I guess that means:
20 million homeowners in the US = dumb
If you're renting a regular apartment:
- Good luck getting into a good school district
- Good luck getting the crack addicts upstairs to stop playing their stereo at 2 am
- Good luck complaining to the landlord that the cockroaches won't stop crawling into your bed because the slob next door doesn't do his dishes
- Good luck getting Butch (from downstairs) to stop knocking on your door because your kids are jumping around on the floor
- Good luck in finding the guy that parked his car right behind yours in the parking lot ... and blocking you from going to work in the morning
- Good luck finding a street parking spot that isn't 4 blocks from your house when you have guests over
- Good luck paying $1,400 for a one bedroom (going rate in downtown Boston, by the way)
- Good luck keeping the landlord from raising your rent every year
- Good luck in trying to install a swing-set for the kids in the back yard
- Good luck trying to install a dish antenna to get the NFL Sunday Ticket
Dow was at 500 in 1956 and in 2006 it was at 12,500 which is approximately a 9.5% return over a 50 year period. I think this is a pretty good indication of an expected return.
I think there are some fundamental changes in the market which will force stocks up long term. Retirement plans like 401k and ira's. A certain portion of the population is contributing every month to these plans. The plan managers are forced to buy stocks which will force the values higher. 50 years ago most average Joe's owned very little stock and the demand was less. There were probably very few 20 year olds owning stocks where as today many 20 year olds own stock and continue to invest. The constant flow of money into retirement plans will continue to push the market higher long term.
I think there are some fundamental changes in the market which will force stocks up long term. Retirement plans like 401k and ira's. A certain portion of the population is contributing every month to these plans. The plan managers are forced to buy stocks which will force the values higher. 50 years ago most average Joe's owned very little stock and the demand was less. There were probably very few 20 year olds owning stocks where as today many 20 year olds own stock and continue to invest. The constant flow of money into retirement plans will continue to push the market higher long term.
It aint gonna just be the little guys getting smashed
Mortgage crisis hits million-dollar homes
<!-- END HEADLINE --> <!-- BEGIN STORY BODY --> By Walden Siew Thu Mar 29, 12:21 PM ET
NEW YORK (Reuters) - Sheriff Leo McGuire presides over foreclosure auctions in Bergen County, New Jersey, where the bidding for a home reached $1.2 million last June -- a record for one of the wealthiest counties in the nation.
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Homes sold on the auction block for as much as $852,000 this month -- more than quadruple the median home price in the United States. County officials believe they are close to setting another record soon.
In Troy, Michigan, Dorothy Guzek, a credit counselor since 1988, has also seen the changing face of foreclosure.
Her clients, while predominantly poor and minorities, increasingly are neither. Nowadays, homeowners holding professional careers with six-figure salaries regularly drop by her office. More and more they come from upscale Michigan communities such as Independence and Clarkston -- once the summer retreat for Henry Ford, founder of Ford Motor Co.
"Because of the financing that was possible, so many people bought the bigger house, the million-dollar house with the bowling alley or the tennis court outside," says Guzek, who works for GreenPath Debt Solutions, a nonprofit service based in Farmington Hills, Michigan. "People across all income brackets are having financial hardship."
For those on the frontlines of the growing U.S. mortgage crisis, these are the early signs that the explosion of subprime loans made to mostly poorer borrowers is reaching higher ground. The damage is hitting homes financed through jumbo loans for more than $400,000 and so-called Alt-A loans that are a notch above subprime and a step below prime.
Americans already are facing foreclosure at a record pace, according to the Mortgage Bankers Association. Lenders started foreclosure actions against more than one in every 200 U.S. mortgage borrowers in the last quarter of 2006.
About 2.2 million foreclosures due to bad mortgage loans may cost U.S. homeowners $164 billion, mostly from lost home equity, according to the Center for Responsible Lending, a Durham, North Carolina-based research group.
In the last three months, the percentage of foreclosures for U.S. homes valued at more than $750,000 has climbed to 2.5 percent, the highest since early 2005, when RealtyTrac, a online marketplace for foreclosed properties, began tracking data. The overall rate of foreclosures also is on pace to increase by a third this year.
