Wells Fargo study finds that 25% of homeowners have No Savings to pay mortgage if laid off! Layoffs maintaining 7 Million annual rate.
Already, 1 in 3 homeowners have family or friends living with them! This is happening faster than I anticipated. The days of the 5 bedroom, 4 bath single family, occupied by one family are gone!
You will see more people renting bedrooms and you will see families pooling resources to buy homes.
The arrival of the New Reality!
Showing posts with label real estate. Show all posts
Showing posts with label real estate. Show all posts
Monday, May 25, 2009
Tuesday, February 24, 2009
There is a Silver Lining in All o f This!
Perhaps that light at the end of the tunnel some claim to see is a lit fuse!
Consumer Spending?
A key measure of consumer sentiment fell more than expected in February, to the lowest level since its 1967 inception, as Americans remained wary of spending amid the weak economy and rising unemployment.
The Conference Board, a New York-based business research group, said its Consumer Confidence Index fell to 25 in February from a revised reading of 37.4 in January. The index has been touching historic lows since September. Economists had been expecting a reading of 35!
Consumer sentiment is a really vital statistic because it is a barometer of future spending which represents 70% of Gross Economic activity in this country.
Housing market?
The S&P Case-Shiller National Home Price Index reported that prices sank a record 18.2% during the last three months of 2008, compared with the same period in 2007.
National home prices have dropped 26.7% since they peaked during the second quarter of 2006.
“One bright note is that the sector that led the economy into this morass is about to turn the corner, perhaps as soon as this summer, and will start to lead us out,” Dr Scott Anderson, Chief Economist, said in the report released by Wells Fargo Friday.
NOT!!
There is nothing in the data suggesting a turn around any time soon.
My forecast as you know is that home prices will plummet to pre-bubblle levels, reflecting the realities of the current economic reality.
On the other hand, silver will move up as house prices move down until you will be able to buy a house with 1,000 oz or less of silver! Today, with silver at $14 oz, it would take about 14,000 oz. Tomorrow, with silver at say, $100 oz and houses at $100,000, that would do it!
The last time this happened was in the early 80's with silver at $50 and homes at $50,000, so it is not as far fetched as it sounds. It illustrates how way out of line home priced got at the peak of the boom when it took almost 40,000 oz of silver!
Go to http://silverpros.blogspot.com/2008/11/why-silver.html for more information
on "why Silver" including a video by Robert Kiyosaki on Investing in Silver.
Consumer Spending?
A key measure of consumer sentiment fell more than expected in February, to the lowest level since its 1967 inception, as Americans remained wary of spending amid the weak economy and rising unemployment.
The Conference Board, a New York-based business research group, said its Consumer Confidence Index fell to 25 in February from a revised reading of 37.4 in January. The index has been touching historic lows since September. Economists had been expecting a reading of 35!
Consumer sentiment is a really vital statistic because it is a barometer of future spending which represents 70% of Gross Economic activity in this country.
Housing market?
The S&P Case-Shiller National Home Price Index reported that prices sank a record 18.2% during the last three months of 2008, compared with the same period in 2007.
National home prices have dropped 26.7% since they peaked during the second quarter of 2006.
“One bright note is that the sector that led the economy into this morass is about to turn the corner, perhaps as soon as this summer, and will start to lead us out,” Dr Scott Anderson, Chief Economist, said in the report released by Wells Fargo Friday.
NOT!!
There is nothing in the data suggesting a turn around any time soon.
My forecast as you know is that home prices will plummet to pre-bubblle levels, reflecting the realities of the current economic reality.
On the other hand, silver will move up as house prices move down until you will be able to buy a house with 1,000 oz or less of silver! Today, with silver at $14 oz, it would take about 14,000 oz. Tomorrow, with silver at say, $100 oz and houses at $100,000, that would do it!
The last time this happened was in the early 80's with silver at $50 and homes at $50,000, so it is not as far fetched as it sounds. It illustrates how way out of line home priced got at the peak of the boom when it took almost 40,000 oz of silver!
Go to http://silverpros.blogspot.com/2008/11/why-silver.html for more information
on "why Silver" including a video by Robert Kiyosaki on Investing in Silver.
Monday, February 2, 2009
Interest Rates to Skyrocket This Year!
The Only bright light for the real estate market is about to be smothered. Interest rates will skyrocket this year and next making it that much harder to qualify for mortgages, especially at today's high real estate prices.
