Over all, the
implosion of the subprime loan market is a disaster to everyone. The large-scale failure of any leading investment vehicle is bound to have
reverberations throughout the economy as a whole.
And with the mortgage/loan industry, as previously seen/experienced in the Savings & Loan debacle of the 80s, the resulting mess eventually gets cleaned up by
those of us who thought we were smart enough to avoid getting involved in the first place.
Awesome.
I would enjoy the opportunity to wax philosophic about the basis for this
implosion (why isn’t THIS issue a
“bursting bubble" instead of an
“imploding market"? Has the
“bubble" cliché gone passé?)
But here’s where I believe there’s something of a sweet-spot for the value investor, who is also likely to be amongst the majority who will eventually be covering that loan default gap produced by the recent spate of reckless lending/borrowing.
Soon, all those ARMs,
“teaser" loans, and other exotics are going to explode all over the borrowers, and those properties will wind up in the lender’s lap. None of those lenders (or more than likely: the lenders who loaned to the subprimes, or their syndicated lenders, or on up the chain) are interested in dealing in the disposal of physical real estate. They sell returns on principal, not dirt.
Come late 2008, I’m expecting some
DEALS to hit the market. My only hope is that the good multi-units aren’t snatched up in poorly advertised, vaguely mentioned
“auctions". I never seem to get notice of those in time…
