Friday, August 27, 2010

More Paul Cooper Talking Out The Side Of His Neck

The HIP deal was dead along time ago. You heard it first here at Jacques Barack. That didn't stop Mini Mayor and Ho So from wasting your money on a trip to Arizona. Still don't believe us that HIP won't find the money to pull the deal off? Here is more Paul Cooper doing his own poop drop on the HIP deal, courtesy of The Real Estate Wonk's blog.

MARCH 28, 2010

Q&A: Paul Cooper, auctioneer

Today in the business section, we've got a Q&A with Paul R. Cooper, a vice president at Alex Cooper Auctioneers in Towson. You were all so interested to hear what he had to say in a blog Q&A a year ago that I thought you'd enjoy another conversation.
Last time, he said many home sellers weren't being realistic about asking prices. This time ... well, it's still a problem, he says. Here's the Q&A, with extra questions and answers that couldn't fit in the print edition:
Question: How’s the market for local home sellers?
Answer: It’s a challenging marketplace. But if you are priced correctly based on actual sales data, you stand a strong chance of selling your home in a short period.
Q: What’s happened to prices?
A: I’m looking at the average and median sold prices for February 2010; I had to go back to April 2005 to find a comparable month. So you can probably say our prices right now are consistent with what they were in April 2005. ... By the way, the April 2005 average and median prices were approximately 20 percent higher than April 2004, so you can appreciate the tremendous run-up in the one-year period.
Q: Some have pointed to that and argued that prices still have a ways to fall. Do you agree?
A: There is a trend line you have to get back to, and the trend line is based on CPI increases. [The Consumer Price Index is a measure of inflation.] If CPI goes up 3 percent a year, … then theoretically real estate should only go up 3 percent a year. So when it goes up 20 percent in one year, it’s elevated off the trend line. It’s an accident waiting to happen. It’s just going to fall right back to the trend line eventually.
Q: Are we there yet?
A: We’re not, because we wouldn’t have 16,000 active listings if we were back to where we should be. February 2002 average sold price: $161,600. Median sold price: $131,900. ... So considering the fact that we’re sitting here right now at $271,000 for an average and $230,000 for a median shows we’re well above these numbers. A 68 percent increase in eight years in average sale prices.
Q: Is it good or bad that the federal government is such a huge part of the mortgage market these days?
A: At this point I think it’s a good idea, because I don’t know who wants to buy our mortgage bonds after what we did to the world. We stuck them with our mortgage bonds, and they’re suffering for it. If anyone got on the phone in New York trying to market collaterized mortgage obligations, they’ll probably get hung up on. ... So the government’s going to dictate what the standards are in down payments, the minimum credit scores. For those that do not have decent credit, I do not see any opportunity to get financing. ... I hear a lot of complaining from the real estate community about trying to get deals through. Certainly from mortgage brokers about how hard they have to work to make a deal work.
Q: What about the commercial real estate market? Market watchers have said for several years that this would be the next shoe to drop.
A: Oh, it’s dropping big time. As far as commercial foreclosures, that’s accelerating quite a bit. And it’s going to probably continue to accelerate. I’ve spoken to attorneys, I’ve spoken to bankers, and they’re really trying to hold off. They don’t want to own this. They’ll do what they can. But an example, I have an office building coming up [for auction] — a major tenant just left. It was 80 percent leased; now you’re probably at 50 to 60 percent. Well, now you’re at negative cash flow, and they don’t have the check to write to the mortgage company.
Q: Are fewer people interested in buying commercial property?
A: The sales volume has gone down tremendously. ... The mortgage market fell apart in August, September of ’07, and then of course the financial marketplace fell apart in September of ’08. So the financing has deteriorated.
Q: What about the people who say, “I believe it, but that means I’m stuck here?”
A: That’s unfortunate. You feel bad for somebody in that situation. You have to have a strong degree of empathy in this job. You have to understand where the people are coming from. They made an investment that did not turn out well, and you have to understand their feelings. They’re really not happy right now. They’re upset and frustrated.
Categories: Q&A