Housing Bubble Bursting?

[Greg Bell]

The stock market crash of 1929 launched the Great Depression. The Depression was the time from October 1929 to the mid 1930’s. Mass poverty occurred then, as many workers lost their jobs and were forced to live in shanty towns. Former millionaire businessmen were reduced to selling apples and pencils on street corners. One third of Americans were below the poverty line in the Great Depression. The Dow Jones finally surpassed its 1929 high, a full 26 years later in 1955.

The stock market crash of 1929 was identical to any other financial bubble. The classic pattern of extreme euphoria and irrational expectations will always lead to devastating financial crashes. Learning how to identify these timeless patterns will allow you to profit whether the market is rising or falling.

 

[Randolph Kinney]

FDIC warns banks to keep safety net

http://www.thenewstribune.com/business/story/76797.html

Noting an operating environment that is “more challenging than it has been in recent years,” Federal Deposit Insurance Corp. Chairman Sheila Bair warned Thursday that regulators and bankers “need to ensure that new global capital standards do not threaten the safety net.” That net of capital on hand stretched during the first quarter as bank income fell.

The FDIC said income fell because of “the housing slump, unfavorable interest rate conditions, slower growth in the U.S. economy and higher levels of problem loans.”

Net charge-offs of defunct loans and leases at all insured institutions nationwide totaled $8.1 billion for the quarter, a 48.4 percent increase over the same quarter in 2006.

 

[Greg Bell]

The NAR can try to spin and lie as hard as they can, but there comes a point folks, like when the water was coming over the bow on the Titanic, when people realize it's all over, and now the rush to the lifeboats begins.
Folks, you are witnessing a housing crash of historic proportions. You will tell your grandkids about this time one day. The gears are starting to lock up now. The center is not holding. And a chain reaction meltdown is fully underway.

I hope you've found your lifeboat. Better hurry, they're getting pretty crowded.

 

[Greg Bell]

Should we take at face value the BLS report today that job growth in May was 157K? It is highly likely that these figures will be sharply revised downward in due time. Why?

Last year the BLS reported 498K private sector jobs created in Q3 with still positive job growth in construction. But last month the BED (Business Employment Dynamics) survey of the BLS showed that job growth in Q3 was actually 19K and that 77K jobs were lost in construction alone. So, the BED-time fairy tale of half a million jobs created in Q3 (when GDP growth was still a modest 2.2%) turned out to be practically zero (repeat “practically zero”) when a more precise survey of these payrolls was made a few quarters later.

Today instead we are presumed to believe that $157 jobs were created in May and that employment change in construction was close to zero in spite of the fact that housing starts have fallen over 30% from peak, in spite of the fact that the housing recession is worsening and, in spite of the fact that numerous studies suggest that a good third of all construction jobs are undocumented. Based on the historical correlation between housing starts and construction employment we should be observing now at least 50K job losses per month in construction alone. Add to those the dozens of thousands of workers being fired as about forty sub-prime lenders are closing shop; add to those the dozens of thousands of mortgage brokers, mortgage lenders employees, real estate brokers and agents that are now losing their jobs. Do these job losses appear anywhere in the employment report? Not even the shadow if it: in May the BLS reported that “real estate” related employees in financial institutions were actually up 1.4K? Does anyone believe that?

 

[Austin]

I am in an office on the same hall with a real estate lawyer and title company. Tuesday after labor day I was printing reports and standing outside smoking a fine quality Cuban cigar waiting on the printer. My lawyer buddy came out the door headed for the court house. I asked where he got that nice Sun tan. He said he spent the Labor Day weekend at an exclusive resort on the South Carolina Coast playing golf.
He then replied: "Austin, you would not believe the property for sale down there. The bottom has really fallen out." This ain't no subprime community. At lunch I ate with a buddy that owns property at a NC beach and told him about it. He said “it is the same thing along the NC coats. Wall to wall for sale signs.”
The thing about this that these people are not subprime. This is a gold coast area and we are talking the loss of billions in the coming years. This one of those cases where it appears that prices are holding their own because nothing has sold recently to prove otherwise. I am going down next week to check out the situation. Not really, but if I say that I can deduct my vacation expenses.

 

[Alison Swain]

Not really, but if I say that I can deduct my vacation expenses.

You can also expect work to increase 5-fold.

 

[moh malekpour]

House prices falling from peak

http://www.ocregister.com/ocregister/money/columns/article_1716753.php

 

[Randolph Kinney]

The coming decline in house values

 

[Alison Swain]

Here's what the Florida Assoc. of Realtors faxed to me this morning:

"The worst of the housing slowdown is over and the nation's economy withstood the blow without slipping into negative territory," a University of Central Florida economist said last week.

"'The economy was staggered by the housing correction but not knocked down," said Sean Snaith, director of UCF's Institute of Economic Competitiveness in his second-quarter forcast for the U.S. Economy.

Central Florida economist Frank Fishkind agrees, "We have seen the worst for housing markets."


These two need two leave the UCF campus, turn left and drive 3 miles southeast to Avalon Park. Between production buiders slashing prices by tens of thousands, paying 3 years' worth of HOA fees and/or a year's mortgage payments, and homeowners selling their properties to one another to falsely keep values high, Central Florida is in for a prolonged period of recovery from continued mortgage fraud.

 

[Randolph Kinney]

http://www.ocregister.com/ocregister/money/columns/article_1716753.php

You can always cite CAR as the proof that prices are actually rising; that goes along with NAR too.

Only California Realtors' industry tally of median-priced single-family houses sold through its network is at record heights. After nine straight months of year-to-year price declines, in the latest report – for April – a new peak was hit, topping February 2006's old high. Still, the Realtors index is up just 2.5 percent in a year.