The Golden Truth: Even More On Housing - Sorry But It's Getting Worse...

Wednesday, February 2, 2011

Even More On Housing - Sorry But It's Getting Worse...

In previous posts I have focused on supply, demand, employment levels, credit availability, and the still relatively high price of housing as the variables which would force home sales and values much lower for the foreseeable future. Now the unlikely source of cnbc.com has brought to light yet another variable: the number of vacant homes. Based on the latest census report on homeownership, the homeowership rate of the population dropped to 66.5% in Q4, down from the 2004 peak of 69.2%. Even more startling was the fact that 11 percent of housing units are vacant. Here's the LINK Think of it this way: 1 out of every 9 homes is sitting empty...

I think that the implications of that data really do not require commentary. One more point. I mentioned a 105% Fannie Mae refinancing program the other day. I was mistaken about the specific details. And the reality is that the program will make things even worse down the road than what I had originally thought. I heard the ad again yesterday. The program allows people with "good" credit scores and who have 1st and 2nd mortgages to refinance 105% of the amount of the 1st mortgage - while leaving the 2nd mortgage in place - in order to "weather this storm and wait for the market to recover." Quite horrifying if you ask me, as it enables a homeowner to basically take cash out of a home that is underwater, cramming down the 2nd mortgage, and add to the overall leverage on the house. My question would be this: if someone has good credit, why do they need "to weather the storm?"

It's getting worse by the day...

7 comments:

MammothWednesday, 02 February, 2011
"1 out of every 9 homes is sitting empty"
------------------------
Would like to see a breakdown showing the ratio of foreclosed homes that had been purchased by investors & speculators, vs. those that were bought by people who actually lived in them.
ReplyDelete
Replies
Dave in DenverWednesday, 02 February, 2011
I bet that data is available from the census bureau, although who knows how accurate it is. The more interesting data I would like to see is:

1) the % of underwater homes using a TRUE market value to mortgage number

2) the TRUE number of people who would like to sell but don't want to because either a) they think the market is "coming back or b) their house is underwater and they don't want to vacate and send the keys to the bank.
ReplyDelete
Replies
EconomicDisconnectWednesday, 02 February, 2011
Housing is deteriorating and thus stocks go up as they are the only thing the FED can point to as a success.

I have pictures of my house inundated by all the snow as of late, looks more like Denver!
ReplyDelete
Replies
AnonymousWednesday, 02 February, 2011
I suspect the Banks are selling their toxic home loans with a 50% or more discount to a Shell Companies which the Banks created to secretly move loans off their books. And then use that loss to offset profits gifted by Fed Res. This is the same scam used after the 1989 Savings and Loan crisis to cleanup financial books. During that period the little guy could not buy a discounted house in a quality niegborhood. I know because I tried to buy with cash. Eventually, the properties were offered to the public by the Shell Companies, but not disounted. Nothing changes,
ReplyDelete
Replies
mabmanWednesday, 02 February, 2011
here's a great article on the FNM/FRE refinancing

http://market-ticker.org/akcs-www?singlepost=2138213
ReplyDelete
Replies
JoeThursday, 03 February, 2011
As Dave pointed out yesterday all we have left is a USD printing press which is systematically destroying our unit of exchange. Everything else is a side show when compared to this one issue, and it appears Bennie has this one set in stone.

Joe M.
ReplyDelete
Replies
Dave in DenverThursday, 03 February, 2011
Yup. Print or die. It's that way for Europe and Japan too
ReplyDelete
Replies

Add comment

Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.