The culprit is the US government. It must finance last year's record budget deficit of 1/2 Trillion dollars plus this years record busting deficit of about $2 Trillion, plus the stimulus package and all of the "quantitative easing" of the Federal Reserve, (which again, is as Federal as Federal Express!). And let's not forget the original $700 Billion Wall St Bailout, plus the approximately $2 Trillion additional which will be needed sometime in the next 18 months to bail out the banks again.
You can also expect to see various other multi Billion dollar bailouts; autos, states, pension funds, etc.
These humungus expenditures will be financed by the government saturating the market with Treasury Bonds. As more and more treasuries are issued, their prices will start to fall and when that happens their yield goes in the opposite direction, Up.
Also, 40% of our national debt is held by China and other foreign governments. When the prices of Treasuries and thus their investment in them starts declining, interest rates will have to be raised to incent them to buy more and to hold on to what they already have. Already the Chinese have dumped over 20 Billion in Fannie Mae and Freddie Mac Bonds during the last 5 months of the 2008. They have also halted investment in many American companies. They realize the US is going to flood the market with new Treasury issues and depress the prices.
Not only housing, but all businesses will be adversely affected with the rise in interest rates, including the stock market, which I believe will see Dow 5,000 before the year is out! Possibly as early as the release of the 4th Qtr, 2008 economic data, due out shortly.
It is important that you get out of debt, especially credit card debt, where they can increase your interest rates at will, as soon as possible. For information on debt relief, see our site: http:HowtoSolveYourMoneyProblems.Com
The culprit is the US government. It must finance last year's record budget deficit of 1/2 Trillion dollars plus this years record busting deficit of about $2 Trillion, plus the stimulus package and all of the "quantitative easing" of the Federal Reserve, (which again, is as Federal as Federal Express!). And let's not forget the original $700 Billion Wall St Bailout, plus the approximately $2 Trillion additional which will be needed sometime in the next 18 months to bail out the banks again.
You can also expect to see various other multi Billion dollar bailouts; autos, states, pension funds, etc.
These humungus expenditures will be financed by the government saturating the market with Treasury Bonds. As more and more treasuries are issued, their prices will start to fall and when that happens their yield goes in the opposite direction, Up.
Also, 40% of our national debt is held by China and other foreign governments. When the prices of Treasuries and thus their investment in them starts declining, interest rates will have to be raised to incent them to buy more and to hold on to what they already have. Already the Chinese have dumped over 20 Billion in Fannie Mae and Freddie Mac Bonds during the last 5 months of the 2008. They have also halted investment in many American companies. They realize the US is going to flood the market with new Treasury issues and depress the prices.
Not only housing, but all businesses will be adversely affected with the rise in interest rates, including the stock market, which I believe will see Dow 5,000 before the year is out! Possibly as early as the release of the 4th Qtr, 2008 economic data, due out shortly.
It is important that you get out of debt, especially credit card debt, where they can increase your interest rates at will, as soon as possible. For information on debt relief, see our site: http:HowtoSolveYourMoneyProblems.Com
Thursday, January 22, 2009
Latest Housing News
Foreclosures were up 81% in 2008 compared to 2007. There were over 3 Million foreclosures filed and over 861,000 people actually lost their homes. This number probably would have topped 1 million were it not for various foreclosure moratoria passed by several states. All they do is prolong the agony for most. Although some experts are calling for a bottom in 2010, at about a 33% drop in housing prices, there is no rational reason to believe this estimate. I think they say that because 2010 is a year away and probably no one will remember they said that at that time. To the contrary, the only bright spot in real estate has been the low interest rates and that bright spot will be extinquished by the end of this year with the bursting of the Treasury Bond Bubble.
The drying up of funds for real estate lending combined with new lending regulations that eliminate half of the people who could borrow before, in addition to the layoffs and the growing number of people "sending the keys to the bank" because they are under water, will combine to drive housing prices lower than anyone dared project, I believe.
Thinking of buying real estate? Put the money you were planning to use for the purchase (30% down required!), into silver. The overall economy is in a deflation now, with the prices of everything going down, including gold and silver. However, when the economy turns, inflation will be back with a vengeance. This situation is analagous to 1971 when the average home sold for $20,000. Let's see what would happen if Mary bought a home for $20,000 and John put $20,000 in silver. The economy was bad for several years in the 70'S but when the economy turned, prices shot up. Mary's home jumped to $40,000 in 1980, but John's $20,000 investment in silver was worth over $770,000 in 1980!
