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Housing Is Moving Towards Disaster

[We assume that these folks can count better than that and there is a typo somewhere in the press release.]

Don't assume anything. Insiders know that their "information" is often faulty and outdated.

[Employment picks up significantly over the next 6-9 months, starting now.]

Not gonna happen. 80% of big co. CEO's have no plans to hire in the next 6-12 months. And even small business owners in thriving industries are hesitant to add employees due to the unpredictability, insanity and incompetence of this administration, not to mention the preferential treatment given to big biz by this administration.

Oh yeah, I forgot to mention the specter of health insurance "surcharges" and increased costs due to cap and trade.

More Reckless Home Lending, Courtesy of Fannie and Freddie

I believe the primary purpose of this provision is to allow homeowners to refinance out of loans wherein the remaining balance exceeds the value of the home.

In case you didn't know, it's in the Constitution that overencumbered homeowners are endowed by their Creator with the right to keep their homes at all costs, and that "no loss may befall a mortgage investor, should a quasi-governmental agency be able to prevent it."

The Assault on Ethical Home Appraisals, Part Deux

[We see low appraisals as a key issue we think will disrupt closings and hurt pricing for some time given the more stringent appraisal guidelines enacted last month.]

Well at least we know who to blame.

Why hasn't someone from the administration had a talk with these appraisers?

I suppose they could squeeze the appraisers out of the process somehow, like they've done with the foreclosure avoidance refis.

We'd all be better off if the government funded the loan, backed it, originated it, marketed the property, etc.

We've gotta make this process incorruptible. Only the federal government should be trusted with such important work. This is important, and we cannot tolerate any delay.

The Assault on Ethical Home Appraisals, Part Deux

[The realtors have a lot of friends in Congress and since we seem to be headed back to the good old days when politicians in exchange for a few bucks let industry write their own regulation]

I'm sorry... I wasn't aware that had ever gone out of style.

Home Buyers: Conspicuously Missing Legislation

I don't disagree at all with the concept of buyers having skin in the game.

However, a price will have to be paid to accommodate this shift.

The average American has a small-to-negative savings rate.

What's the median home value now? 180,000?

180,000 * 5% = $9,000.

I look at people's personal financials all day long.

Most people don't have a month's worth of expenses saved up, never mind a 5% down payment.

If we're going to move in that direction overnight, then we're going to have to wait awhile for people to buy houses.

More on the Scarcity of Land Debate

[But we do not really have a land shortage. ]

Flint, MI thinks it needs to raze about 40% of its housing.

This is being hailed as a model for other areas of the country.

Others will follow.

Housing on Fire - Can Someone Please Explain?

[Someone buys a house for $200,000; loses it through foreclosure; sees the bank sell it for $50,000; rents it from the new owner for $1000 a month and two years later buys it back from them for $125,000.]

Ahhh... such an elegant business model. However, even in the days of easy money, lease-purchase transactions were only successful 20% of the time, at best. Granted, if you buy low enough, and the renters are plentiful, you can replace them. But after the 2nd, 3rd, or 4th renter, the place begins to look less like a home and more like a rental, the credit quality of the subsequent tenant/"buyers" begins to decline, and at a certain point, the asset begins to lose its luster.

A few additional assumptions are also being made: 1- prices will not fall further, 2- Interest rates will remain low, 3- FHA will continue to make poor lending decisions, 4- The "buyers" will actually do what they're told at the seminars.

That last point is a bit tricky. Towards the end of the bubble and the beginning of the crash, a lot of ARM-owners were not able to qualify for lower long-term rates because they didn't take the steps necessary to EARN those kinds of loans. People are often willing to do "whatever it takes" at the outset, but very few deliver.

U.S. Government Paying Homeowners to 'Walk Away'

The economic value of staying longer usually exceeds the amount of the check offered.

The average American may not be able to calculate the risk of an ARM re-set that can't be refinanced, but they do know how to tell if a few month's rent is greater than the bribe to move out early.

Seven Reasons the Market Has Already Bottomed

[Studies have also shown that tax breaks are more likely to be spent when in they're in the form of payroll modifications.]

Particularly when the amounts are so small. A big check is more likely to be carefully spent, while these little dribbles are more likely to be pissed away.

If they wanted this money to be SPENT, this is certainly a supremely effective method.

Not sure as to whether that's better for us or not, although I'm leaning towards the latter.

Seven Reasons the Market Has Already Bottomed

[1. Attractive House Prices

House prices have fallen 29% on average since their peak in July 2006. ]

Using the same logic, AIG, FNMA, FHLMC, etc. are screaming buys.

I don't think the decline is over yet.

Most of those who talk about how "attractive" house prices are right now are not actually in the market looking to buy right now.

So it's apparently a good time for everyone else to buy.

Why My Housing Plan Should Be Implemented - Now

[The cost is small, since the government in return for its payment gets a real asset, not a toxic asset]

Clearly, you haven't bought a lot of homes in the "bottom half" of the market.

[...and since the government pays the market price, not an overblown price. The government’s net cost is only the interest cost of holding onto such assets until the market finally regains health and the government can sell it at or above the original acquisition price.]

Okay, buy a distressed asset in a declining market, and your net cost is only the interest cost. Hmmmm.

[Thus capital gains are expected, and rental incomes can offset the interest cost.]

Obviously, you haven't bought many homes and rented them with the expectation of re-selling them.

The costs of converting them to "ready-to-sell" would eat you alive.

You might spend some time talking to property owners in AZ, CA, and FL and ask them how well this approach works.

In addition, you have costs of sale and upkeep during the marketing period.

There's a difference between researching the housing market and actually getting your hands dirty buy playing in it.

Your theory works great in a vacuum, just not in the real world.

Personal Responsibility and the Housing Bubble

[What happened to putting 20% down on a home?]

If you'd like housing prices to deflate another 50%, then requiring a 20% dp would do nicely.

[What happened to taking out a mortgage where the payments were affordable for the duration of the loan?]

Now there's a good question. Pre-2003, you couldn't sell an adjustable rate mortgage with a shotgun in your hand.

[The doctor admitted to not reading any of the loan documents saying she did not have time to do that since she was busy running her medical practice.]

She's really not that unusual. Due diligence is a chore. How many average investors read a prospectus, much less get on any conference call, or check a company's financials before buying a stock? Watching Cramer or reading a blog is what passes for research.