"Everyone's looking at subprime. The rock they aren't looking under are the adjustable rate mortgages and teaser rates and low money-down loans," said Mark Kiesel, a portfolio manager for Pacific Investment Management Co., the world's biggest bond manager. "It's going to affect prime as well."
Kiesel said he sold his Newport Beach, California, home for more than $1 million in May last year after the property appreciated more than 20 percent in two years. He believes delinquencies and defaults will rise, weighing down most of the housing market.
California, with 3,384 foreclosures of higher-scale homes since December, is leading the nation, followed by Florida and New York, according to RealtyTrac. The MBA doesn't track foreclosure data by home value.
ICEBERG
Josh Rosner, managing director at investment research firm Graham Fisher & Co., says the growing numbers of foreclosures outside the subprime market is just the start.
"To define the problem as a subprime problem is short-sighted," Rosner said. "It's really seeing the tip of the iceberg as the iceberg."
Compounding the risk is the nature of homebuyers of higher-end homes, says Rosner. About 40 percent of homes bought last year were second homes or investment properties. Speculative buyers may be more at risk, he said.
Standard & Poor's said on a conference call on Thursday that foreclosure rates are likely to surpass levels last seen during the 2001 recession.
"That giant ATM you've been living in has just shut down," said David Wyss, chief economist at S&P in New York. "Consumers are in debt and we've been living beyond our means for some time."
CDOs
The latest foreclosure data also may spell trouble for Wall Street, where pools of bonds may be susceptible to nonperforming
loans that underpin debt vehicles known as collateralized debt obligations.
CDOs group debt based on credit quality and are similar to mutual funds in packaging securities to help diversify risk. In CDOs, the strongest debt is at the top of the capital structure, helping to smooth out any drag on performance from weaker debt, such as subprime loans.
Just as more expensive homes are beginning to fall through the cracks, the fear is higher-rated bonds within CDO structures may be vulnerable.
The declining performance of subprime loans have resulted in CDOs losing about $20 billion in market value, according to investment bank Lehman Brothers.
UBS Securities said in a report last month that rising delinquencies may cause losses within some subprime mortgage bonds rated as high as the "A" category.
FRAUD-FUELED
At the Justice Center in Hackensack, New Jersey, on Friday, the wood-paneled room is filled with about 40 people and the auction is routine. The first property on the sales sheet lists a Korean homeowner with $509,000 of outstanding debt. There are no bidders. Deutsche Bank, holder of the busted loan, buys the property with a quick $100 bid.
Sheriff McGuire calls the process "one of the most distasteful parts of my position." He places most of the blame on bankers who allowed questionable lending practices.
"This might not have happened if not for these new type of loans," McGuire said, minutes before the auction. The loans also have helped millions of Americans purchase new homes, he concedes.
"The banks took a chance on the future, and the homeowners took a chance so there's enough blame to go around," McGuire said. Still, "the banks and lenders have largely set them up for this downfall."
Adding to the grief, mortgage scams and con artists trying to take advantage of distressed homeowners abound, boosting foreclosure rates, county workers said.
"It's not the American Dream anymore," said Fran Napolitano, a county clerk in Hackensack. "It's 'who can I stab next."'
In Detroit's suburbs, hit hard by the U.S. auto industry downturn and financial troubles at General Motors Corp. and Ford Motor Co., the story strikes home each day for GreenPath's Guzek.
"It's sad. It's just an awful feeling," she said. "You hope that you can come up with a financial plan to help people remain in their homes, but sometimes it's not the best thing for them."
These days, her calendar of eight counseling sessions a day, 40 a week, remains full. Increasingly, she offers different advice than devising financial plans to save her clients' homes.
"If they can't afford it, sometimes the best thing for them is to walk away," Guzek said.
