Housing Bubble Bursting?

[Austin]

The inventory of single-family homes represented a 10.2 months' supply, the most since February 1988.

This statement is a good example of why you can't trust what you read in these reports. Taking the sale rate and dividing it into the number of for sale properties is not a 10.2 month supply, it is only an index of market activity.

For example, a city of 10,000 homes has 500 excess supply with no household growth. Say they had 250 sales last month. That means a 2 month supply. How many do they have in supply at the end of the 2 months? The answer is 500 so how could you exhaust the supply in 2 months? What we have is frictional vacancy at a high rate or a gross over supply that can only be absorbed by household growth over time.

Here is how this index can be used. Dividing the number of sales per month into the available supply results in the following numbers. Tell me what the index indicates? 2, 6, 9, and 12 in that order over the last four months. It means the market is slowing down and in that story above a 10.2 months supply means the national market is heading into deep dodo. The fact that the NAR stated these numbers means the dodo is going to really get deeper in a hurry. Hold your noses high and stand on your tip toes.

 

[Randolph Kinney]

IndyMac going down, down, down - where's the bottom?

IMB - $11.86 down 9.88% as of now.

Countrywide falls to 4 1/2 year low on option ARM concerns

I suspect maybe IndyMac is being tarnished by Countrywide however, problem loans are increasing across the board. The market is discounting future bad news for all lenders and securities dealers in mortgages.

At what point would anyone buy IndyMac?

 

[moh malekpour]

IMB - $11.86 down 9.88% as of now.

Countrywide falls to 4 1/2 year low on option ARM concerns

I suspect maybe IndyMac is being tarnished by Countrywide however, problem loans are increasing across the board. The market is discounting future bad news for all lenders and securities dealers in mortgages.

At what point would anyone buy IndyMac?

Morningstar Alert

IMB
10-24-2007 10:20 a
IMB has fallen more than 10%
The price of this stock moved down -11.398% from $13.1600 to $11.6600

Morningstar Alert

CFC
10-24-2007 11:00 a
CFC has fallen more than 10%
The price of this stock moved down -10.498% from $15.0500 to $13.4700

Is out there a competition ?

 

[Austin]

US home sales fall to fresh lows, glut of unsold homes rises
Oct 24 11:25 AM US/Eastern
http://www.breitbart.com/article.php?id=071024152444.1bd2qxem&show_article=1

The depth of the housing depression was underlined by an annual reading which showed sales of homes and apartments across the United States have plummeted a hefty 19.1 percent from September 2006.

NOTICE THE USE OF THE “D” WORD FOR THE FIRST TIME!



Primer on how Financial Markets Work:
http://www.youtube.com/watch?v=SJ_qK4g6ntM&mode=related&search=
http://www.youtube.com/watch?v=Z5VeNwG3xms&mode=related&search=
http://www.youtube.com/watch?v=Fdx0FOQwQxw&mode=related&search=
http://www.youtube.com/watch?v=NAt311OlM7U&mode=related&search=
http://www.youtube.com/watch?v=5BiQGaE5j2k&mode=related&search=

 

[Randolph Kinney]

REO properties best marketed by the Internet

Foreclosure.Com Partners with Indymac Bank to Help Lender Market and Sell REO Listings

Prominent financial institution turns to America's largest and most reliable provider of distressed real estate listings to move REO inventory fast

BOCA RATON, Fla., Oct 24, 2007 /PRNewswire via COMTEX/ -- Foreclosure.com today announced a partnership with Indymac Bank(R) - the seventh-largest savings and loan in the nation - to market and facilitate the sale of thousands of Real Estate Owned (REO) properties via the Internet, adding another major national lender to its growing stable of prominent data sources.

In fact, each Indymac Bank(R) listing - similar to the other 1.2 million on Foreclosure.com - will enable interested buyers to contact Indymac Bank listing agents/brokers directly via telephone and email.

 

[Randolph Kinney]

Centex says housing decline is national, cuts prices

Centex lowering home prices in response to tighter lending

BOSTON (MarketWatch) -- Executives Centex Corp., one of the nation's largest home builders, on Wednesday said the company is lowering prices as tighter lending standards are making it tougher for buyers to obtain loans and further weakening demand for new houses.

