Tony Rand

Where Is That Mythical Housing Bottom?

Great commentary and questions. After spending the last 23 years working in the housing and banking industries, I can think of three primary areas that need to see improvement before we begin to see the housing bottom. I'm sure there are more areas that could be applied, but these three stand out the most. First, there is the affordability index.

As an example, near the height of the housing bubble, home prices in Orange County, California were so high that less than 10% of households had a median income that would qualify them to achieve the dream of home ownership. Because of risk ignorance, easy credit was made available to people who did not truly qualify.

Second is consumer confidence. Third, as already mentioned, is unemployment. All three of these areas must first see improvement and then stability before we see the housing bottom.

As ArkansasAngie mentioned above, there are widespread fluctuations throughout the country where some areas are greatly impacted. Many areas, which can in part claim credit for instituting anti-predatory lending laws, have been protected from artificially inflated home prices and excessive consumer spending by using home equity like it had an ATM card attached to it.

Because the housing boom was artificially sustained outside of normal cyclical channels, the hangover from the party will last longer - and it will also be more difficult to hold back on the reigns as we slide further down the correction side of the hill.

'The Change We Need' Is in Economic Direction

First things, first. Is it just me, or are there a lot of negative ratings assigned to the comments posted by users? It has always been my understanding that correct and truthful comments should receive positive ratings and incorrect or false comments, negative ones.

Interesting how you put all of this together, Steve. Yes, it is odd that the United States, having moved from capitalism and toward socialism, suddenly seems to be lowering its self-installed blinders - only to be surprised to catch themselves viewing the ground from their midway dive off one of the worst economic cliffs seen on the globe. This is an act of the People and we should take responsibility for the act.

For some reason WE the People think that we can blame our elected Government for our problems today. Our elected officials and all of their subsequent act(s) are only as good as our voting power can afford us. Well, I'm sorry to say that we, the People, got cheep and greedy. Agreed - All of the options laid out thus far seem to be further blinding the People, all of whom are living with the worst of all fears - the fear that they have no control over their destiny - including that they no longer seem to understand their own comprehension of "destiny".

If our nation is going to survive, we need to rethink how we are to proceed forward - ignoring all that has taken place in the past other than to make a checklist of what not to do in the future. We need to focus on promoting infrastructure and education, with education being the most important. Math, science and ingenuity driven from critical thinking will drive the future of this planet. If America does not get on board, we'll be left in the dust (literally). Although our new President hasn't said so, I believe he understands the fundamentals needed to help lead us, all Americans, back up the global ladder.

We do need a new economic and financial direction. I don't know if I would equate it to a "religion", but I do understand where you went with this. Religious faith is very strong and requires complete trust in the beliefs drawn from it...a blind faith so to speak. I have both my sight and my faith. What about the rest of you, America?

Bernanke Speaks Out on the Great Recession

Thank you, Steve. Yes, it is odd that the media coverage of Bernanke's speak were barely covered. I do truly wish that we could stop trying to find 1) blame, and 2) a cure. All of the options laid out thus far are blindsiding the American people and causing them to lose focus on the big picture.

America was once a grand nation, full of power, strength, justice and leadership; leadership in both business and politics. Today, after spending the last 10-years (or so) ignoring that the world wants to be us, we've failed to track and monitor that the world is gaining on us at an incredible rate of speed. Globalization is taking place and we're losing our standing in the world.

If our nation is going to survive, we need to rethink how we are to proceed forward - ignoring all that has taken place in the past other than to make a checklist of what not to do. We need to focus on promoting infrastructure and education, with education being the most important. Math, science and ingenuity driven from critical thinking will drive the future of this planet. If America does not get on board, we'll be left in the dust (literally).

Getting the Real Estate Crisis Right

Maybe you should call me Chicken Little. Example: The affordability index in 27 major metropolitan counties shows that borrowers left without the ability to lie about their income/assets nor the ability to accept a high risk negative amortizing mortgage cannot afford to own residential real estate. Realistically, all home price gains from 2003 will most likely be wiped out. So in many areas we will see home value declines as high as 50% to 60%. Most areas will be in the 20% to 30% range. Any area in which normal home price appreciation has been realized from 2000 will maintain a great degree of normalcy with a 1% to 7% reduction in values. This is my fifth market cycle, but for myself (and everyone else who has been in this business a long time), the characteristics of this perfect storm will bring more damage than ever expected...compare this fiasco to the S&L scandals of the 1980's and then add appropriate inflation factors for your region. At the end of the day, the recent inverted Treasury yield curve guarantees our recession. How the legislature, GSE's, HUD and all of the mortgage servicing entities handle recasting adjustable rate mortgages and loss mitigation of repayment impairment will only soften the overall blow to the existing market...not eliminate it altogether.