The stage is set for a repeat performance. When the economy turns, real estate appreciation will be hampered by the huge inventory of unsold homes, restrictive lending standards that will eliminate half of the usual buyers, and sky high interest rates. Silver will have no such retardants holding it back. As it is, silver is more scarce now than in 1980, since 95% of all silver mined is consumed by industrial uses. Also, Warren Buffet has recently bought 20% of All the silver in the World! Think he knows something that we don't?
The drying up of funds for real estate lending combined with new lending regulations that eliminate half of the people who could borrow before, in addition to the layoffs and the growing number of people "sending the keys to the bank" because they are under water, will combine to drive housing prices lower than anyone dared project, I believe.
Thinking of buying real estate? Put the money you were planning to use for the purchase (30% down required!), into silver. The overall economy is in a deflation now, with the prices of everything going down, including gold and silver. However, when the economy turns, inflation will be back with a vengeance. This situation is analagous to 1971 when the average home sold for $20,000. Let's see what would happen if Mary bought a home for $20,000 and John put $20,000 in silver. The economy was bad for several years in the 70'S but when the economy turned, prices shot up. Mary's home jumped to $40,000 in 1980, but John's $20,000 investment in silver was worth over $770,000 in 1980!
The stage is set for a repeat performance. When the economy turns, real estate appreciation will be hampered by the huge inventory of unsold homes, restrictive lending standards that will eliminate half of the usual buyers, and sky high interest rates. Silver will have no such retardants holding it back. As it is, silver is more scarce now than in 1980, since 95% of all silver mined is consumed by industrial uses. Also, Warren Buffet has recently bought 20% of All the silver in the World! Think he knows something that we don't?
Wednesday, January 21, 2009
A Quick Update on Where We Stand...
How about housing? New, luxury condos in Manhattan now loosing air too with new Battery Park condos selling for up to 56% off! Homes in Detroit and Cleveland being dumped by the banks for $1,000 each. 10% of all mortgagors late on payments, 15% of all homeowners with a mortgage owe more than the house is worth. The new restrictions banks are putting on potential home buyers, such as 30% cash for downpayment, closing costs and mandated bank reserves, has closed about 50% of willing buyers out of the market.
Mass unemployment spreading to every sector, 34,000 more from Circuit City bankruptcy alone. If you count unemployment the same way they did during the Great Depression, and there is no reason we shouldn't, our unemployment rate is really 16%
We are looking at an unstoppable avalanche of bankruptcies: US Airways, Saks, Best Buy, Kmart, BN Furniture store, Bronx, NY etc are all on the brink. Circuit City was just the first big name. Retail is moving to the Internet, just like travel. There is no need for the big overhead of a physical location in many instances. Half of all electronic purchases are now made over the Internet.
US Government will wise up later than sooner that they can not continue to save everyone. The big banks and financial institutions are already dead, the only thing keeping the lights on is tax payer money and that will soon come to a halt. Citi, Bank of America, AIG have already had several hits on the public tit and will need more. Just in: "Friedman, Billings, Ramsey analyst Paul Miller made waves Tuesday by suggesting that Bank of America Corp. (BAC: 5.78 +13.33%) needs more than $80 billion in new common equity capital. The bank begins the year with $61.7 billion of tangible common equity, supporting $2.4 trillion of tangible assets, Miller’s note said according to a MarketWatch report. That’s well below the 6 to 9 percent ratio that Miller believes is needed." Can the bank earn the Billions it needs? It just lost $1.7 Billion in the 4th qtr. Earnings are headed the other way, down, not up.
Consumer delinquencies will destroy entire industries: housing, credit card (banks), autos, etc.
Commercial real estate will soon join the party. You don't need Malls if the customers cannot afford to buy. Just in: "Suggesting that capital markets turmoil is now affecting multifamily apartment owners and developers, the National Association of Home Builders suggested Wednesday morning that apartment developers are finding it difficult to fund future projects."
Obama will have no choice but to devalue the currency to provide enough inflated dollars to pay the Trillions of debt we have and are continuing to build up. A deficit of over $2Trillion is very likely this year.
Internationally, the Chinese economy is heading for recession too. Plus, they see the growing recklessness with which the US prints money to prop up failed financial institutions. This means that they will stop, sooner than later, buying US Treasury Bonds. This will extinquish the last real estate bright spot, low interest rates which will be yet another stake in the real estate market's heart.
