Housing Bubble Bursting?

[Terrel L. Shields]

if shrewd investors think it's safe to commit more money to this sector, the end of the meltdown may be closer than we think

If a frog had a pocket to carry a pistol in, he wouldn't be afraid of snakes.

The credit availability for residential housing has been reduced.

..reduced only to levels we saw 6 - 8 years ago when you were still expected to put SOMETHING down on a new purchase or loan, when you had to have a few things...like a JOB....a good credit score, etc.

This lend-any-amount-to-anyone mentality is the crux of the problem. The government is trying to lay blame to a problem they created. They wanted the economy to zoom zoom zoom and housing was it..

 

[Steve Owen]

More good news...

If I was in Miami FL or maybe even NW Arkansas I might not feel like this. But the info posted in the links at

http://appraisersforum.com/1342336-post2727.html

make more sense than most of the Chicken Little stuff posted here so far. Are we going to have a recession? It certainly is a possibility, maybe even a strong possibility... with the deficit growing and the economy having taken a large hit from housing, it might just take one more little thing to push it over.

Still, look at the whole picture, including this good news:

http://www.kansascity.com/mld/kansascity/business/16953761.htm

Employment is still strong (unless you're in Detroit or a few other places), most homeowners are still making payments, and even with sub-prime only a small percentage are in foreclosure.

Yeah, I imagine that things look pretty bleak in S. Florida, Detroit, and parts of California and Nevada. It could push us over into recession, but I see quite a few good signs to go along with all the bad.

 

[Mark to market]

An abstract thought to ease your pain.

Over the last 5 or so years the US dollar has devalued approximately 40% to the Euro (do not hold me to that figure it an approximation from memory). This was done for several reasons, one of which was to ease our debt load to the rest of the world. The good news is that now we are paying roughly 60 cent on the dollar for money owed overseas. The bad news is that foreign entities have raised their prices on commodities, (see oil) to make up the difference.

I suggest that if the devaluation figure of approx 40% is deducted from the price of housing that our bubble is not so bad.

I am not sure if this is an accurate assessment, but I do see a soft landing.
_________________
The Loan Appraiser

 

[Randolph Kinney]

Steve, I don't want to throw water on your fire however, the major home builders are all saying the same thing; 2007 is going to suck with both volume and price declining.

All the information I read concerning credit available to the residential market has be reduced and particularly subprime financing. This is going to impact future sales negatively.

NAR will be publishing their existing home sales data shortly for February 2007. I expect that to show another month of declining median sales price.

All you or I can do is watch from the sidelines and publish articles as they come in.

One point I find very humorous is the Congress wants to fix the subprime mortgage problem. They are talking about FHA taking over to supply the subprime market. Good news, I am sure. Also, they want Fannie and Freddie to give forbearance to subprime loans. More good news. :new_all_coholic:

 

[Randolph Kinney]

Fed Says It Could Have Acted Sooner on Subprime Rout

http://www.bloomberg.com/apps/news?pid=20601206&sid=a1.KbcMbvIiA&refer=realestate

March 22 (Bloomberg) -- The Federal Reserve could have acted faster to prevent a meltdown in the subprime-mortgage market by curbing the lax lending standards that contributed to the crisis, the Fed's chief bank supervisor said.


``Given what we know now, yes, we could have done more sooner,'' Roger Cole, the Fed's director of banking supervision and regulation, told the Senate Banking Committee in Washington today, as regulators testified for the first time before Congress on the market rout.


Lawmakers called the hearing after growing concern that the deterioration of subprime lending will spread to regular mortgages and even into the broader economy by cutting into consumer spending.

 

[Greg Bell]

We continue to keep a watchful eye on the this pattern, as it bears a striking resemblance to some rather famous historic tops. The set-up pattern looks complete, with point e's top at February 20th, 2007's 12,795.93. The recent mini-crash comes just when it was expected, around March 2007, and is the predictable price action subsequent to completion of this pattern. If history is a predictor, the Dow Industrials will plunge much further. The next sharp thrust lower could start around mid-March 2007 if the cycle analysis work shown in previous weekend issues is going to be an accurate predictor. The stock market represents the collective view of everyone who knows anything about the state of the economy. It is therefore useful as a predictor of booms and busts. Sharp market declines warn of coming economic upheaval. This pattern is a way to identify when the stock market is likely to announce the next recession -- soon.

 

[moh malekpour]

Greenspan blamed for subprime crisis

http://www.theglobeandmail.com/servlet/story/LAC.20070323.IBSUBPRIME23/TPStory/Business

WASHINGTON -- Members of Congress are pointing angry fingers at Alan Greenspan and other U.S. bank regulators for fostering a mortgage market "on steroids" and failing to thwart a predictable subprime meltdown.

Christopher Dodd, chairman of the U.S. Senate banking committee, complained yesterday Mr. Greenspan, who retired as U.S. Federal Reserve Board chief last year, was an early proponent of the type of exotic mortgages that are now being blamed for an epidemic of foreclosures across the United States.

Mr. Greenspan urged lenders to move away from traditional fixed-rate mortgages in a June, 2004, speech as a way to help U.S. consumers, Mr. Dodd told a hearing probing the subprime mortgage meltdown. "The Federal Reserve seemed to encourage the development and use of adjustable rate mortgages that today are defaulting and going into foreclosure at record rates," Mr. Dodd complained.

The Fed then did little to rein in banks as lending standards deteriorated in a mortgage market that appeared to be "on steroids," said Mr. Dodd, Connecticut Democrat.

"Our nation's financial regulators were supposed to be the cops on the beat. . . . Yet, they were spectators for far too long," he added.

Poor Allen

 

[moh malekpour]

Fed accused of subprime ‘perfect storm’

http://www.ft.com/cms/s/8b229154-d8a2-11db-a759-000b5df10621.html

The Federal Reserve helped create a “perfect storm” in the US subprime mortgage market that could expose up to 2.2m more Americans to the threat of home foreclosure, Chris Dodd, chairman of the Senate Banking committee, said on Thursday.

“Despite those warning signals the leadership of the Federal Reserve seemed to encourage the development and use of ARMs that, today, are defaulting and going into foreclosure at record rates,” he said.

Mr Dodd, who was supported by Richard Shelby, the senior Republican on the committee, also expressed frustration at the fact the Fed had so far failed to issue promised guidance to tighten controls on the $1,200bn subprime mortgage market.

An estimated 1m subprime borrowers will have their rates adjusted sharply upwards this year and another 800,000 next. Roger Cole, a senior Fed official, said the guidance would come out by May at the earliest. But he conceded that the Fed could have done more.

 

[Austin]

http://www.theglobeandmail.com/servlet/story/LAC.20070323.IBSUBPRIME23/TPStory/Business

Poor Allen

I hate it when a Democrat gets something right and I have to agree with them. I just feel so cheap and used. I feel the urge to just go take a bath.

 

[Randolph Kinney]

Existing-home sales rise 3.9% in February

http://www.marketwatch.com/news/story/us-existing-home-sales-increase-third/story.aspx?guid=%7B8B345C8E%2D335A%2D4977%2D8344%2D2E867AEB2750%7D&dist=bnb

WASHINGTON (MarketWatch) - Sales of existing homes unexpectedly rose 3.9% in February to a seasonally adjusted annual rate of 6.69 million, the National Association of Realtors reported Friday.

Inventories of unsold homes rose 5.9% to 3.75 million, representing a 6.7-month supply, up from 6.6 months in January. Inventories are not seasonally adjusted.


The median price of a home fell 1.3% year-over-year to $212,800, the seventh straight monthly decline.