Author Topic: Ready for a double-dip downward spiral in housing? (Not good for Obama)  (Read 4258 times)

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Christians4LessGvt

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Ready for a Double-Dip in Housing?

March 1, 2010

The Housing Slump Renews - Sales of new homes plunged 11.2% in January to a record low 309,000 units on an annualized basis. Sales of existing homes fell 7.2% to a seasonally adjusted annual rate of 5.05 million units, the weakest reading since June 2009.

I think that prospective buyers who had hoped to take advantage of the first time $8,000 tax credit, and move-up buyers seeking the $6,500 tax credit are concerned that they cannot get to Contract by the end of April if they are applying for a mortgage now. Even if they do, they have to close by the end of June. If not, they may lose their down payment and not get the tax credit? If it all goes well, it still takes six months to get the tax check from the IRS.

Commodity Speculation is Hurting the Homebuilders

Because Bernanke insists on keeping the federal funds rate at zero percent, speculation in copper and lumber futures is causing problems for homebuilders and hence the U.S. economy. How can a builder compete with cheaper depressed short sales and foreclosures in existing homes with higher costs of building materials?

Since the end of 2008 to the high in January 2010 copper prices are up 182%. Since January 2009 and February 2010 Lumber Futures are up 112%.

Bernanke says there are no signs of inflation, so he continues to ignore reality, and that zero rate policy could actually cause the Double-Dip, or worse.

Fannie Mae Takes a Hit - Fannie Mae (FNM) will get another $15.3 billion of taxpayer money bringing its total bailout to $75 billion. The total for Fannie and Freddie Mac (FRE) is now $126 billion, and the total line to the U.S. Treasury is now up to $415.3 billion and counting through 2012.

FDIC Troubling Statistics - The FDIC Quarterly Banking Profile suggests that "The Great Credit Crunch" that began with the peak in the housing stocks in mid-2005 will continue right through the new decade. Community banks peaked in December 2006 and the regional banks peaked in February 2007. Stress continues to build in the banking system as the number of bank failures rise.

The number of banks on the FDIC List of Problem Banks is up 824% since the end of 2007 to 702.

The assets among the problem banks is up 171% to $402.8 billion

The warnings began when Quarterly Net Income in the banking system crashed in the 4th quarter of 2007, which was the final warning that recession loomed.

Nonfarm, non-residential real estate loans have not yet begun to deteriorate as there appears to be a balance for loans of owner-occupied properties collateralized by business revenue (sales of goods and services) and business expenses (payroll, supplies and debt services). This is a fragile balance and a reason for the lack of job creation.

If you assume Derivatives was a cause of "The Great Credit Crunch" consider this: Since the end of 2007 the Notional Amount of Derivative Contracts produced by our nation's banks is up $48.8 trillion, up 29.6% to $213.6 trillion. I thought we were supposed to reduce derivative exposures?

Bank Failure Friday
The FDIC closed two community banks on Friday with one publicly-traded Rainier Pacific Bank (RPFG), which is on the ValuEngine List of Problem Banks.

The 22 bank failures so far in 2010 have cost the Deposit Insurance Fund $4.4 billion, bringing the DIF Deficit to $25.3 billion. The FDIC has $46 billion in prepaid DIF fees for 2010 through 2012 that are earmarked for the DIF when scheduled.


http://seekingalpha.com/article/191175-ready-for-a-double-dip-in-housing?source=email
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Xavier_Onassis

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I don't think that cheaper houses are a bad thing for everyone. Certainly not for those who wish to buy a house. The people who lose when prices go down (Realtors, builders, people in the construction trades) are really noisy when they are damaged. The homebuyers are not organized and do not tend to be very vocal publically.
"Time flies like an arrow; fruit flies like a banana."

Amianthus

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The people who lose when prices go down (Realtors, builders, people in the construction trades) are really noisy when they are damaged.

You forgot to mention the other group that is hurt when prices go down - current home owners that are looking to sell.
Do not anticipate trouble, or worry about what may never happen. Keep in the sunlight. (Benjamin Franklin)

Christians4LessGvt

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And an economy can't replace 37 years of government sponsored abortion, which reduced net demand by 55 million consumers, with QE. The cumlative result of early termination of one in three pregnancies year after year is eventual and persistent economic depression. Look first at Japan, then Europe and now US. Yeah they tried to run 30 million mexicans in to replace the dead babies...hell it didnt work. This is only going to get worse as time passes. Watch.
« Last Edit: March 01, 2010, 05:28:37 PM by ChristiansUnited4LessGvt »
"Mr. Gorbachev, tear down this wall!" - Ronald Reagan - June 12, 1987

kimba1

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can`t really feel too much sympathy with a 1.2 million dollar house that should really sell for 500k.

alot of these cost increase is voluntary
meaning thier got remodeled solely for the bigger ticket price.

in fact I`m willing to bet alot of these remodeled homes are not even in code so the new buyer will pay more out of pocket.