"We in the industry experienced a complete resetting of products available to borrowers," said Chief Executive Tim Eller during a conference call with analysts to discuss quarterly results.

He said interest rates and qualifying standards on any mortgages other than agency products have become much more difficult.

"We responded quickly by adjusting home prices in many of our neighborhoods to levels that would enable buyers to qualify for FHA mortgages," Eller said, adding that the disruption affected nearly every region in which the builder operates.

 

[Randolph Kinney]

Excellent article on the declining dollar

What's Ailing the Dollar? Part II: Current Account Balance

The current-account balance measures the difference between what residents of the US collectively earn and what they spend.

If a nation's income is greater than its spending, the nation has produced more goods, services, and construction than its residents have purchased. The current-account balance is in surplus and foreigners purchased the difference. This is the case, for example, for Germany, which had a current account surplus of $148 billion in 2006 with a GDP of $2.9 trillion.

When spending exceeds income, the nation purchases more than its residents have produced. The difference is purchased from foreigners, and the current-account balance is in deficit. This has been the case for the US since 1991, but the trend change started in 1980. The US had a current account balance of negative $794 billion in 2006 against a GDP of $13 trillion.

The falling trend in the current-account balance of the US since 1980 reflects the fact that U.S. residents collectively spent increasingly more than income.

Income is either consumed or saved, and spending is either for consumption or investment. The current-account balance therefor measures the extent to which the US residents together save more than they invest. The fall in the current-account balance since 1980 has occurred because saving fell increasingly short of the amount necessary to finance domestic investment. The difference has to be borrowed from foreigners.

 

[Randolph Kinney]

The second wave of mortgage reset defaults - when?

To understand what you’re seeing above, you need to keep in mind where most of the option ARM lending took place during the housing boom - markets like California and Florida, markets that are now literally watching their property values nose dive in key regions throughout each state.

For these borrowers, a recapitalization of their option ARM mortgage will likely come at the worst possible time — 2010 and into 2011. Most housing pundits are suggesting that housing prices won’t stablize until early 2009 (even the NAR is predicting a lousy 2008). That suggests any recovery in housing may come far too late for a large swath of borrowers who will suddenly find themselves upside down and seeing their mortgage recast in ways they might even now think impossible. Hope springs eternal, after all, and 2010 seems a long way off.

In terms of billions of dollars’ worth of outstanding loan volume, the option ARM reset surge looks to be just as large as the subprime problem we’re now facing as an industry.

Given the likely battered and bruised condition of the market coming out of 2008 and into 2009, it’s looking right now as if 2010 could be a bad case of deja vu, all over again.

http://www.housingwire.com/2007/10/24/more-than-subprime-resets-the-real-meaning-of-two-waves/

 

[moh malekpour]

Reports Suggest Broader Losses From Mortgages

http://www.nytimes.com/2007/10/25/business/25mortgage.html?_r=1&hp&oref=slogin

At this juncture, economists say the troubles in the mortgage market could, all told, cost financial firms and investors up to $400 billion. That is far more than the roughly $240 billion cost, adjusted for inflation, of the savings and loan crisis of the early 1990s, according to estimates of the combined financial toll of that crisis on both the federal government and private sector.

The loss in total real estate wealth is expected to range from $2 trillion to $4 trillion, depending on how far home prices fall, according to several economists. That would be significantly less than the losses suffered by investors in the stock market collapse earlier this decade, which erased more than $7 trillion, or about 40 percent, of market value.

Experts caution that these estimates are preliminary and the total costs could get bigger still. They also note that the loss of real estate wealth could prove more damaging for the general public than falling stock values because more American families own homes than own stock.

In recent years, the rise in real estate values has helped propel consumer spending, as homeowners refinanced mortgages and took out home equity loans.

“There weren’t a lot of people living off their capital gains from stocks,” said Jane Caron, chief economic strategist at Dwight Asset Management. “There were a lot people using their home as a piggy bank.”

 

[Riick]

"We're doomed! We're all frickin' doomed." - Mogambo Guru

http://www.dailyreckoning.com/Writers/MogamboGuru.html