June 28, 2007

Real Homes of Genius: Today we Salute you Compton. $279,900 for 768 Square Feet.

Word on the grapevine is, now that Paris did her time in Lynwood, all other cities in the proximity are going up in Hollywood value. They are hot. Today we salute you Compton, with our Real Home of Genius Award. This 768 square foot palace will wet the appetite of any hungry home buyer. Take a look at the gates. Doesn’t it remind you of the entrance of Windsor Castle? I’m glad we both had the same initial reaction. In addition, this place has some uncanny ability to squeeze gold out of turnips. This place has 3 bedrooms in 768 square feet. How they do this is like asking Oscar Mayer's how they make hot dogs, you probably don’t want to know.

As we read the description, we realize that this is a motivated seller. In addition, they may offer you a repair credit. Isn’t that nice? Well I may not buy this place. Since this place is in Southern California and less than $300,000, ergo this is a good deal. Forget the fact that area rents go for $800 a month. This place was built during World War II. While Europe and Russia where being bombed, we had this glorious piece of construction coming up from the ashes.

Let us take a look at the sales history:

Sale History

1/13/2006: $293,206

04/19/2005: $282,000

06/20/2003: $1,000

Fascinating. So you are telling me we have a place in Southern California with 2 years of zero appreciation? Blasphemy! This goes against the sunshine tax laws and all things that make this world spin. But here is the real kicker. The Zillow Zestimate is $418,000! Bwahaha! Who are we to believe? Zillow, the current price, or our gut? My gut likes the 2003 2nd note or refinance.

This is a great example of how many urban areas around Los Angeles are coming down quickly while the median price keeps rising like a Phoenix. Speaking of Phoenix, many home builders out there are giving cars with a home purchase. How smart. Give you a $40,000 car so they don’t have to knock the price down and affect comps. Too bad this tactic isn’t working because look at the inventory from last week (can you say sign of the beast?):

Today we salute you Compton with our Real Home of Genius Award.

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June 26, 2007

Mortgages 101: Rule #1, Read your Mortgage! Riding the Mortgage Default Wave.

News flash. No summer jump for housing. I’ll give you a minute to recover from the shock of this surprising update. And in other news, people don’t read their mortgage applications before signing the dotted line. In this weekend’s LA Times and another article from the Washington Post, some startling data is released regarding mortgage borrowing. A Federal Trade Commission study took a sample of 819 prime and sub-prime mortgages borrowers in 12 locations around the country and found:

· 90% of borrowers could not identify the correct upfront cost associated with their mortgage.

· Two-thirds didn’t realize they would get hit with penalties if they refinanced within two years.

· 80% had a hard time understanding why the APR was different from the loan note interest rate.

This is absolutely startling because the data gathered came from prime and sub-prime borrowers. The sample size is also significant because it shows a decent representation of what is occurring in the current marketplace. I find it fascinating that those in the housing industry seem to take no issue with the above numbers. The line in the sand is being drawn. On one side, you have resolute bears that will refuse to pay current prices and are waiting for prices to reflect market income and rental rates. On the other end, you have housing bulls crying “personal responsibility” regarding buyers and echoing a continued growth in real estate appreciation. I can see both sides of the argument. However, when you have housing bulls saying a buyer knew what they were getting into and therefore are directly to blame (the above data shows they did not know what they were getting into), this pretty much shakes the foundation of their argument. After all, now that we factually know the vast majority of buyers do not know even minor details of their mortgages, do we continue turning a blind eye to this financial negligence?

