Foreclosures Are Rising

Foreclosures are on the rise, and that is a fact. The question is, what does it mean for you and your family? Economists are starting to claim that we'll see a bottom this year (see the embedded video). I'll write up a full detailed report soon.

The Economy is Broken

The embedded video actually has nothing to do with the housing market or the economy. However, the title of this posting will make complete sense after you've watched the video. Enjoy.

Are they laughing now?

The embedded video illustrates how even the analysts refused to see the obvious truth of what was to come (the television program aired in 2006). Some of these analysts even laughed at Peter Schiff as he warned of what was then an impending mortgage crisis.

Who can you trust for investment advice?

The embedded video demonstrates how successful you would been if you followed Jim Cramer's investment advice to the letter, starting before the current declining economy.

REO Safari #2

This is the second episode of the REO Safari Series (see the previous episode here). The embedded video (2 min 21 sec) takes place in Valley Center (near Escondido). Jim the Realtor mentions the Cash for Keys program (he is offering the previous owners $2500 for their keys). The home previously sold for $927,500 in 2005.

REO Safari #1

Today's post is the first episode of a planned series of articles which endeavor to showcase the role of lender owned properties (REO) in the current housing crisis.

For months, I've been writing about the fact that REO's have overtaken the market, and are driving prices down. The embedded video follows Jim the Realtor, as he drives around Oceanside to survey the neighborhood where he has a new listing. Watch as he encounters REO after REO within only a two block radius.

California Housing Inventory... the Real Story

Highlights

1. The total loss, over the past 9-months, of most ‘affordable/exotic’ loan programs relied upon so heavily over the past five-years.
   
2. Out-of-control supply with Foreclosure and Bank REO inventory surging to levels that now make the foreclosure market, ‘the real estate market’. In CA in April, 2008 Total Sales equaled 31,250, banks took back 22,328 homes from foreclosure auctions, and Foreclosure Resale’s were 38% of Total Sales. In April 2007, they were 5% of Total Sales.
   
3. The ‘mortgage crisis’ moving up the credit spectrum from subprime to alt-a, and finally to a much larger percentage of the prime market than ever before thought…the latter primarly being due to the ‘negative equity effect’ and what was considered ‘Prime’ over the past five years, being far from it.
   
4. A catastrophic 27% fall in CA median housing prices in the past 11-months, pushing a massive amount of home owners into a negative-equity position and increasing their likelihood of loan default across all borrower types.
   
5. New home buyers not having a large enough down payment or income/credit level to be able to qualify for new-vintage fixed-rate, fully documented mortgages.
   
6. Potential, qualified buyers not being able to sell their present home to raise the down payment; not wanting to rent or yielding enough from renting their present home to buy a new home; or just not wanting to enter the market due to depressed confidence levels. Remember, most home buyers are existing home owners and not first-time home buyers or renters.
   
7. A large percentage of home owner who used second mortgages or high-LTV single-lien financing to avoid a down payment and existing home owners who leveraged-up their homes by pulling cash-out to maximum LTV/CLTV levels having no ‘skin in the game’, defaulting and moving to the rental pool.
   
8. Homes are still too expensive and it is still cheaper to rent in most cases. Buy vs rent ratios are still closer to peak levels than historic norms in many major metropolitan areas around the nation, especially in the bubble states.
   

Housing Crisis Over Seas

Believe it or not, the United States was not alone in the Housing Boom of the new millennium, nor is it alone in its Housing Crisis. Below are two videos (8 minutes in duration each) of news program in Northern Ireland, which is reporting the current housing market conditions there.

Video 1 of 2


Video 2 of 2

You can't handle the truth

"You can't handle the truth!"  The words spoken by Colonel Jessup (Jack Nicholson) about the death of Santiago, a marine under his command, in the hit movie 'A Few Good Men' (1992), and the quote seems fitting here.  Why have I made such a bold statement?  Because I'm surprised at the number of people that continue to refuse to see the market the way it really is.  Not just consumers, but some of the analysts too!  They believe the spin (from the Wall Street Journal and other news venues) about the market having bottomed and sales are climbing.  The embedded video discusses the recently released foreclosure numbers for April (via Foreclosure Radar), as well as the implications these foreclosures will have on the market. Please take some time to view it.

