Richo

2 Comments

    • UltraShort Real Estate ETF: The Only Safe Haven for Commercial REITs [view article]
      Thank you for your analysis. Apr 14 05:16 PM
    • GSEs: The Tail Wagging the Credit Market Dog? [view article]
      Disagree.

      Due to median income vs cost of living and consumer debt load the average consumer only has so much housing debt capacity.

      At the height of the boom loans were granted without regard for the consumers ability to pay.

      Home prices will fall until the median home reaches 2.5 x median wages.

      Another contributor to home price collapse, especially in the most frothy, speculative, markets is the current tightening in lending qualifications.

      The imposition of a down payment requirement eliminates a good percentage of potential buyers.

      The return to a combined maximum 45% (housing PITI + consumer payments) / verified gross monthly income will bring housing prices back into alignment with median imcome.

      In the intrum that leaves us with a giant overhang of over leveraged, underwater debtors. Many with poor histories of repayment.

      Until this resolves any company with exposure to the inevitable wave of mortgage defaults and housing price correction is a risky bet.

      How long before we have a bottom? With all of the "prop up the market" shenanigans I do not know the WHEN but we will be getting there when we see the above 2.5 x median income for median housing.

      My guess is after the option arms resolve themselves. Pretty interesting bulge of them out there in 2010.....but I suspect they will come into play before then.

      Good luck       Apr 11 12:02 PM
Loading...
Symbols:
Authors:
Quick Links:
Contribute an Article Become a Seeking Alpha Contributor

Transcripts

More Transcripts»