FASCINATING GRAPHIC

GREEN BAR IS HOUSEHOLD INCOME - CLICK ARROW TO WATCH!

LOW END HOUSING IS CLOSE TO BOTTOM BUT....

High end is in a different situation.From Bloomberg: ‘Millionaire Homes’ May Lose Value Until 2012
... “Tighter lending standards and the lack of cheap financing for these borrowers continue to be key issues,” the New York- based [JPMorgan Chase & Co. analysts] wrote [in a June 12 report], referring to “jumbo” mortgages. That’s after so-called interest-only and option adjustable-rate loans were a “major driver” of soaring values, they said. ...“Currently, we have national home prices bottoming in 2011,” they said. “However, prices for more expensive homes may not bottom out until 2012, and ultimately result in peak-to- trough declines in excess of 60 percent (compared to 40 percent nationally).” “California is probably worse than other states, but higher-priced homes in general are going to be a problem,” Sim said in a telephone interview today.Most of the low end sales are "one and done" (the seller is a bank), and this will lead to a dearth of move up buyers. This lack of move up buyers, and tight financing will impact demand for the mid-to-high end. Although the percentage of foreclosures will be less in the high end areas than the low priced areas, the foreclosures are still coming (see Alt-A Foreclosures in Sonoma and Foreclosure Resales: Slow in High Priced Areas )However I disagree with the JPMorgan analysts on the relative price declines. Prices increased more in percentage terms in the low priced areas of California (like the Inland Empire and Sacramento) than in the high priced coastal areas. So prices will probably fall further in percentage terms from the peak in the low priced areas. Also, I think the price declines will occur over a longer period in the high priced areas (like the JPMorgan analysts), so the nominal price declines will be less (assuming a little inflation). But those are minor details - I agree there are further substantial price declines ahead.

APRIL HOUSING REPORT

S&P Case-Shiller Feb 10-City Home Price Index -18.8% YYPROVIDED BY Dow Jones & Company, Inc. - 09:00 AM 04/28/2009DOW JONES NEWSWIRESU.S. home prices continued their multiyear slide in February, according to the S&P/Case-Shiller home-price indexes, but they did stop their 16-month streak of record declines.Fifteen of 20 major metropolitan areas posted price declines of more than 10% from a year earlier with the Sun Belt continuing to be hit hardest. Nationally, home prices are at levels similar to the third quarter of 2003."While the declines in residential real estate continued into February, we witnessed some deceleration in the rate of decline in some of the markets," said David M. Blitzer, chairman of S&P's index committee. Still, 10 of the 20 metro areas reported record year-over-year declines.As of February, the 10-city index is down 32% from its mid-2006 peak and the 20-city is down 31%. The two indexes have fallen every month since August 2006, 31 straight.The indexes showed prices in 10 major metropolitan areas fell 19% in February from a year earlier and 2.1% from January. In 20 major metropolitan areas, home prices also dropped 19% from the prior year and 2.2% from January.Again, none of the regions could stave off a decline from January to February, although 16 of the 20 areas saw a smaller decline compared with January. Month- to-month decliners were led by Cleveland, which posted a 5% drop and displaced Phoenix, which saw prices fall 4.5%, from the top spot. Dallas fared best, edging down 0.3%.For the 11th straight month, no region was able to avoid a year-over-year decline, although nine cities posted better annual returns than they did in January. Phoenix and Las Vegas were again the worst performers, with drops of 35% and 32%, respectively. Phoenix is down 51% from its peak in June 2006. Dallas has been the least hurt, down 11% from its June 2007 peak.Compared with a year earlier, Dallas and Denver again had the best relative performance, with annual declines of 4.5% and 5.7%, respectively.The news comes after government data Friday showed new-home sales fell in March, but only mildly, after a surge the month before. More data last week showed that existing-home sales dropped in March and median prices fell 12%, according to the National Association of Realtors.

To read report click here.

Irrationality of real estate investors. I can boil it down in simple terms in the matrix below:











In an up market, Buyers are driven by emotion and continue to chase prices higher on the euphoric expectation of profits. In the down market, Buyers become hyper-rational. Perhaps a funnier way to think about it is that when the market is going up, Buyers are Believers. When the market is going down, Buyers are like atheists. Their stance is “Prove it to me.”

On the flip side, in an up market, Sellers are the more rational market participants. When we enter a down market, Sellers are the ones driven by emotion and have a difficult time making decisions that are rational.

EMPLOYMENT PICTURE DARKENS

April 17 (Bloomberg) -- Indiana in March joined seven other U.S. states with a jobless rate of at least 10 percent, and unemployment surged in Oregon, Washington and West Virginia as the worst employment slump in the postwar era rippled through the economy.

Indiana’s jobless rate jumped to 10 percent last month from 9.4 percent in February, the Labor Department reported today in Washington. Michigan, with 12.6 percent, remained the state with the highest unemployment rate, followed by Oregon at 12.1 percent. The rate in California rose to 11.2 percent from 10.6 percent.

QUICK UPDATE ON MARKET

Now is a good time to buy a home for those with long-term plans to live there and a solid job, thanks to a combination of low prices, favorable interest rates and various government incentives.

Anyone thinking of refinancing should do so immediately because the amount of government borrowing will raise rates sooner or later.

It still is a buyers market and the amount of foreclosure's on the market continue to suppress house prices.

THOUGHT THIS WAS INTERESTING

click the PICTURE for larger image. History is an amazing thing when you look back on it. Similarities between past and present can be fascinating.

