure. There is a bigger force at play here then just sombody losing their job.

"The increased use of interest sensitive loans in the face of rising home prices would lead to an increase in mortgage defaults in the near and intermediate future," she also noted. "The percentage of New Jersey homeowners paying 35 percent or more of their pretax income for housing expense increased to 29 percent of all loans in 2004. And in 2005 that number will probably increase further."

Many New Jersey home buyers are using interest-only loans to qualify for more house than they could otherwise afford were headed for trouble, and McGee referred to these loans as "financial time bombs. When they convert to fully amortized adjustable-rate loans in two to five years, monthly payments can jump by 40 percent or more. Such a payment shock can lead to default."

(Source: Inman News)

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Posted by Mark Ijlal at 11:35 PM | Permalink | Comments (0)

I got this awesome email late Friday night – just made my weekend. I even read it on the The Real Estate Warrior Radio Show yesterday. I exchanged emails with Shane some time ago and I am so happy that he has decided to make a go for it. He is in Virginia but I have also 2 of my good friends – Neker in West Bloomfield who left his engineering job for GM and Mark White in Madison Heights who quit from Exxon two months ago to make a go at it. All I can say is – Welcome! And call me next time when you pass by Michigan. Lunch is on me.

Here is the email from Shane :

Mark, (and Nora :-)

I just wanted to thank you for sending this along. I got your Free Cd last week and just finished listening to it today and it was very good also.

I'm also writing to let you know that I'm about to start a new part of my journey. I've been living in Virginia for the last 10 years and working for large corporations in the computer field almost the whole time. I haven't felt satisfied with my work but on rare occasions and for the longest time have thought that I need to get out of it. But being prudent, I didn't want to run AWAY from my career. I wanted to run TOWARD my next career!

For the last 5 years I've studied and dabbled in real estate investment. I've read dozens of books and listened to dozens of audio courses by gurus. I've bought 2 houses for myself and 2 for selling. I've build half a dozen real estate related websites. I've registered vanity toll free numbers.

I've attended local investor group meetings. And I've been elected the VP of one local group. Overall I'm proud of myself for continuing to make progress in this field I've chosen as my next occupation. But I'm not satisfied with the speed of my progress.

You may remember that I found you through your blog. I started writing in my own personal journal about real estate about 5 years ago. I was 24 years old at that point. Back then I was working a job making over 75k. Times were good. I set a goal for myself to build a million dollars net worth by the time I was 30. I turned 30 last month. And I'm disappointed to say that other than the experiences I've gained, I'm no better off than I was when I set that goal.

I went on a trip to my home state of Wisconsin this last month for a family emergency. I was there a week and I had a lot of time to reflect. I made the decision to give up everything I have here in Virginia and move back to Wisconsin. But I'm not getting another job. I refuse to get another job.

I'm quitting my corporate life. I'm selling my personal home in Virginia. I've purchased a big Diesel truck and a new laptop and some new tools. And I'm going full time into real estate investment.

I've listened to many guru's talk about how it doesn't make sense to do the work yourself when a property isn't perfect. And from a strictly money standpoint, I agree. But in the last few years I was forced into having to do things for myself on properties when I ran out of money and competent workers. And strangely, I found it really fulfilling. I enjoy working on a project and seeing the daily progress. Certainly I don't enjoy doing all the work by myself. I'm rather comfortable hiring contractors and helpers.

And frankly I get a little bored with a paint brush in my hand for more than 30 minutes. So I delegate well. ;-) But I found that I enjoy being very close to the house while the work is being done.

I'm installing a mount in my truck for my laptop. I will have a GPS
receiver hooked to it. I also have wireless Internet access through Sprint. My office will be totally portable and always with me. I'm buying a large enclosed trailer to hold all my tools and common materials for my rehab projects. Less trips to the hardware store or back to the shop means less time wasted.

I have decided to continue working my computer job full time until I have a contract on my house. Selling it is funding my business startup and the move to Wisconsin. And every day I have to come to this job it hurts. It's not a bad job. In fact, it pays well and it's comfortable and easy now.

But it's a job. It's trading hours for dollars. It's a restriction on my time. It's holding me back from what I'm passionate about. After an 8 hour day of working on things that are simple and totally unrelated to my goals, I lack the energy and focus to begin serious work on real estate. The distractions have become too great.

In the next few months I expect to be living a new life. And I thank you for your part in it. You have been that "real person" who is doing all the things I know I am capable of and want. It's exciting to read your blog.

It's exciting to hear you talk about your successes. And more than
anything, it's exciting to know that what you are doing is totally
reproducible.

Thank you for the networking and education you are doing.

