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John Thomas graduated with a bachelor’s degree in biochemistry with honors and a minor in mathematics from the University of California at Los Angeles (U.C.L.A.) in 1974. He moved to Tokyo, Japan where he was employed by a medium-sized Japanese securities house. Thomas became fluent in Japanese... More
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  • Home Sales Figures Aren't Point to a Bottom 1 comment
    May 4, 2009 4:51 PM

     March pending home sales jumped a surprising 3.2%, according to the National Association of Realtors, prompting another tidal wave of calls that we have hit bottom in the real estate market. Obama’s $8,000 tax credit for first time purchasers ($14,000 in California), record low mortgage rates, a feeding frenzy by sharks and flippers, and the lowest prices in a decade were the cause.  Contracted purchases were up 3.9% in the West (California) and down 5.7% in the Northeast (Michigan). I think we are anything but out of the woods. Several state and federal moratoriums on foreclosures are about to expire, unleashing another onslaught of foreclosures and short sales on the market. While inventories are shrinking for the moment because of the near shut down on new home construction, unemployment induced delinquencies are still soaring. At this stage of the economic cycle, you can count on seeing a raft of contradictory data. I’m afraid that I’m a glass half empty guy on this one. With all of the reasons to buy listed above, where are the multiple offers and the bidding wars? Continue to rent.
     

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  • Nom de Guerre
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    Well, the housing perma-bulls at the NAR said the downturn would never happen either. Does anyone remember the "soft landing" thesis they promoted back in '05 and '06? They've been bottom-calling for the past three years. Paid NAR shill, David Lereah even called a bottom in January 2007. LIke a broken clock, they will eventually be right if they continue calling a bottom every few months. (Then, they will have been "right once in a row.")

     

    In my area of the San Gabriel Valley, I've been watching the real estate market from the sidelines for the last eight years. After leaving active military duty in 2001, I thought about buying a house, but decided to wait in order to save more money for a down payment. As my savings rose, so did the prices. In 2004, I found myself in Iraq after being recalled to active duty from the reserves. I had a good internet connection when I wasn't under mortar or rocket attack and could plainly see an out of control bubble forming. I had absolutely no idea that it could go on for as long as it did.

     

    Now, after making the prudent decision not to buy at inflated prices, I'm being punished by the Bush/Obama administrations who want to insulate the poor decision makers from the consequences of their bad decisions. Nice! What is America becoming???

     

    I wish it was common knowledge that Realtors are not your friend. The vast majority want you to pay as much as possible for the house. How else are they going to afford a new Lexus every two years? I'd like to say that Realtors are on par with used car salesmen, but I don't want to insult used car salesmen.
    5 May 2009, 07:14 PM Reply Like
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