What about gold and silver, you ask? The current deflation has beaten down gold and silver by 30-40% in the last year. prices of gold and silver have been d
The baby has been thrown out with the water. Their prices, especially those of silver, have been hammered in the past 14 months and I expect they will continue to trend down as the deflation persists. This makes it an IDEAL time to buy gold and silver at such deflated prices. As the only real money in the world, people will stampede to these metals once the economy crashes.
Oh, yes, stocks. I predict that within the first qtr, 2009, we will see a Dow of around 5,000. The current deflation is sucking the life out of businesses. No financing for businesses, failure of more major financial institutions, bankruptcies of major retailers, no sales, dropping corp profits, possibly rising interest rates all point toward a crippled stock market in free fall.
Anyone ever hear of the Amero? Google it!
Mass unemployment spreading to every sector, 34,000 more from Circuit City bankruptcy alone. If you count unemployment the same way they did during the Great Depression, and there is no reason we shouldn't, our unemployment rate is really 16%
We are looking at an unstoppable avalanche of bankruptcies: US Airways, Saks, Best Buy, Kmart, BN Furniture store, Bronx, NY etc are all on the brink. Circuit City was just the first big name. Retail is moving to the Internet, just like travel. There is no need for the big overhead of a physical location in many instances. Half of all electronic purchases are now made over the Internet.
US Government will wise up later than sooner that they can not continue to save everyone. The big banks and financial institutions are already dead, the only thing keeping the lights on is tax payer money and that will soon come to a halt. Citi, Bank of America, AIG have already had several hits on the public tit and will need more. Just in: "Friedman, Billings, Ramsey analyst Paul Miller made waves Tuesday by suggesting that Bank of America Corp. (BAC: 5.78 +13.33%) needs more than $80 billion in new common equity capital. The bank begins the year with $61.7 billion of tangible common equity, supporting $2.4 trillion of tangible assets, Miller’s note said according to a MarketWatch report. That’s well below the 6 to 9 percent ratio that Miller believes is needed." Can the bank earn the Billions it needs? It just lost $1.7 Billion in the 4th qtr. Earnings are headed the other way, down, not up.
Consumer delinquencies will destroy entire industries: housing, credit card (banks), autos, etc.
Commercial real estate will soon join the party. You don't need Malls if the customers cannot afford to buy. Just in: "Suggesting that capital markets turmoil is now affecting multifamily apartment owners and developers, the National Association of Home Builders suggested Wednesday morning that apartment developers are finding it difficult to fund future projects."
Obama will have no choice but to devalue the currency to provide enough inflated dollars to pay the Trillions of debt we have and are continuing to build up. A deficit of over $2Trillion is very likely this year.
Internationally, the Chinese economy is heading for recession too. Plus, they see the growing recklessness with which the US prints money to prop up failed financial institutions. This means that they will stop, sooner than later, buying US Treasury Bonds. This will extinquish the last real estate bright spot, low interest rates which will be yet another stake in the real estate market's heart.
What about gold and silver, you ask? The current deflation has beaten down gold and silver by 30-40% in the last year. prices of gold and silver have been d
The baby has been thrown out with the water. Their prices, especially those of silver, have been hammered in the past 14 months and I expect they will continue to trend down as the deflation persists. This makes it an IDEAL time to buy gold and silver at such deflated prices. As the only real money in the world, people will stampede to these metals once the economy crashes.
Oh, yes, stocks. I predict that within the first qtr, 2009, we will see a Dow of around 5,000. The current deflation is sucking the life out of businesses. No financing for businesses, failure of more major financial institutions, bankruptcies of major retailers, no sales, dropping corp profits, possibly rising interest rates all point toward a crippled stock market in free fall.
Anyone ever hear of the Amero? Google it!
Sunday, December 28, 2008
Home prices to fall and fall and fall...
I just read an article forecasting more trouble for real estate in 2009.
The author seemed to be incredulous about that possibility, saying that some markets were even approaching Pre-Bubble price levels as though that was an organic impossibility.
If you check you will see that the last 2 real estate booms in the 70's and 80's resulted in prices dropping back to pre-boom levels before they took off again.
That is what statisticians refer to as a "regression to the mean," falling back to the historic trend line.
There are even more significant troubles for real estate in 2009 and beyond than are perceived by many real estate experts.
