jimbomo

Declines from Peaks in Housing Show Big Disparity

Nearly every article on housing misses the point. Houses are not worth more that 2.5 to 3 times household income. They are primarily shelter for their owners - not retirement investments or inflation hedges. It doesn't make any difference how far prices go down until we reach this 2.5 - 3 x figure.

I lived in San Diego during 2007 and noticed that houses in the neighborhood where I rented were selling for around $600K. I can guarantee that very few if any of those households had incomes of $200K + per year.

What Kind of Government Support Will Fannie and Freddie Get?

Fannie and Freddie are only symptoms of the U.S. cancer - an over-leveraged economy and ineffective government. A severe recession or depression is the only cure.

See: market-ticker.denninge...

Rising Global Food Prices: Trading Guns for Butter

I view this as information as a harbinger of bad things to come for emerging economies. This quote is telling:

From a GDP perspective, the U.S. has it easy in weathering food inflation. Food is only 7% of overall economic consumption. But in Asian economies like China, India and Vietnam, food costs account for anywhere between 30­‒50% of overall consumption. Every uptick in food prices has a vastly more significant effect on local economies than here at home.

Added to this is the upsurge of energy costs that will also be a drag on poorer economies.

So, the investment possibilities are - short equities in emerging economies.
EOM

Labor Data Spell Recession

Another 50 points = weaker dollar = higher oil and gas and food = less consumer buying. Repeat this until interest rate = 0 and the next bubble starts.

ISM Manufacturing Index Rebounds

Wait a minute, I thought this was good news. It looks like the new orders fell out of bed.

"New orders, the best predictor of economic growth in the near-term, led the declining categories falling from 49.1 in February to 46.5 in March."

EOM

Amend Jingle Mail Laws

California has a "non-recourse" law for the purchase mortgage if the home is the primary residence. However, I think this is the exception rather than the rule. I practiced law in Texas and we used to make jokes about "non-recourse" loans because we could not believe any banker loan money without having the right to sue the borrower for the balance due after the collateral was sold.
EOM

Investor Sentiment and Market Returns: Now's the Time to Be Bold

If we were looking at a chart from a physics or chemistry experiment, I might believe this data. However, there are simply too many variables to account for in a global economy. This data may be a piece of the puzzle but it seems illogical to rely on it too much. EOM

Home Prices Fall 11.4% in January: A Chance to Hit Bottom?

I wonder if we will ever see a real bottom or merely sideways movement with a slow drift downward (like Japan experienced). One reason is because of garbage like this mortgage broker's ad for FHA loans:

--FHA Mortgages - For New Home Purchases and Refinances

--FHA Raises Loan Amounts! Now even more loans qualify.

--FHA mortgages, which are insured by the Federal Housing Administration, are a helpful tool for people who might not qualify for conventional mortgage programs. They offer:

* Low down payment requirements, mortgage insurance and closing costs
* Cash-out refinances up to 95%
* Easy credit qualifying for people who have poor credit or lack a traditional credit history
* Past bankruptcies can still apply
* Help for people with low-to-moderate incomes

--Programs:

Buying your First Home
FHA might be just what you need. Your down payment can be as low as 3% of the purchase price, and most of your closing costs and fees can be included in the loan.

The mortgage broker claims he gets 3 out of 4 applications approved. This is the kind of crap that started all this. The FHA is setting people up to fail a few years down the road.
EOM

Durable Goods Orders: Not as Bad as They Seem?

You make a good point and I believe we would have seen more excitement from the market if the results had been "marketed" this way. In fact, earlier this week the NAR said that sales of existing homes were up from the last month, which they were, but still down significantly from last year's same month results. But the market went up.

Personally, I think investors should be smart enough to interpret the data each way and I believe they did. The NAR data looks like the reversal of a downtrend but the durable goods data looks like a continuation of a downtrend.
Also, I'm assuming the durable goods data is raw numbers, not adjusted for inflation, and therefore maybe just flat YOY.
Jim
___________
My opinion is worth what you paid for it.

Housing Crash Unaffected By Fed Actions

I agree with the logic of this article but I also believe the Fed and government will bail out those homeowners who are not too far under water and will start backing mortgages (new and old) which are marginal. As some evidence, I offer the following post from a mortgage broker on www.patrick.net :

www.fhahomeloanmortgag...

FHA is easy to qualify for, the program was created to help to increase homeownership in the United states. FHA program makes buying a home easier and less expensive than other types of real estate mortgage Programs. Some examples include,

Minimal Down Payment and Closing Costs.
• Down payment less than 3% of Sales Price and 100% Financing options available
• Gift for down payment and closing costs are allowed up to 6% of Sales price.
• No reserves or savings required.
• Easy Credit Qualifying Guidelines
• No minimum FICO score or credit score requirements.
• FHA will allow a home purchase 2 years after a Bankruptcy.
• FHA will allow a home purchase 3 years after a Foreclosure.

www.FHAmortgageProgram...

THIS IS THE SAME BS THAT CAUSED THE BUBBLE IN THE FIRST PLACE.

THERE IS ALSO SOME PRECEDENT FOR BIG BAIL OUTS IN THE U.S. - CHRYSLER, SAVINGS & LOAN MESS, AND GREENSPAN'S LOW INTEREST RATE BAILOUT OF WALL STREET.

EOM

The End of the Bear Market?

I hope you're right but I'm skeptical of any analysis that does not consider the underlying driver of our economy - consumers. This type of "Wall Street" view frustrates me because I see so many of my fellow citizens in dire financial straits. Their debt load is too high and their house is no longer an ATM. So, their only solution is to tighten their belts or default and start over. Either way their free spending days are over. EOM