Shane

Posted by Mark Ijlal at 12:55 PM | Permalink | Comments (0)

Remember the Main North Condo development in downtown Royal Oak I wrote about last month. The absolutely crazy Grand Opening with live Jazz band, great food and wine - well word from the street is that bunch of retired Detroit Lions have bought Condos in that development. I like the development but to break even - repeat just to break even on the mortgage payment plus the assoication dues plus the property taxes - I have to rent a one bedroom / one bathroom condo for $2200. That just seems a little teeny weeny high to me.

Your opinion might differ.

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Posted by Mark Ijlal at 11:24 PM | Permalink | Comments (0)

San Francisco-area home prices hit new high
Median price paid for a home climbs to $619,000

SAN FRANCISCO - Spurred by strong demand and continued low mortgage interest rates, prices paid for homes in the San Francisco Bay area rose to a new high in August and home sales in the region remained at near-record levels, according to a report released Wednesday.

The median price paid for a home in the nine-county region, which includes San Francisco and the Silicon Valley high-technology hub, rose to $619,000 in August, an increase of 2.1 percent from July and a 19-percent jump from a year earlier, according to the report by DataQuick Information Systems.

Home prices in the San Francisco Bay area, which boasts one of the strongest housing markets in the United States despite the economic shock to the region from a prolonged high-tech slump, have posted double-digit percentage increases each month for 21 consecutive months, the La Jolla, California-based real estate information service noted.

According to DataQuick, 12,154 new and resale houses and condominiums sold in the San Francisco Bay area last month, marking an increase of 6.0 percent from the prior month and a decrease of 4.1 percent from a year earlier.

Year-earlier sales were the strongest of any August in the San Francisco Bay area, according to DataQuick’s records, which date to 1988.

According to DataQuick, the region’s housing market is not showing signs of the slowdown many analysts expect. They have predicted the market will cool because increases in the area’s home prices in recent years have outstripped personal income gains of potential home buyers.

“We’re a bit surprised at how stable the market is in all categories. Usually one segment of the market will be outperforming the others. Right now, though, the same trends apply to all parts of the market from entry-level on up to the prestige market,” said Marshall Prentice, president of DataQuick.

“This stability means that the market will probably stay strong at least through the end of the year,” Prentice said.

Posted by Mark Ijlal at 11:23 PM | Permalink | Comments (0)

Next time when you lose a foreclosure to somebody else - read this story that it happens to the best of the best.

Notice the gloomy long face. :-)

Posted by Mark Ijlal at 11:19 PM | Permalink | Comments (0)

Me and Jason, outside WDTK 1400AM after our first show on September 10, 2005.

Posted by Mark Ijlal at 11:23 AM | Permalink | Comments (0)

First, starting from tomorrow morning, Saturday and every Saturday from then on, you can hear me LIVE on the first talk show in Michigan dedicated solely to all things real estate investment in Michigan.

The show is called The Real Estate Warrior Show and it is being broadcasted in metro Detroit on Newstalk 1400 WDTK, every Saturday, 10am to 11am. For my friends not living in the metro Detroit area, you can tune in LIVE by going to their website at and listening to the LIVE show being broadcasted.

You can call in and talk to me, one on one, ask any questions, share any successes that you are having, everything goes – buying and selling foreclosures, rentals, apartments, lease options, financing – as long it is related to real estate investment in Michigan. You can call in your questions during the show on 1-800-923-9385.

For once that should stop all complains about not being to get a hold of me - :- ) .

It’s happening tomorrow. Don’t miss it.

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Posted by Mark Ijlal at 08:47 PM | Permalink | Comments (0)

Travis Mckee emailed me this link for people who are willing to offer housing to the victims of New Orleans floods

Craig List Housing Help

Also you can use the Federal Government Emergency Resource to register your housing resource since New Orleans is without Internet access so putting up your housing help at Craig's List can only work if somebody reads it, prints it and takes it to the emergence relief there. I just created an account there for the housing that I have available. It is a little confusing to do but I wrote a detailed note. If anybody else knows of any resource to offer housing (even long term) to displaced victims, please email nora@markijlal.com.

Posted by Mark Ijlal at 10:49 PM | Permalink | Comments (1)

Here are some more emails from my blog visitors. I am finishing my report and whomever contributed will get it by Monday. Good work and thank you.

From Bill Reed:
Mark 2 hot cities I think are Tecumseh and Saline MI. I have relation that paid 75 k for 10 acres south of Saline, and I hear ground in the same area is worth more now than 3 years ago considerable.
Tecumseh area I see some new developments going in and wondered if I should try to buy a lot and resell it in a couple of years.

From Vondell Boyer:
The Hot market for Real estate in my area would be Eastpointe because the area has nice homes & it's quiet,also close to shopping malls, gas stations, schools, & the location is not far from most main streets & express ways, the houses most are priced wright but some sell for more then they should, And people buy them.