<!-- END STORY BODY --> <!-- BEGIN SIDEBAR -->
Mortgage crisis hits million-dollar homes
<!-- END HEADLINE --> <!-- BEGIN STORY BODY --> By Walden Siew Thu Mar 29, 12:21 PM ET
NEW YORK (Reuters) - Sheriff Leo McGuire presides over foreclosure auctions in Bergen County, New Jersey, where the bidding for a home reached $1.2 million last June -- a record for one of the wealthiest counties in the nation.
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Homes sold on the auction block for as much as $852,000 this month -- more than quadruple the median home price in the United States. County officials believe they are close to setting another record soon.
In Troy, Michigan, Dorothy Guzek, a credit counselor since 1988, has also seen the changing face of foreclosure.
Her clients, while predominantly poor and minorities, increasingly are neither. Nowadays, homeowners holding professional careers with six-figure salaries regularly drop by her office. More and more they come from upscale Michigan communities such as Independence and Clarkston -- once the summer retreat for Henry Ford, founder of Ford Motor Co.
"Because of the financing that was possible, so many people bought the bigger house, the million-dollar house with the bowling alley or the tennis court outside," says Guzek, who works for GreenPath Debt Solutions, a nonprofit service based in Farmington Hills, Michigan. "People across all income brackets are having financial hardship."
For those on the frontlines of the growing U.S. mortgage crisis, these are the early signs that the explosion of subprime loans made to mostly poorer borrowers is reaching higher ground. The damage is hitting homes financed through jumbo loans for more than $400,000 and so-called Alt-A loans that are a notch above subprime and a step below prime.
Americans already are facing foreclosure at a record pace, according to the Mortgage Bankers Association. Lenders started foreclosure actions against more than one in every 200 U.S. mortgage borrowers in the last quarter of 2006.
About 2.2 million foreclosures due to bad mortgage loans may cost U.S. homeowners $164 billion, mostly from lost home equity, according to the Center for Responsible Lending, a Durham, North Carolina-based research group.
In the last three months, the percentage of foreclosures for U.S. homes valued at more than $750,000 has climbed to 2.5 percent, the highest since early 2005, when RealtyTrac, a online marketplace for foreclosed properties, began tracking data. The overall rate of foreclosures also is on pace to increase by a third this year.
"Everyone's looking at subprime. The rock they aren't looking under are the adjustable rate mortgages and teaser rates and low money-down loans," said Mark Kiesel, a portfolio manager for Pacific Investment Management Co., the world's biggest bond manager. "It's going to affect prime as well."
Kiesel said he sold his Newport Beach, California, home for more than $1 million in May last year after the property appreciated more than 20 percent in two years. He believes delinquencies and defaults will rise, weighing down most of the housing market.
California, with 3,384 foreclosures of higher-scale homes since December, is leading the nation, followed by Florida and New York, according to RealtyTrac. The MBA doesn't track foreclosure data by home value.
ICEBERG
Josh Rosner, managing director at investment research firm Graham Fisher & Co., says the growing numbers of foreclosures outside the subprime market is just the start.
"To define the problem as a subprime problem is short-sighted," Rosner said. "It's really seeing the tip of the iceberg as the iceberg."
Compounding the risk is the nature of homebuyers of higher-end homes, says Rosner. About 40 percent of homes bought last year were second homes or investment properties. Speculative buyers may be more at risk, he said.
Standard & Poor's said on a conference call on Thursday that foreclosure rates are likely to surpass levels last seen during the 2001 recession.
"That giant ATM you've been living in has just shut down," said David Wyss, chief economist at S&P in New York. "Consumers are in debt and we've been living beyond our means for some time."
CDOs
The latest foreclosure data also may spell trouble for Wall Street, where pools of bonds may be susceptible to nonperforming
loans that underpin debt vehicles known as collateralized debt obligations.
CDOs group debt based on credit quality and are similar to mutual funds in packaging securities to help diversify risk. In CDOs, the strongest debt is at the top of the capital structure, helping to smooth out any drag on performance from weaker debt, such as subprime loans.
Just as more expensive homes are beginning to fall through the cracks, the fear is higher-rated bonds within CDO structures may be vulnerable.
The declining performance of subprime loans have resulted in CDOs losing about $20 billion in market value, according to investment bank Lehman Brothers.
