Housing Bubble Bursting?

[Austin]

http://www.bloomberg.com/apps/news?pid=20601087&sid=a0X4zgNm8Ibs&refer=home

Citigroup to Raise $7.5 Billion From Abu Dhabi State (Update3)
By Will McSheehy and Bradley Keoun



Nov. 27 (Bloomberg) -- Citigroup Inc., the biggest U.S. bank by assets, will receive a $7.5 billion cash infusion from Abu Dhabi to replenish capital after record mortgage losses wiped out almost half its market value.
Citigroup rose 2.6 percent in New York trading today following acting Chief Executive Officer Win Bischoff's statement late yesterday that funds from the state-owned Abu Dhabi Investment Authority will help ``strengthen our capital base.''

Wonder if they have any good used office furniture? Why don't we get up a pool get some of that 11% return?

 

[rcsone]

....wonder who is keeping up with all this who owes who stuff accurately.........cannot be any trees left to chop or climb...rs

 

[Randolph Kinney]

I wonder if 11% is high enough for the unknown level of risks? $7.5 billion can eviscerate by moving one SIV onto the balance sheet.

 

[Lloyd Bonafide]

Homeowners' big question: How low will prices go?

http://www.latimes.com/business/la-fi-howlow27nov27,0,5862638.story?coll=la-home-center

Southern California home prices have fallen for five straight months, according to data released this month, and are now down 12% from their peak last spring and summer.

For most of this decade, skyrocketing home values were a frequent topic whenever people gathered along soccer sidelines or at backyard barbecues. But the conversation has taken an about-face, noted Jeff Vendley, a Ventura mortgage broker who is trying to sell two Oxnard town houses he bought in 2004 and 2005.

Now, he said, people are wondering, "How low we can go?"

No one knows how severe the slump will be, but economists and real estate experts interviewed by The Times, and who were willing to make predictions, said prices could fall 15% to 25% before turning back up.

 

[Austin]

I am watching Fox Business Channel and they just interviewed Judge Palatano about HR 3875. He said if it passes it will destroy the banking industry. No way banks can stay in business because they get sued if they don't make loans to low income risk purchasers and they get sued if they do and they lose the property.
I have been telling you guys this housing policy was political franking on a grand scale. It is all about buying votes and the chickens are coming home to roost.

 

[Randolph Kinney]

This graphic says it all

Just a few months ago, some were saying "What decline?". Now some are acknowledging the decline and saying "How far down?"

Interesting to note that DataQuick is their source. Maybe they should send a copy to NAR as a wakeup call?

 

[Alison Swain]

"No one knows how severe the slump will be, but economists and real estate experts interviewed by The Times, and who were willing to make predictions, said prices could fall 15% to 25% before turning back up."


I think they're being naively optimistic.

 

[Randolph Kinney]

It's official: all cities in the Case/Shiller index declined

Home prices falling everywhere: S&P

WASHINGTON (MarketWatch) -- U.S. home prices were falling in every region of the country in September, according to a closely watched index of home prices released Tuesday.

Home prices fell in September in all 20 major cities covered by the Case-Shiller price index, even in cities that had been holding up before the August freeze in mortgage markets, Standard & Poor's reported.

For the national Case-Shiller home price index, prices fell 1.7% in the third quarter compared with the second quarter, and were down a record 4.5% in the past year. It was the largest quarter-to-quarter price decline in the 20 years covered by the index.

For the first time in this housing cycle, prices in all 20 cities dropped from the previous month, with the biggest declines in the former bubble cities of Miami, Phoenix, San Diego, Las Vegas, Los Angeles and Tampa.

For the 20 cities, prices fell a record 4.9% year-over-year. Meanwhile, prices were down 5.5% year-over-year in the original 10-city index, the largest drop in the 10-city index since 1991.

The last time prices fell so much, it took more than eight years for home prices to return to their peak level.

Some pundits say it may reach a 15% decline nationally from its peak. Looking at the rate of decline, the housing market is in free fall with no bottom in sight.

 

[Tim The Enchanter]

Interesting stuff, some of which I saw in the Times already.

In my daily work I'm seeing more and more neighborhoods with very low absorption rate, and a big oversupply.
And median prices falling down the stairs.

 

[Austin]

I heard on Fox Business last night that there are in Miami 25,000 condos vacant and 25,000 more are coming on line this year. The most condo's every sold in a year in Miami is 5,000 making a 10 year supply. Discount those sales back to present value at 7% and you are looking at around 50% or so economic obsolescence. Throw in condo fees, maintenance and upkeep, and age then you are talking more like 75%.

The funny thing about this saga is that the dude that taught my AI class on market analysis is from Miami and his firm does all of the big market analysis projects. Should I ask for a refund?