From Kim Elliott:

Here are a few that I think are the next 'hot cities' in Michigan:
Saline - room to grow & great schools
Milan - people spilling out there from high prices of Ann Arbor, lots of bang for the buck Belleville - reminds me of Canton 10 years ago
Redford - perhaps a sleeping giant, access to downtown, very affordable, real neighborhoods with small parks, hints of infrastructure development

From Don Clark:

I have recently moved here to Lake Orion. I cannot believe all of the building up this area has done in the last few years. Blue ribbon schools and a little bit of country has this area booming. It starts in Auburn Hills, and goes north up m-24 through Lake Orion, Oxford, and is starting to hit Metamora. Metamora is the next big thing if I were to bet.

From R Mcoice:

I live in Sterling Heights (SH) and would consider it to be a "hot" market based on my definition,
but perhaps not yours. I wouldn't say that people would pay any price to live there, but there
are other compelling reasons that make SH a great market.

1) Schools - SH is in the top 10 school districts in the State based on test scores (SH is part of the Utica school system). They also have several "blue ribbon" schools.
2) Safety - SH is rated as one of the top 100 safest cities in the country.
3) Affordability - This is a double edged sword. You can buy a very nice home in SH for around $200k.
This is a bargain when you consider how prices have skyrocketed in other cities. SH is now considered a good place for starter homes/first time home buyers. A large % of
residents are blue collar workers. With the demise of the auto industry and the high unemployment rate in general, many blue collar workers have lost their jobs as companies move manufacturing overseas.
SH like many communities has seen an increase in bank foreclosures as people have lost their jobs and can't make their mortgage payment.

4) Condition of homes - most neighborhoods are in good condition. In many cases you woudn't have to spend much money on repairs or upgrades before reselling it.

From Mike Farrell:

I think Ann Arbor is a hot city - Not in terms of rapid price
increase, but more in the sense that people will pay any price to live
there. Here are some reasons why:

1) The University of Michigan and Hospitals cause people to move into
and leave the area all the time
2) The city is land locked so the city limits cannot be expanded.
This creates more scarcity and drives up prices
3) Ann Arbor Public Schools are nationally recognized and often times
people will pay the higher prices just to be in the school system - In
fact a new High School is about to be built within the next couple of
years
4) Lots of ways to invest in Ann Arbor - Buying an old house in the
student ghetto and renting it for income ($500 per month per room is a
solid average price), and of course pre-foreclosures and REO's

From Chris:

I would elect Canton... I am a business owner there and would totally elect it... I remember visiting there 8 years ago, and seeing farmland... Now it is totally jumping! There is even an IKEA, Gap, etc... coming to town soon. Also, as I drive around and see the homes that are for sale, I cannot stop thinking about how the exact same house elsewhere would sell for much less (especially considering price / sq ft in some neighborhoods - e.g. Cherry Hill Village, etc)... I look forward to seeing your list,

From Rick Kelly:

Mark - I am thinking Ann Arbor because there is no other city like it around. Large University, plenty of cultural, learning, sporting, dining opportunities.

From Terri Buffum

Mark My pick for a Hot city is 2 cities that are intertwined, here are a few of the reasons that I believe it is a hot market in these "Downriver Communities"

1. Brownstown is Building a new Henry Ford Hospital
2. Brownstown is developing a Downtown that is supposed to have the feel of Birmingham
3. Woodhaven/Brownstown High School just finished an expansion on their existing High School.
4. Target in Woodhaven just added on to their store AND:
5. Walmart is going up directly across the street from Target.
6. I have heard that Costco is coming to Woodhaven 1 block from Target/Walmart.
7. Downriver is more affordable than a lot of areas and there is still soo much wide open space for even more growth.
8. Conviently located to I75 & I 275...20 minutes to Downtown Detroit, 10 minutes to Metro Airport
9. The Detroit Free Press has named it one of the up & coming places to live in.

When I moved here 5 years ago I hated it, there was nothing here, no restaurants, no strip malls etc. I think Target, Home Depot & Farmer Jack were either brand new or just opening I can't wait til everything is done, the new Hospital will be done in early 2006 and probably not to long for the Downtown areas. I really like living here now.

From Mark and Joanna:

Many people move up to Grand Blanc from Oakland County, because you can get way more of a house for your $. It is a nice small town, with affordable houses for now, and not too long of a drive to Auburn Hills area for work. Taxes are also lower but the city caught on and raised them last year. There is a lot of new development, and houses have been steadily going up in price. The school system is great and new businesses are moving in. Reminds me of what Canton used to be way back when, lots of farm lands and tone of new development.

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Posted by Mark Ijlal at 10:40 PM | Permalink