I say this because everbody in my area is telling me to remodel, but nobody talks about getting thier homes within code.

getting you house in code is not a given.


Amianthus

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If you use a licensed contractor for the remodel, it *should* be in code. If it's not, it's the responsibility of the contractor to get it that way.
Do not anticipate trouble, or worry about what may never happen. Keep in the sunlight. (Benjamin Franklin)

kimba1

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well

this is gonna sound racist

alot of people here use irish contractors who never brother with permits.

it`s cheaper than going the legal route.

people tend to prefer the illegal route.

that`s why I`m betting alot of these remodeled homes don`t pass inspection.

Amianthus

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How do those contractors stay in business? I'm sure the building inspectors must suspect all these contractors that never order any building permits or schedule inspections. How do the contractors maintain their licenses and bonding?
Do not anticipate trouble, or worry about what may never happen. Keep in the sunlight. (Benjamin Franklin)

Christians4LessGvt

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can`t really feel too much sympathy with a 1.2 million dollar house that should really sell for 500k.

kimba as a hobby i look at open houses on sunday
yesterday i looked at house that was valued by the county tax role in 2009 for $895K
the "asking" price $599K
with no jumbo loans for the upper market is making that market a disaster
« Last Edit: March 01, 2010, 06:39:18 PM by ChristiansUnited4LessGvt »
"Mr. Gorbachev, tear down this wall!" - Ronald Reagan - June 12, 1987

kimba1

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true

but 895k is alot of money.

people really need to say publicly "that`s alot of money"






Christians4LessGvt

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Re: Ready for a double-dip downward spiral in housing? (Not good for Obama)
« Reply #10 on: March 01, 2010, 07:46:46 PM »
$899K to $599K in one year is whats alot of money

somebody is gonna get hosed

the bank

plus local taxing authorities are in for huge, huge drops in property tax revenues
"Mr. Gorbachev, tear down this wall!" - Ronald Reagan - June 12, 1987

Xavier_Onassis

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Re: Ready for a double-dip downward spiral in housing? (Not good for Obama)
« Reply #11 on: March 01, 2010, 08:14:01 PM »
The assumption that the house was ever actually worth $895 is simply arbitrary. Many of the overpriced houses were bought by flippers who were trying the game the system. Flippers add nothing to the value of the house, the country, or anything else, and the fact is that no one needs them. So if they get diddled, it simply teaches them a lesson and removes a lot of them from the market, which I would call good riddance.
"Time flies like an arrow; fruit flies like a banana."

Christians4LessGvt

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Re: Ready for a double-dip downward spiral in housing? (Not good for Obama)
« Reply #12 on: March 01, 2010, 09:08:54 PM »
The assumption that the house was ever actually worth $895 is simply arbitrary.

Not any more than any house value in the United States

Many of the overpriced houses

It was not over-priced in 2006
There are no jumbo loans. (over $500K)
Thats the primary reason why the price dropped this much.

were bought by flippers who were trying the game the system.

So if I work my ass off...save money instead of taking trips to Cancun
Save for rainy days like what we now face
and now that real estate is low buy distressed properties
fix them up...wait awhile....and sell them for a profit...
Why the need to demonize?


BTW....This house was/is owned and was lived in by the original owner...not a builder or flipper...who got transferred to Conn.


« Last Edit: March 01, 2010, 09:31:54 PM by ChristiansUnited4LessGvt »
"Mr. Gorbachev, tear down this wall!" - Ronald Reagan - June 12, 1987

Plane

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Re: Ready for a double-dip downward spiral in housing? (Not good for Obama)
« Reply #13 on: March 01, 2010, 09:11:44 PM »
The social utility of a flipper.


Haveing a flipper or two around means that sellers are harder for  buyers to cheat.

kimba1

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Re: Ready for a double-dip downward spiral in housing? (Not good for Obama)
« Reply #14 on: March 01, 2010, 11:41:39 PM »
How do those contractors stay in business? I'm sure the building inspectors must suspect all these contractors that never order any building permits or schedule inspections. How do the contractors maintain their licenses and bonding?

some are not licensed.
remember the inspectors are city employees meaning by the governments perceptions.
smaller staff and higher work qoutas equal more money in general funds.

the inspectors will never catch the contractors.