UBS Securities said in a report last month that rising delinquencies may cause losses within some subprime mortgage bonds rated as high as the "A" category.
FRAUD-FUELED
At the Justice Center in Hackensack, New Jersey, on Friday, the wood-paneled room is filled with about 40 people and the auction is routine. The first property on the sales sheet lists a Korean homeowner with $509,000 of outstanding debt. There are no bidders. Deutsche Bank, holder of the busted loan, buys the property with a quick $100 bid.
Sheriff McGuire calls the process "one of the most distasteful parts of my position." He places most of the blame on bankers who allowed questionable lending practices.
"This might not have happened if not for these new type of loans," McGuire said, minutes before the auction. The loans also have helped millions of Americans purchase new homes, he concedes.
"The banks took a chance on the future, and the homeowners took a chance so there's enough blame to go around," McGuire said. Still, "the banks and lenders have largely set them up for this downfall."
Adding to the grief, mortgage scams and con artists trying to take advantage of distressed homeowners abound, boosting foreclosure rates, county workers said.
"It's not the American Dream anymore," said Fran Napolitano, a county clerk in Hackensack. "It's 'who can I stab next."'
In Detroit's suburbs, hit hard by the U.S. auto industry downturn and financial troubles at General Motors Corp. and Ford Motor Co., the story strikes home each day for GreenPath's Guzek.
"It's sad. It's just an awful feeling," she said. "You hope that you can come up with a financial plan to help people remain in their homes, but sometimes it's not the best thing for them."
These days, her calendar of eight counseling sessions a day, 40 a week, remains full. Increasingly, she offers different advice than devising financial plans to save her clients' homes.
"If they can't afford it, sometimes the best thing for them is to walk away," Guzek said.
<!-- END STORY BODY --> <!-- BEGIN SIDEBAR -->
As Dawoof posted that article, there are millions more where that came from. Let's be clear, in Japan when their real estate bubble collapsed, it didn't matter that they brought real interest rates down to essentially zero. It made no difference. With inflation an issue right now, the Fed can't even cut....This is going to get soooooooo much worse than it is now. I'm shocked how complacent people are about it.
I will never be happy if my house goes down 30%...but it won't happen. I am sure it will top out at some point, but it happens.
Sell and rent?
I would rather lose 30% of the value on something I own than to donate rent to someone every month. How would that make any sense for anyone?
maybe this is the reason for the clip stiff job at Cascade
uppy:hey clip....that 30% is staring you in the face
Wow, I didn't even have to bump it. As I reread the thread, the more I realize that Dawoof is one of the ones on here who have a clue about economics and bubble creation.
Notice after the close today another Bear Stearns Hedge Fund(added to the 2 others which went to zero) is going down, this one based on mortgage loans(futures tanked after the close)...I'd say we are in inning 4 right now of this whole thing. Lending is simply the first shoe to drop. American Home Mortgage today---nice day for shareholders. 10 dollars to 1 dollar in one day....And this is months and months into the market knowing things are ugly in lending. Insolvent--Get used to hearing this word. Don't confuse insolvent with bankrupt b/c they aren't the same thing.
Notice after the close today another Bear Stearns Hedge Fund(added to the 2 others which went to zero) is going down, this one based on mortgage loans(futures tanked after the close)...I'd say we are in inning 4 right now of this whole thing. Lending is simply the first shoe to drop. American Home Mortgage today---nice day for shareholders. 10 dollars to 1 dollar in one day....And this is months and months into the market knowing things are ugly in lending. Insolvent--Get used to hearing this word. Don't confuse insolvent with bankrupt b/c they aren't the same thing.
Now Cramer is saying to just walk away and default if upside down. I guess it makes sense.I think much worse is yet to come.
http://video.google.com/videoplay?d...l=2&start=0&num=10&so=0&type=search&plindex=0
http://video.google.com/videoplay?d...l=2&start=0&num=10&so=0&type=search&plindex=0
Thanks to VT and GD. There are many here that understand markets and post #55 is one of the best in this thread.
