double beta

Coming Soon: Banking Crisis of Historic Proportions

Continued by not started by? Watch the wizard of oz. A great allegory about trying to convert to a silver standard. The Alaskan gold rush brough in enough gold to boost inventory and bring economy up with it.


On Aug 16 09:29 AM john s. gordon wrote:

> to what degree was the financial hardship of 1873-1907 caused/exacerbated
> by adherence to the gold standard? opinions please.

The New Foreclosure Prevention Plan

Force a subsidized 31% front end ratio so people can get a little more debt strapped on before they collapse. On top of it, we will pay these individuals $1,000 to do what they should do, pay for thier obligations. Markets do what markets do... And the only thing this will acomplish is ensuring the government eats more of the losses.

I really do like the phone number for the program 1-888-995-HOPE. 1-888-DUMB-A%& may be more fitting.

The Brighter Side of Falling Home Prices

This is a interesting angle, that is likely to become more attractive even if prices stay static due to the debasing of the currency.

When Will the Housing Market Bottom?

The author is stating a valuation methodology, he did not state anywhere in his article all $200K homes will rent for $2K/ month. I have been buying $50K condos and renting them for $650 per month in the Portland, OR MSA. To value against this benchmark, I am getting $2,600/ month.

The author makes several good points, what he does not mention is that there is a large population of people who cannot be financed (self employed, recently BK and recently forclosed) and will only be able to purchase a home through non-traditional methods (owner contract, family monies, etc...). This large pool of captive renters are driving the prices of rents up for typical low and middle income housing. The product in the higher stratifications of the market is not desirable for rentals in this market and probably is difficult to pencil in most.

When Will the Housing Market Bottom?

The author is stating a valuation methodology, he did not state anywhere in his article all $200K homes will rent for $2K/ month. I have been buying $50K condos and renting them for $650 per month in the Portland, OR MSA. To value against this benchmark, I am getting $2,600/ month.

The author makes several good points, what he does not mention is that there is a large population of people who cannot be financed (self employed, recently BK and recently forclosed) and will only be able to purchase a home through non-traditional methods (owner contract, family monies, etc...). This large pool of captive renters are driving the prices of rents up for typical low and middle income housing. The product in the higher stratifications of the market is not desirable for rentals in this market and probably is difficult to pencil in most.

When Will the Housing Market Bottom?

The author is stating a valuation methodology, he did not state anywhere in his article all $200K homes will rent for $2K/ month. I have been buying $50K condos and renting them for $650 per month in the Portland, OR MSA. To value against this benchmark, I am getting $2,600/ month.

The author makes several good points, what he does not mention is that there is a large population of people who cannot be financed (self employed, recently BK and recently forclosed) and will only be able to purchase a home through non-traditional methods (owner contract, family monies, etc...). This large pool of captive renters are driving the prices of rents up for typical low and middle income housing. The product in the higher stratifications of the market is not desirable for rentals in this market and probably is difficult to pencil in most.

Has the Housing Price Bubble Deflated?

People get distracted quickly by false horizons. Trendline up, double down; trendline down, pull the chips off the table.

There are alot of baby boomers and baby boomer accounts that have to realize a return on their investments inorder to even consider retirement. We have seized credit markets which dropped the velocity of money, once leverage re-enters the picture we will have a much bigger pool to multiply through the market thanks to our Fed's abilty to create dollars.

Like tech in 2001, we will be looking back at some 'shoulda-woulda' values 48-mos from now in residential, neverminding the inflation hedge. I am bearish for the next year on commercial, especially unanchored B & C retail and off market office.

If You Ever See a Chart Like This, Run Away Fast

What a gig.. 17-years of being a middleman and calling it a hedge fund. 2 and 20 off someone elses work?

Commercial Real Estate Offering 8%-9% Cap Rates, Anyone Interested?

I belive NLI is Net Lease Income. Could also be called 'Effective Gross Income', especially if you are adjusting for hypothetical vacancy rates.

Three Areas of Opportunity for the Bold

Real estate is geographically diverse which is well known. However, from what many old investors tell me there have not been many times in history rental properties will produce a 2:1 coverage with a 20% equity injection. If the property is producing $370/mo or $4,440 per year after PITI payments he is realizing an unadjusted 13.1% cash on cash return. Not bad. Assume he has 10% operating expenses and a 5% recoup on the taxation side over the life of the property. ($1,300*12= $15,600 gross. $15,600 * 5%= $780. $4,440 - 780= Adjusted NOI of $3,660 and results in an adjusted cash on cash return of 10.8% with no accounting for future appreciation. Not a bad return, if you can do better right now let me know.

How Much Further Will Housing Fall?

The arguement is soft in relying on the historical conservative 28% 'front end' debt-to-income used for underwriting purposes. This ratio has ratcheted upwards into the 30+% range. If it this benchmark ratio was advanced to a more appropraite 32-35%, it would indicate that housing is affordable.

However, the bigger problem I have with this article is that the author is assuming a 0% downpayment. If I were going to assume a tight underwriting DTI, I would also assume a requred 10%- 20% equity contribution. Once again, factor a 15% equity contribution with a 32% front end ratio, and it would appear that housing is affordable in relative terms.