Olly Newland’s Column, 31 May 2009
‘Mortgagee Sale.’ These two words can strike terror into the heart of any property owner. A mortgagee sale can destroy families, businesses, and lives. Over the last year more property owners in financial difficulty have faced the loss of their home or investment to the pay off the lender.
Sometimes the dreaded situation arises from an innocent change of circumstances (job loss, marriage split etc). But sometimes it results from the greed or naivety of those who believed the hype that property prices would rise forever. Now, with the ‘worst recession in 70 years’ sapping the economies of the world, the lesson has to be taught all over again: What goes up must go down.
In March this year forced home sales hit a 15-year record of 201 properties according to Terralink. This ‘worrying trend’ showed that ‘there were still a lot of distressed owners through out the country’ according to Terralink.
Other statistics support this view: Trademe reported an increase of 231% of forced sales in the last twelve months alone. The large number of advertisements appearing for mortgagee sales is evidence we can all see that this explosive increase is not a myth but a sober reality.
What’s worse is that a mortgagee sale is the highly visible ‘end-game’ of a long process. I estimate that for every mortgagee sale that actually gets advertised there are at least another fifty property owners in distress but who manage to sell, refinance, or come to some arrangement under pressure before the hammer falls.
So let’s discuss the basics of what really happens before and after the mortgagee sale process begins.
‘Mortgage nightmare’ (Shorter version as Herald on Sunday column )
NZ_Herald Sunday 31 May 2009
Olly Newland’s Column, 17 May 2009
Against the backdrop of a deepening global recession no-one can say how long it will be before ‘normality’ returns to the market. We are told this is shaping up to be the deepest recession since the 1930s Great Depression. If that is the case, we are also told (and I agree with this) we should expect flow-on effects to the world economy — possibly for a generation or more.
But let’s leave the high-level prognostications to the economists. In our own backyard, property investors and home owners alike must ask the question: Will the property market as we know it survive, or must it too undergo a fundamental shift?
From where I sit, the next ten years will likely see a far tougher financial and credit environment. The reworking of the laissez-faire capitalist system which brought us to this point cannot be avoided. The refrain “let the free market decide” has lost its potency and appeal — at least for now. The massive and unprecedented bailouts by world governments and the collapse (or forced mergers) of household names and companies both demand and drive eye watering changes.
As well as a re-ordering of credit rules, I predict there’ll be a major shift in how we assess a potential property investment, particularly commercial property. Over the coming decade (and perhaps beyond) I foresee a permanent change in the investment environment and in different classes of property investment as we all respond to the emergence of the new, tougher financial order. Some types of real estate investment that were considered “hot” yesterday will become the disfavoured white elephants of tomorrow.
‘Shaky foundations’ (Shorter version as Herald on Sunday column with Q&A)
NZ_Herald Sunday 17 May 2009
Five common investor mistakes (plus Q&A)
(Olly’s Herald on Sunday column) NZ_Herald Sunday 3 May 2009
Olly on talkback radio with Wendyl Nissan Newstalk ZB Sunday 26 April 2009
Listen or download (MP3 – 24 mins)