THE DOOM BUNKER

The Colbert ReportMon - Thurs 11:30pm / 10:30c

Doom Bunker - Jack Jacobs and Stephen Moore

Colbert Report Full Episodes
Political Humor

Rap Battle
Joke of the Day

REAL ESTATE WARNINGS FROM 2003

The problems were known but ignored. We certainly have the best government money can buy.



Back to GREENUP AND ASSOCIATES home page.

BAILOUT COSTS - WOW!

Not much to say except we have sold our kids down the river......



The above graphic was from the evil speculator - hat tip

To see that site click here.

INTEREST RATES AND BAILOUTS

Over the last few years I have made reference to the fact that runaway government spending eventually causes interest rates to rise. We are fast approaching that time when the bond market says enough! This article from Bloomberg spells out this exact scenario. Read.

So, by trying to save housing they may end up exacerbating the problem through higher interest rates. Time will tell but I have the belief that throwing money at the housing problem is foolish and will result in epic failure.

THE SPEECH I WOULD LOVE TO HEAR

My Fellow Americans,

Although during my inaugural address, I affirmed we were a nation of many faiths - - including "non-belivers", allow me to read from Ecclesiastes 3:1-8:

To everything there is a season,
a time for every purpose under the sun.
A time to be born and a time to die;
a time to plant and a time to pluck up that which is planted;
a time to kill and a time to heal ...
a time to weep and a time to laugh;
a time to mourn and a time to dance ...
a time to embrace and a time to refrain from embracing;
a time to lose and a time to seek;
a time to rend and a time to sew;
a time to keep silent and a time to speak;
a time to love and a time to hate;
a time for war and a time for peace.

The past three decades have been witness to an American which has seduced itself into utter fantasy - - - into a world where people believe they should be multi-millionaires in their twenties, everyone should own a large house, and no one should have any meaningful restrictions on how much they eat, spend, or consume.

The party is over. And as much as we'd all like it to come back, it's going to be over for a very long time. This is a time where we, as a nation, must act like adults and face what is before us. Our banking system is bankrupt. Our nation has financial obligations it can never fully honor. And our economy is in shambles.

What made America great is not gone, however. We have abundant natural resources; a world-class system of higher-education; a diverse, vibrant population eager to build a better life for themselves and their families; and a government and legal system which is, on the whole, free, strong, and worthy of the nation's trust.

We, as a nation, must understand there are tough times ahead, and there is no easy fix. Over the coming months, I will be working with Congress to implement The Reality and Reconstruction Act, which will, among other things:

Phase out our unteneable obligations to Medicare and Social Security, effectively eliminating these agencies within ten years;

Seek civil and criminal prosecution, including confiscatory asset seizure, against any senior personnel in the financial, lending, or investment banking industry which has profited unfairly from the financial bubble over the past decade;
Shutter any financial institution unable to support itself as an independent enterprise;
Implement a flat tax of 25% on all income, with a contemporaneous dilution of the Internal Revenue Service;
Position our entire recovery strategy to be global-based, as opposed to US-based, striving to keep trade barriers as low or non-existent as possible
The road to recovery will be a long and hard one, but with these bold steps, we will ultimately prevail. These are hard choices, but the consequences of not making these choices now will be far more severe in just a few years. I thank you for your support, and I wish you, your family, and our nation strength, wisdom, and courage. Good night.

SLOPE OF HOPE

Won't happen but one can dream.

STIMULUS BILL: AKA PORKULUS

CLICK TO ENLARGE

The net result will be higher interest rates. The U.S. is maxing out it's line of credit.

HOUSING TAX CREDIT

The Senate has apparently kept the $15,000 homebuyer tax credit in the stimulus package. The tax credit sponsors, Senators Johnny Isakson and Joe Lieberman, estimated the cost would be $18.5 billion. Several analysts (like Dean Baker) made fun of this estimate, and the new is estimate is a cost of $35.5 billion. But this post isn't about the poor math skills of Senators ...First the details (as far as I can tell):

• The tax credit is 10% of the purchase price up to $15,000.
• The tax credit is for one year (from date of enactment).
• The credit is available for both new and existing home purchases.
• This is for primary residences only, and the home must be owner occupied for two years after purchase.
• There is no income cap (the $7,500 tax credit had an income cap of $150,000 per year).
• Unlike the $7,500 tax credit, the new credit does not have to be repaid over time.
• The credit is limited each year to the amount of taxes paid in any one year (with the $7,500 tax credit, buyers received the entire credit and a refund if the $7,500 was greater than taxes for the year)
• Buyers can split the $15,000 into two separate tax credits to be taken in successive years.

The rest of this comprehensive article is at Calculated Risk Blog. One of the finest sites on real estate I know of!

OUR GOVERNMENT IS INSANE!

Politicians Want to Use Tax Dollars to Crush Newer-Model Trucks and SUVs SEMA Warns Lawmakers This Boondoggle Will Cost American Jobs

SEMA is opposing an effort by some Washington lawmakers to include a national car crushing program in the upcoming economic stimulus package. Vehicles targeted for the scrap pile will likely include Chevy Blazers, Silverados, S-10s and Tahoes; Dodge Dakotas and Rams; Ford Explorers and F-Series; Jeep Cherokees and Wranglers; and any other SUV or truck that obtains less than 18 mpg.For the rest of the article click here.

Guess our Government is too stupid to realize we are broke.I guess when no one is employed the people will wake up. On the current course this will be soon....