Highlights:

• Notice of Defaults (NOD = pre-foreclosures) were up 2.6% to a record high of 44,100 from 42,700 last month.
  
• Notice of Trustee Sales (NTS = Foreclosure Notices) were up 7.8% to a record high of 28,892.
  
• Foreclosure Sales at Auction jumped 44% for a total of approx $9.5 Billion from $6.87 Billion last month.
  
• Discounts were at a record pace. 84% were discounted by 25% or more off the original note amount. 47% were discounted by a whopping 30% or more.
  
• 97.75% of the homes failed to sell at auction so the banks bought the rest back.
  

See his article in its entirety here.

Right Now

The embedded video talks about what's happening in the economy and the housing market... Right Now.

I decided to post this video because it highlights what the staff of this blog have been reporting over the last couple of months:

• The devaluation of our currency - Uncharted Waters (March 6th)


• Buyers getting wiser - A smarter kind of buyer (March 13th)


• Falling home prices - California home prices free fall (March 28th)


• The worsening state of the economy - We're on thin ice (April 6th)


• Future buying opportunities - Explosive Opportunities (April 11th)


• Identifying the market patterns - It's all happened before (April 14th)


• The misguided american dream - The Dream (April 17th)


• The explosion in foreclosure activity - The 'F' Word (April 18th)


• Warnings of ignored economists - The Roubini Interview (April 19th)


• Rising Adjustable Rate Mortgage payments - ARMed and Dangerous (May 6th)

Please have a look at the video and feel free to leave a comment concerning what you thought about it.

Housing Bubble vs. Great Depression

The embedded video contrasts the crash of the recent Housing Bubble vs. The Great Depression.   I must admit the video's author did a fantastic job of contrasting the two, and thus it's really worth a watch...

The video is similar in concept to an article posted on this blog last week called 'It's all happened before...', which contrasts the Housing Boom of the 1980's and 1990's to the most recent Housing Boom. Please read it if you haven't already.

The Roubini interview

I've been saying for sometime that the current administration has been downplaying the severity of the economic issues we're facing.  Embedded within this post is an interview conducted by Steve Paikin of The Agenda, a Canadian public affairs television show, featuring Nouriel Roubini, a professor at NYU.   In the interview, Roubini discusses the U.S. economic recession and is very candid about the economic outlook.   

Roubini argues that the current recession will not be short and shallow, as some economists have claimed, but it will be the worst recession we've seen since the Great Depression.  He goes on to talk about the financial sector and that we'll see the collapse of more financial institutions (e.g. Bear Stearns), and further price declines in the housing market.  Unfortunately, Roubini's proclamations of the impending financial crisis to come have earned him the name of Dr. Doom among some of his peers.

The full interview is about 30 minutes long (broken into 3 separate videos), but I encourage you to have a look.

Part 1 of 3


Part 2 of 3


Part 3 of 3

Sex, Lies, and Real Estate?

There's a new apartment complex in Downtown Los Angeles (off the 110 Freeway) that is using rather unconventional means (*wink*wink*) to increase interest in their property.  See the video for yourself!!!

Another revolution is brewing in Philly...

I found the information below extremely interesting, and thought I'd share it with all of you:

PHILADELPHIA (Reuters) - Authorities in Philadelphia will suspend foreclosure sales of homes whose owners have fallen behind on adjustable-rate subprime loan payments — potential relief for tens of thousands of struggling debtors.

Sheriff John Green said on Friday he would halt sales of foreclosed properties in April and would seek a court order extending a moratorium for an unspecified period.

Bitten by the Bear (Part 2)

Following up on the "Bitten by the Bear" entry that I posted last week, I decided to post the video below which describes what happened to Bear Stearns.

Please watch the video below before reading "My Take".

My Take

I think Jim Cramer is a great investor, and he has a great sense of the financial markets. So what I'm attempting to illustrate here is this: if Jim Cramer can't see these things coming, then how can any of us mere mortals feel confident about the markets or the economy?

The Housing Bubble Song

I found the video below, while perusing the Internet for housing bubble-related news.  I decided to post it here because I think it does a great job describing the events that led up to the housing bubble and it's subsequent collapse in a concise manner, with an entertaining song to boot.

Click here to watch the video directly from the YouTube website.