Global Warming Examiner

Homeowner Equity at Post WWII Low

I am not surprised that home equity is lower with falling home prices. But that may not be the only reason. With interest rates below the inflation rate, the prospect of the dollar continuing to fall, and investments available in hard assets and/or foreign currencies; wouldn't it make sense to borrow against your home at a fixed rate with the plan on paying it off later with 'cheaper' dollars even if you could pay off the loan balance now.

NAR's Lawrence Yun Continues to Mislead on Housing

The two extremes: things are much better than you think and the sky is falling.
The prices are going to come down/ be weak until supply equals demand. This will happen when the overhang of people needing or wanting to sell their homes is cleared by people who have a chance to buy more now more affordable homes. The Fed is doing all it can to create easy money for people to buy homes by making mortgages more affordable and increasing inflation which will drive up the value in dollars of real assets like homes.

Are home prices weak - yes
Will home prices keep dropping - maybe
Will home prices fall to 1999 levels - not with current Fed policy

Probably a good time to start looking at the builders again, especially the strongly capitalized ones.

Commodities vs. REITS

I liked your article. Lots of good background on REITS and Commodity investing. In regards to REITS, the current credit crunch is limiting the availability of funds to property developers, thereby reducing supply. This has the same positive effect on existing properties as high interest rates without the actual cost of higher rates. This should be a positive for the large, existing, quality REITS. If anyone on the site has suggestions on specific REITS that might benefit, I am interested.