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host · 05-18-2006, 11:33 AM

aceventura3, this time, it is different. The excess has been unprecedented, and the consequences will be in proportion...in the opposite direction:

Quote:

http://realtytimes.com/rtapages/20060112_arello.htm
ARELLO Announces Number Of Licensees For 2005
by Blanche Evans

If you think everyone you meet is a real estate agent, you're not far wrong. According to new figures from ARELLO, the licensing officials, there are more than 2,636,783 licensees in the United States.

With a U.S. population of about 297,889,053, that's about one licensee for every 113 men, women and children.

A lot of optimism, or "hope" in the posts here. IMO, it's "only the beginning....only just the start......

From today's WSJ:

Quote:

http://www.post-gazette.com/pg/06138/691241-28.stm
or if you subscribe:
http://online.wsj.com/google_login.h...googlenews_wsj
Studies find that late payments on mortgages rise

Thursday, May 18, 2006
By Ruth Simon, The Wall Street Journal

....To be sure, mortgage delinquencies remain low by historical standards. But experts worry the trend could worsen. With the housing market cooling and interest rates rising, "by the end of the year you could see a substantial increase in delinquency rates" for mortgages, says Thomas Lawler, a former Fannie Mae economist and now a private housing consultant.....

Twenty-nine percent of borrowers who took out mortgages last year have no equity in their homes or owe more than their house in worth, according to a study completed this year by Christopher L. Cagan, director of research and analytics for First American Real Estate Solutions, a unit of First American Corp. That compares with 10.6 percent of those who took out loans in 2004.

An analysis by Bear Stearns found that delinquencies on loans originated in 2005 were in most cases far higher than on loans issued in previous years at the same point in their life cycle. "The numbers are clearly worse," says Gyan Sinha, a senior managing director at Bear Stearns. The reason: Lenders were "able to generate a lot more volume in the face of rising rates" by loosening lending standards, Mr. Sinha says. "More aggressive lending was clearly taking place," he says.

A separate study by Credit Suisse reached similar conclusions. That study looked at borrowers with good credit who were at least 90 days late on their mortgages. Credit Suisse found that borrowers who took out adjustable-rate mortgages in 2005 were three times as likely to be delinquent on their payments after the first year as those who took out ARMs in 2003 and 2004. Payments on ARMs can adjust after as little as a month, or after several years, depending on the terms of the loan. (The study didn't include borrowers with option ARMs.)......

Past Due

Recent studies highlight some early warning signs that could affect mortgage borrowers.

Delinquencies are sharply higher for loans that were issued last year, when lenders were aggressively courting business.

One study shows 29 percent of borrowers who took out mortgages last year have no equity in their homes.

Higher interest rates and a cooling housing market could further push delinquency rates up in coming months, experts fear.

Quote:

http://www.realtytrac.com/pub/articl...2006Q1.asp?m=1
Foreclosures Up 72 Percent From Last Year
Georgia, Colorado and Indiana Post Nation’s Highest First-Quarter Foreclosure Rates

National foreclosure filings continued to climb in the first three months of 2006, evidence that more U.S. homeowners are struggling to stay current on their monthly mortgage payments......

.........Georgia, Colorado and Indiana post highest foreclosure rates
Despite a 19 percent decrease in new foreclosures in March, Georgia documented the highest state foreclosure rate in the first quarter of 2006 — one new foreclosure for every 127 households. The state reported 24,419 properties entering some stage of foreclosure, more than two times the number reported in the previous quarter and nearly three times the number reported in the first quarter of 2005.

Colorado’s quarterly foreclosure rate of one new foreclosure for every 138 households registered as the nation’s second highest state foreclosure rate. The state reported a total of 13,267 properties entering some stage of foreclosure in the first quarter of 2006, more than twice the number reported in the previous quarter and a 96 percent increase from the first quarter of 2005.

With one new foreclosure for every 165 households, Indiana documented the nation’s third highest state foreclosure rate in the first quarter of 2006. The state reported 15,261 properties entering some stage of foreclosure, an 84 percent increase from the previous quarter and more than twice the number reported in the first quarter of 2005.

Other states with first-quarter foreclosure rates ranking among the nation’s 10 highest included Nevada, Michigan, Texas, Ohio, Tennessee, Utah and Florida.