Went back and read this thread also and regardless of how im judged for posting this, Ill now post we are now in bottom 2nd inning of a massive collapse in real estate.
Alan Greenspan and the artificial interest rate cuts starting in 2001 fueled final blow off phase that created the condo flippers, no-doc loans, million dollar trailers, and at least a few million wannabe Donald Trumps.
If history books portray Greenspan as anything but the creator of the worlds largest bubbles, it would be a big fat lie.
Now there are millions of builders sitting on inventory for whatever reasons they believed they could sell to a greater fool for yet higher prices and more sooner than later, many of them will be bankrupt.
People overpaid for homes, thinking they would rise to the moon and thus every homeowner would become a multimillionaire.
Not only did they overpay, they borrowed massive amounts of money vs bloated and false appraised values, somehow thinking interest rates would never rise and their home value would rise to the moon.
Then the condo flippers came around thinking as dreamers throughout the centuries have that they had figured out how to turn lead into gold. As all bubbles and manias progress, doubters were dismissed as out-of-touch fools and that this time it was different.
Well, as we read this, we again have discovered, that in fact, although the faces may have been different, the game was the same.
:howdy:
Went back and read this thread also and regardless of how im judged for posting this, Ill now post we are now in bottom 2nd inning of a massive collapse in real estate.
Alan Greenspan and the artificial interest rate cuts starting in 2001 fueled final blow off phase that created the condo flippers, no-doc loans, million dollar trailers, and at least a few million wannabe Donald Trumps.
If history books portray Greenspan as anything but the creator of the worlds largest bubbles, it would be a big fat lie.
Now there are millions of builders sitting on inventory for whatever reasons they believed they could sell to a greater fool for yet higher prices and more sooner than later, many of them will be bankrupt.
People overpaid for homes, thinking they would rise to the moon and thus every homeowner would become a multimillionaire.
Not only did they overpay, they borrowed massive amounts of money vs bloated and false appraised values, somehow thinking interest rates would never rise and their home value would rise to the moon.
Then the condo flippers came around thinking as dreamers throughout the centuries have that they had figured out how to turn lead into gold. As all bubbles and manias progress, doubters were dismissed as out-of-touch fools and that this time it was different.
Well, as we read this, we again have discovered, that in fact, although the faces may have been different, the game was the same.
:howdy:
Not only what you said Dawoof, but builders like D.R. Horton just kept gonbbling up real estate and building homes like there would be a neverending line of dazed buyers. Not happening. The supply/demand is really screwed up now, and this will have a whiplash effect on the market like we have not seen in recent history.
I have made some decent scores gambling in my 53 years, but the one that am most proud of is selling my 122k home (in 1998 dollars) for 477k in May of 2006. In my region, may of 06 is charted as the absolute peak in home prices. Thank God I jumped ship. My old home is back on the market for $347,000. And approaching 90 days on the market.
This major correction is nowhere near over in California, and many other states.
The Las Vegas market is poor as well.
I have made some decent scores gambling in my 53 years, but the one that am most proud of is selling my 122k home (in 1998 dollars) for 477k in May of 2006. In my region, may of 06 is charted as the absolute peak in home prices. Thank God I jumped ship. My old home is back on the market for $347,000. And approaching 90 days on the market.
This major correction is nowhere near over in California, and many other states.
The Las Vegas market is poor as well.
One thing to note about the real estate market, particularly the South Florida market... houses are listed for longer periods of time as the market is flooded with homes for sale, but that has not equated to a decrease in the median sale price. The inventory in Browad County is climbing every month, yet the median sale price actually increased 1% in June. Sellers are reluctant to lower prices and would rather keep the house on the market for 9 months than to lower the price for a quicker sale.
The market has not crashed and the bubble has not burst as long as the median sale price stays constant. This indicates that the worst is yet to come, but it also may never come at all as long as the dollars are there for purchase.
The market has not crashed and the bubble has not burst as long as the median sale price stays constant. This indicates that the worst is yet to come, but it also may never come at all as long as the dollars are there for purchase.
