Yoski

Estimated Change in Home Prices

Miami only going to fall another 7% from 10/08? That means we've hit bottom here in Miami. Prices are still unaffordable, jobs are drying up but we've hit bottom!? NOT!

Citi's Flip-Flop on Mortgage Cramdowns: A Really Bad Idea

You left something out. The judge can only reduce the loan amount ABOVE the appraisal which would be treated as unsecured debt. Of course that all depends on who does the appraisal. Let's assume for a second that the appraisal reflects true market value (I know, big assumption) then it is in the banks interest to have the principal reduced and keep the borrower paying a reduced rate. The alternative is foreclosure where the banks is pretty much guaranteed to recover less than true market value. The difference for the banks is made up by the tax payer through various bailout packages.

Inflation Concerns? That's So Yesterday

"In other words: inflation without the wage growth component. This means even greater government deficits. "
Most importantly this means a reduced standard of living for the vast majority of us.
If we would let poorly run businesses fail instead of bailing them out we might stand a chance to get back on our feet after a while, no matter how painful in the short term. Nationalizing poorly run business and piling onto the debt like there's no tomorrow will guarantee us that we will be a much poorer nation for generations to come.
While we're at it we should also nationalize brothels, that way at least we can make some money while getting screwed.

Last Gasp of a Doomed Currency

"The feedback I have received from people I know in the real-estate Industry is that prices of both bank-owned and non-bank owned properties have bottomed out."
But they've been saying that every month for the last 2 years. I'd figure eventually even the most gullible people catch on to that. Guess I figured wrong.

Six Situations to Monitor for the Remainder of 2008

$4 trillion later and the guy that master minded the 9/11 attacks is still free. Country bankrupt, economy and banking system failing. Mission accompilshed!
America despeartely deserves everything it has coming to it!

Welcome to the Mortgage Business

The cost to the taxpayer will be more like $200-300 billion given the current state of affairs (5% losses on $5 trillion in assests).
"To promote stability in the secondary mortgage market and lower the cost of funding, the GSEs will modestly increase their MBS portfolios through the end of 2009."
This means there will be substantially more questionable mortgages added from now until the end of 2009 and probably well beyond. Banks get to off load all their junk and in addition get to make more sub-prime mortgages. They get to keep the profits and unload the risk right onto the taxpayer. In the end it will probably cost in excess of $1 trillion dollar and might only stop once the US government is insolvent. Let's not forget, in addition we have to bailout auto makers, airlines, monolines and foreign countries we tend to invade from time to time. The leading edge of the boomers is taking early retirement this year. In the end, the only way this can be paid for is the monetization of debt, ie. hyper inflation. It might be another 10-15 years before this happens, but the ground work is being laid today.

The Merits of Staying in Cash

"We can produce synthetic oil from natural gas and coal for an average of $65 per barrel"
Wishful thinking, nothing more. These days it costs about $100 a barrel to produce oil from tar sands, deep water or coal. Natural gas is an alternative, sure. But it is not overly abundant either. Most of it gets used for power generation and heating. Oil service companies are still a decent investment looking forward. Especially oil rich regions that don't have a clue about technology (Venezuela comes to mind) will hire those companies to get production moving again.

Market Outlook: It's Still All About Housing

DougM
" Do you think the commodity bubble is done? "
I don't think commodities are a bubble. The stuff is scarce and getting scarcer, long term demand is increasing. A typical supply-demand squeeze. Once the price gets too high something breaks...like the world economy. Then demand drops as do prices. That's what we're currently experiencing. Things stabilize for a while. Then demand starts increasing again while supply has been droping all along. You get the next price spike and the economy will contract again, prices will drop again, etc.. I'll wait a bit longer for commodities to pull back and the economic situation to stabilize, then I am back in full force.

Some Real Talk on Housing

Once the housing bubble deflates it will most certainly overshot the trend line because:
1. That's what bubbles do when they deflate.
2. Declining real incomes of most Americans (affordability)
3. over supplied market (vacancy rates)
4. much tougher lending standards
5. Houses will again be viewed as places to live, not investments
6. housing will be completely discredited as an investment
7. far flung places in the burbs will be nearly worthless as the energy crisis takes a hold
The housing bust still has a long ways to go and will overshoot 2002 levels be a long shot. It will also take a long time to recover. Keep on dreaming about a V shaped bottom. Not going to happen.

Realtors, Prepare to Lose Your 6 Percent

I see a lot of angry 6%ters are chiming in. Time to get a real job. A Real Estate Agent is about as obsolete as a travel agent or a used car sales agent. I always avoided those leeches like the plague but I have to admit it is difficult doing so because 90% of all properties are listed with agents. So you are usually out of at least 3% of the purchase price.

Fannie Mae - Or May Not

The "Plunge Protection Team" can only put lip stick on a pig for so long. Ben at the FED pawn shop is already taking in gun, tools and old jewlery as colleteral to make payday loans for broke bankers.
Eventually the government will be hit by too many players that are too big to fail. There won't be enough money to bailout all that needs bailing out. Investors around the world aren't likely to throw any more good money after bad (even so I underestimated the stupidity of foreigners before). At this point government will only have 2 equally bad choices left. Let'em eat cake or print more money. My guess is they'll print more money.

An Alternative Script for NAR's Chief Economist

“If you paid your mortgage off, it means you probably did not manage your funds efficiently over the years,”
If you lost you life savings gambling on real estate you probably did not manage your funds efficiently over the years.
Now that's what I call a paradigm shift....bwaaaaaahhh!!...

AIG, Fannie and Freddie Put the Crunch on Condo Mortgages

A friend of mine lives in a 2/2 condo in Bal Harbour (Miami area). She rents it at $1600/month. Taxes run $1000/month, HOA are $600 and special assesments (roof, elevators, swimming pool, etc) are another $250. That's a grand total of $1850/month in operating expenses. Even without considering the mortgage the place is a 1600-1850=<250> a month liability. How much would you pay for a place that COSTS you $250/month when rented? Certainly not anywhere close to the $600K aksing price. Personally I wouldn't pay $1 for it.

The Decline in Median House Prices Sets New Record

In Miami we still have another 50+% to go considering current price levels. That would put us back to 2000 prices. A 1200 sqft 2/1 slum dwelling is still offered (not sold) @ $200K, down from $350K at the peak. Realistically it might be worth $60 - 80K, that's about all you can afford if you make $10/hr and have 2 incomes. Since it appears that sanity has returned to banks lending standards there's absolutely no financing out there for those type of properties unless you have 20% down. Prices still have a very long way to fall here in Miami.

The Moral Hazard of Creditors

"Regulators can make clear that recently withdrawn funds will be pursued aggressively, in order to treat all creditors equitably. It makes less sense to stage a run on the bank if you know that the bank will come right back and stage a run on you."
That's not going to work. Once the horse left the stable it's gone for good no matter how aggressive the bank or regulators will pursue it. By the time they catch on chances are that money already found a new home on far away shores. Good luck with that pursuit!