Texas, Florida and California report most foreclosures
Texas reported the most first-quarter foreclosures of any state, 40,236, and Florida reported the second most with 29,636. California was a close third with 29,537 properties entering some stage of foreclosure in the first quarter of 2006, but the state’s quarterly foreclosure rate of one foreclosure for every 414 households was below the national average.

Also among the 10 states with the most foreclosures in the first quarter were New York, which reported 13,795 properties entering some stage of foreclosure, and Illinois, which reported 13,691 properties entering some stage of foreclosure.

The RealtyTrac 2006 U.S. Foreclosure Market Report provides the total number of homes entering some stage of foreclosure nationwide and by state for each month. RealtyTrac’s report includes properties in all three phases of foreclosure: Pre-foreclosures — Notice of Default (NOD) and Lis Pendens (LIS); Foreclosures — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been re-purchased by a bank).

Quote:

http://www.washingtonpost.com/wp-dyn...050501516.html
Sold -- or Not: When Home Buyers Walk
Some Will Give Up Thousands to Get Out of This Market

By Sandra Fleishman
Washington Post Staff Writer
Saturday, May 6, 2006; Page D01

........Hanley Wood Market Intelligence, a home-building research firm, this week said that its latest survey of builders showed that the cancellation rate for the Washington area in March more than doubled from a year earlier, jumping to 12.7 percent from 5.1 percent.

"But 10 to 15 percent of people deciding to cancel is not going to be unusual most of the time," said Jonathan Dienhart, Hanley Wood's director of research. "It's just that in the last couple years when we had unusually high demand, where people could just buy a property and flip it, there were fewer cancellations. It's not a cakewalk anymore."

The survey shows the cancellation rate locally highest in Fairfax County, at 30.9 percent, compared with 0.8 percent a year ago. Half of condominium buyers there canceled, compared with no cancellations a year ago. When the statistics are looked at by a single county or type of housing for one month, however, the number of transactions is small..........

Quote:

http://www.canada.com/topics/news/wo...666921&k=70496
Jacqueline Thorpe, Financial Post
Published: Saturday, May 13, 2006

......."I think, in 18 months, as sad as it would be, there will be 30% fewer mortgage brokers in this business," says Richard Shaffer of Prestige Mortgage and Investment Group in Palm Beach, Fla.

An estimated 25% to 50% of all U.S. jobs have been connected to the housing industry in recent years, but jobs are not the only thing at stake.

Consumers have used the rising value of their homes to tap equity and fund spending in a way unknown a decade ago. A slump in prices could turn that tap off, causing a sharp slowdown in the economy, which could sideswipe Canada..........

......."People are mentally spooked and the argument is: 'Why does the Fed have to continue to beat it to destroy it?' " he says. "I don't get it."

Mr. Rodstein neglected to mention one crucial factor -- oversupply. Across the United States, there are 3.5 million single-family homes and condo units up for sale, a record, and up 30% from a year ago.

In Miami-Dade County alone, there are 25,000 condos under construction and another 25,000 that have already got their financing and are likely to go forward, says Jack McCabe, chief executive of McCabe Research and Consulting in Deerfield, Fla. In addition, 50,000 more have been announced.

In the whole period from 1995 to 2004, only 9,079 units were built in Miami Dade........

So what you have here is a liquidity "pump" that mitigated the effects of the bursting of the tech "bubble" in 2000. The Nasdaq index of 2000 stocks fell from a high of 5148 in March 2000, to a low of just over 1000, three years later....an 80 percent drop that swallowed fortunes.... and dampened demand, but...thanks to home equity refi cashouts facilitate by the real estate "bubble" that was rushed along side of the "tech wreck", the negative effect on the economy was postponed....until now......

The negative effects of the postponed impact will be much worse than if the Fed and government regulators had not allowed the loosening of credit standards for mortgage approval to the extent that they have, and had not allowed the sheer volume of new loans to increase the money supply and the stability of the dollar's value in exchange.