These troubles will continue to drive prices down even further. Although some markets are in fact approaching pre-boom prices, the pendulum may not stop at mid point and may actually swing all the way past pre-boom prices. Have you ever known a pendulum to stop mid way through its swing?
Here are some additional factors to consider:
The credit crisis is forcing banks to husband what little capital they have which is why they will restrict lending to the Very qualified.
How many prospective home buyers have 750+ FICO or Credit scores And 30% in cash for down payment, closing costs and bank mandated cash reserves? Especially since the US savings rate has been hovering around zero for the past decade.
Fewer buyers equal lower demand which means lower prices.
Also, how many more homes will be deserted by home owners who are Underwater, owing more than they owe? It is estimated that nearly 16% of owners with mortgages or about 8 Million home owners are in this situation. These desertions will add greatly to the bloated inventory of homes weighing down the market.
Finally, the only bright spot in housing will probably be extinguished in 2009 as interest rates will skyrocket once China is forced to stop buying our debt because of our dwindling purchases from them.
One report I read said that rental of a typical space on a freighter delivering goods to the US from China, fell from $236,000 for the trans Pacific crossing to $5,000!
Once China stops buying our Treasury Bonds, we will have to lower prices on them to attract other buyers, which will jack up their yields or interest rates as they move inversely to prices.
Our mortgage rates will then soar because they are pegged to the 10 year Treasury Bond yield.
So, despite the optimistic predictions of many rose tinted, shade wearing real estate "professionals" the likelihood of a rebound in housing is probably further away in 2009 than at any time since the real estate bubble burst.
Copyright 2008 Bill Young. Bill is offering a free, one year course for people who want to know how to quit living pay check to pay check and how to become financially free developing multiple streams of income from real estate and home based business assets. Register here: http://HowtoSolveYourMoneyProblems.Com
Article Source: http://EzineArticles.com/?expert=Bill_Young http://EzineArticles.com/?Home-Prices-to-Fall-and-Fall-and-Fall&id=1819502
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The author seemed to be incredulous about that possibility, saying that some markets were even approaching Pre-Bubble price levels as though that was an organic impossibility.
If you check you will see that the last 2 real estate booms in the 70's and 80's resulted in prices dropping back to pre-boom levels before they took off again.
That is what statisticians refer to as a "regression to the mean," falling back to the historic trend line.
There are even more significant troubles for real estate in 2009 and beyond than are perceived by many real estate experts.
These troubles will continue to drive prices down even further. Although some markets are in fact approaching pre-boom prices, the pendulum may not stop at mid point and may actually swing all the way past pre-boom prices. Have you ever known a pendulum to stop mid way through its swing?
Here are some additional factors to consider:
The credit crisis is forcing banks to husband what little capital they have which is why they will restrict lending to the Very qualified.
How many prospective home buyers have 750+ FICO or Credit scores And 30% in cash for down payment, closing costs and bank mandated cash reserves? Especially since the US savings rate has been hovering around zero for the past decade.
Fewer buyers equal lower demand which means lower prices.
Also, how many more homes will be deserted by home owners who are Underwater, owing more than they owe? It is estimated that nearly 16% of owners with mortgages or about 8 Million home owners are in this situation. These desertions will add greatly to the bloated inventory of homes weighing down the market.
Finally, the only bright spot in housing will probably be extinguished in 2009 as interest rates will skyrocket once China is forced to stop buying our debt because of our dwindling purchases from them.
One report I read said that rental of a typical space on a freighter delivering goods to the US from China, fell from $236,000 for the trans Pacific crossing to $5,000!
Once China stops buying our Treasury Bonds, we will have to lower prices on them to attract other buyers, which will jack up their yields or interest rates as they move inversely to prices.
Our mortgage rates will then soar because they are pegged to the 10 year Treasury Bond yield.
So, despite the optimistic predictions of many rose tinted, shade wearing real estate "professionals" the likelihood of a rebound in housing is probably further away in 2009 than at any time since the real estate bubble burst.
Copyright 2008 Bill Young. Bill is offering a free, one year course for people who want to know how to quit living pay check to pay check and how to become financially free developing multiple streams of income from real estate and home based business assets. Register here: http://HowtoSolveYourMoneyProblems.Com
Article Source: http://EzineArticles.com/?expert=Bill_Young http://EzineArticles.com/?Home-Prices-to-Fall-and-Fall-and-Fall&id=1819502
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