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Housing Bubble Bursting?

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Why rent? Especially now

This Is Why I Rent: Median Incomes Do Not Support Median Home Prices


median-income-priced-out.gif

The graph above demonstrates three very important facts.
  • Whenever prices rise more than the normal trend, they eventually correct and drop back in line.
  • This housing bubble is an absolute giant when compared to the housing bubbles of the previous decades.
  • Income levels haven't come close to keeping up with home price inflation. For decades, home prices strongly correlated with median incomes. In 1997, everything changed.

 
IndyMac rated as "junk"

IndyMac downgraded to “junk”

Moody’s Investors Service today downgraded the lender’s debt rating to “junk” status, Reuters reports.

The credit rating agency lowered IndyMac’s issuer rating, which measures the ability to honor unsecured obligations, one notch to “Ba1,” its highest junk grade, from “Baa3.”

Moody’s also cut the long-term deposit rating for IndyMac Bank to “Baa3″ from “Baa2″ and the short-term deposit rating to “P-3″ from “P-2.” The bank’s preferred stock was cut to “Ba2″ from “Ba1.” Further cuts are possible, Moody’s said.

The downgrade reflects a decline in IndyMac’s financials that stems from difficult mortgage industry conditions, Moody’s said.

“IndyMac faces a long-term challenge to restore profitability to historical levels,” wrote Sean Jones, a Moody’s senior vice president.
Click to expand...
 
Well, what makes sense to me is that when GRM goes to 180 or 200 (which means it takes nearly 17 years to pay out if you eat all the taxes and expenses and put every dime income into the property with 100% occupancy. That makes it a pretty poor investment. So renting makes more sense. And therefore the investor is probably looking for that closer to 120 or less GRM so "Years to Payout" does not exceed 10.
 
Mine may be a short-sighted, microeconomic perspective . . . however, if a "typical" value in a "typical" market in SoCal is down by 10% during the past 45 days--as based upon the most recent 100 properties I have researched--and if the brunk of the bulk of foreclosures has not yet been experienced; and, if the volume of active listings is increasing exponentially, with distress-related list prices 15% -30% less than non-distress listings, would that not reflect a potential decline of 20% - 30% during Q3 and Q4 of 2007 alone?

It appears to me that the most dismal industry forecasts present a rosier future that my crystal ball reveals...
 
Dang, the dow's overnight volume was really huge. Anyone know why?

But that huge volume barely budged the numbers.

Is sudden huge volume a sign that smart money is making some sort of move?

Does anyone think it is just profit taking while the DOW is unnatually high?
 
The stock market is in a Dead Cat bounce with a dash of the suckers rally.Where's the Enron accountants when you need one.The higher the suckers rally the harder they will fall , it will be a big day in october...
 
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