The Fed presides over a "fractional reserve" banking scheme. New "money" is created out of "thin air"....by the origination of new loans. Every "first time" borrower creates a "new loan" situation....as does every "refi cashout" on the increased portion of every new, larger refinanced mortgage, fueled by the artificial demand from "first timers" who qualify for home mortgages because of relaxed lending requirements and low interest rates, justified by altering the CPI qualifiers to the point where inflation "disappeared", justifying a Fed interbank rate that was lowered to one percent. The "first timers" bid up the limited supply of entry level properties, and the profits of the sellers pushed demand and prices up.....all along the line....and the Freddie and Fannie accomodated by increasing "Jumbo" mortgage lending limits and convenient "low doc" and "no doc" loans.

Now....this ponzi scheme is unraveling....and along with the loss of employment and accompanied loss of economic demand from the newly jobless with less money to spend....by the folks who built, marketed, and financed the homes and sales and the new and refi cashout mortgages and the vacuum created by the loss of the consumer spending on new furniture, home appliances, landscaping, etc. etc.....and from the refi cash out's:

Quote:

http://www.pimco.com/LeftNav/Bond+Ba...of+Housing.htm
May 2006
Bond Basics: The Role of Housing in the U.S. Economy

.....The Economic Impact of the Housing Boom
As home prices have risen, an increasing number of homeowners have tapped the equity in their properties one of three ways: via cash-out mortgage refinancing, home-equity loans, or outright sales of their homes. A significant amount of this liquidity has gone to power consumer spending. Federal Reserve survey data show that between one-quarter and one-third of the value of home-equity loans and cash-outs go directly to financing personal expenditures.

In a paper published in September 2005, Federal Reserve Board Chairman Alan Greenspan and staff economist James Kennedy attempted to quantify the impact of this liquidity on overall consumption.1 Greenspan and Kennedy found that borrowing against home equity accounted for 6.9 percent of all personal disposable income in 2004, or roughly $600 billion.

Against a backdrop of weak wage increases and a negative national savings rate, home equity extraction provided consumers with a new source of spending money. Greenspan and Kennedy did not suggest how much of the $600 billion in borrowing flowed through to spending but, as Bill Gross noted in his October 2005 Investment Outlook, people don’t borrow money to deposit it in the bank. They borrow money to spend it. Assuming 50% of that $600 billion in borrowing went to consumption, Gross estimated that home equity withdrawals have added one-half to one percent annually to U.S. economic growth in recent years.....

We enter this new era of depressed consumer spending and mountainous debt with higher enegy prices and diminishing dollar purchasing power. Our currency has been intentionally destabilized by the PTB because they plan to massively inflate the value of all assets to relieve the impact of overall debt obligations on the debtors. As much debt as possible has been transferred to foreign lenders and derivatives have been created to lessen the impact on domestice lenders, like the GSA's (government sponsered entities), Fannie, Freddie, and Sallie....Mae.

The escape plan is for borrowers to pay back lenders with inflated and easier to come by....dollars on fixed loan debts. Those who owe credit card debt or have variable rate mortgages will face bigger challenges, aggravated by new "banrupcy reform".

I predict that the scheme will ulitmately fail... the housing market, home values, consumer spending, and the value of the dollar will all be depressed in the deflation that will follow the failed inflation to escape from the debt burden plan. Rising interest rates....and when inflation is finally universally perceived...the rush to "buy now before prices go up" will temporarily prop up demand....and prices for everything from houses to vehicles to big screen HDTV's.

There is still time to sell your home at a fair value if you can justify selling into the offers that you get....then renting...and if you have profits....buying pre-1965 U.S. silver coins as a hedge....prices are down today:

Quote:

<a href="http://www.tulving.com/goldbull.html">90% Silver Coin Bags</a>
Price quote is near the bottom of the page....

The political leadership will end up using the U.S. military to attempt to shore
up the purchasing power of the eroding dollar, and to control foreign petroleum and other raw material reserves. I believe this is inevitable and that they will wait until it is too late to intimidate and dominate rival powers to the degree of success that they could achieve if they implemented a sudden and total effort into doing it now. They will end up doing it....but if they did it now, they might pull off disarmament and submission of U.S. rivals without firing a (nuclear) shot...or by attacking and making "examples" of just one or two resistant nations.

I don't endorse the scenario above. It is simply the conclusion that I reach after considering where we find ourselves, where we've come from, and what experience tells me we have done...and will do in reaction to it all. There is a plan, but it will be too little or too late to reverse consequences in every stage where it is implemented.