As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier, according to estimates from LPS Applied Analytics. Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier...Based on the rate at which banks have been selling those foreclosed homes over the past few months, all that inventory, real and shadow, would take 103 months to unload. (Here's the article link: LINK)
(click on chart to enlarge)
As home values continue to decline, high unemployment persists and more homeowners resort to strategic default (or "jingle mail"), the number of foreclosures will likely accelerate this year. In addion, Congress does not appear willing to extend the home buyer tax credit program when it expires in 4 days. To make matters worse, 58% of all modified mortgages re-default after just 8 months - a glaring failure of Obama's taxpayer-financed mortgage modification programs.
This in turn will lead to another massive heart attack in the banking system, which no doubt will again be paid for by taxpayers. The moral of this story is that if you are contemplating buying a home, your best move will be to hold off for at least another couple of years to see where this is going. I have said since 2003 that we could see a 75-85% decline in housing prices before a real bottom is hit. I still maintain that view and it would appear that the data may well validate my conviction.
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A buddy of mine just closed on a cookie-cutter "mini McMansion" in one of those Willow-Meadow-Hill-Clayton-Creek-Estate subdivisions. He had to hurry up and buy to get that $8,000 tax credit. I tried to explain all the math and economics forces weighing against houses, but I couldn't compete with the brainwashing and conventional wisdom that it's always a good idea to buy a house. Oh well.
ReplyDeleteHouston we have a problem?
ReplyDeletehttp://www.kitco.com/images/live/silver.gif
Nice spike @ 9:50????
Anonymous - your buddy definitely mades a mistake unless he doesnt' care about money and really loves the house.
ReplyDeleteAnyone get a peek at the 2 year Greek bond this morning....YIKES!
ReplyDeletehttp://www.bloomberg.com/apps/quote?ticker=GGGB2YR%3AIND
Europe is melting down right now, and it's taking the spotlight off the meltdown in this country
ReplyDeletethanks for the link
Trying to wake up the brainwashed masses is like trying to teach a pig to sing. You get frustrated and the pig gets pissed off.
ReplyDeleteI have two coin dealers that have a combined 80 years of experience and neither believes the PM's are manipulated. They simply point to the fact that Gold is at an all time high so it can't possibly be manipulated. They just cannot seem to comprehend the difference in purchasing power since 1980.
Joe M.
LOL. Many coin dealers and mining stock executives that i have met with are complete morons when it comes to understanding the facts about the gold market.
ReplyDeleteLook at all the gold mining companies that sold forward years of production when gold was at $300/oz. ROFLMAO.
Most coin dealers are nothing more than pure brokers. They don't care if gold goes up or down, as long as people are buying and selling.
Yup. They operate off the vig or what bookies call the juice.
ReplyDeleteJoe M.
I can think of two reasons why advisors/bullion brokers do not what to say the manipulation word.
ReplyDelete1) most of the people out there will think the person is a wacko and walk away
2) or, if they see that a market is manipulated, why play in that sandbox (which can be overcome of they look at a 10 year chart of gold and are receptive to listening to a variety of other reasons).