What about personal responsibility for the mortgage industry? I guess they see it as a one way road. We have the mortgage industry committing outright consumer fraud and malfeasance by placing borrowers into homes they know that sometime down the line, they will be unable to afford. In some cases we are actually having lenders taking borrowers out of fixed conventional loans and placing unknowing buyers (aka see aforementioned borrower stats) into risky interest-only or other exotic mortgage products. Somehow this seems okay. And we wonder why foreclosures are rocketing up to the moon? Some would like you to believe that a trillion dollar mortgage industry should be held to the same standard as a financially irresponsible buyer making $25,000 a year getting into a $500,000 Real Home of Genius. You’ll never hear the real estate syndicate talk about a fiduciary responsibility because they have thrown that concept out of their lexicon. The consequence for the borrower? They lose their home and are financially screwed for many years. The consequences for the mortgage industry? Only time will tell but last year “bail-out” talk was being thrown about in the Senate. Guess who will pay this bill? The tax payer. Do you pay taxes? Unless your name is Wesley Snipes, you probably do. So in essence, the ridiculous irresponsibility of Wonderland lending will come home to roost with you regardless of whether you played into this housing bubble or not. The mortgage industry’s shenanigans will bring a collective cloud on the entire public.

The Elephant in the Room: Lending has become a Pure Sales Industry.

Local banks used to have a stake in the lending that occurred in their neighborhood. You actually had to go to your bank (physically) and meet with a representative to go over your financial statements. They would look at your income, W2s, bills, and financial statements to ensure you were a qualified buyer. And if all else failed, underwriting was more restrictive because you actually had to have a down payment. During this bubble, you literally could make up your income to jump into a home. Make up your income? Stated income baby! No interest-zero-down cash-back-loans amigos! Taking a page out of 2nd Life, you literally could reinvent yourself in a pseudo-reality made up by your own definitions. Anyone that has a sense of finance only could stand back as a spectator and wonder what the hell was going on. And a major problem is local banks passed the buck all the way to Wall Street and decentralized mortgage buyers. No longer did the local bank have to fit the bill if you went MIA on your housing payments. What do they care if you foreclose since your mortgage is now chopped up like hamburger meat and floating around in some hedge fund in China yielding 8%. At least that is until the market came to a screeching halt.

Companies such as New Century Financial bit the dust because of first and early payment defaults and were forced by Wall Street to eat some of their own crap. What happened when they got these notes back? An implosion. Mortgage insiders and even speaking to a few acquaintances in the know, sub-prime outlets operated as boiler rooms. A white board was on the wall for all to see and literally a competition of who could sell the most loans ensued. The riskier the loan the bigger the commission. And all this could be done via the phone and over the net. You can electronically sign and send statements to some lender operating half way around the country. I’m sure an Orange County lender knows market conditions in Oklahoma City. What do real estate agents say? Oh yeah, location, location, location. Apparently the industry didn’t take note of one of their key rules.

Wall Street hungry for these loans devoured anything that was sent to them. The pressure spread from aggressive outlets and affected the bottom line including your local bank. So instead of putting pressure on regulators to enforce basic financial laws, they decided to join the ongoing credit orgy. Now, you can go to your local bank for a mortgage, a credit card, mutual funds, and open up a savings account all under one roof. Although savings account are pointless since America as a whole is in a negative savings range. Why save when savings rates are at 1%? So bank representatives suddenly became sales folks trying to sell you on multiple products. A Jack of all trades, but a master to none. At least previously, there was some implicit understanding that your bank representative needed to evaluate the risk you posed to the bank. If you foreclosed, your home was an REO and you look like a retard for lending $400,000 to a person making $20,000 a year. You probably lost your job for being so incredibly irresponsible. Now, the mortgage has been sliced and diced so many times that no one really knows who holds your actual note (chances are no one fully since it is morphed into a derivative and is essentially a collateralized debt obligation). Fancy words for spreading the crap so thin that it eventually smells like roses.

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June 23, 2007

Why the Housing Market Has Failed You. 5 Major Failures of the Housing Market

I’m sure many of you already read the article about The Real Estate Prayer Luncheon in Florida where a group of hopeful agents prayed that the housing slump will end. I actually think this is a great idea to resurrect the housing market. So in light of this, I am going to pray that my new book coming out called The Wealth via Failure Code will be a major success. I’m praying that all of you will buy it. Since we are living a surreal housing environment, I figure writing a book with Orwellian themes will tickle many of your fancies.

There are 5 major failures with the current housing market. There are more, but 5 large items that need to be addressed immediately since they will impact the market in the next few months. Anyone buying a home in this market is tempting fate; it is reminiscent of the woman who stuck her arm in a Siberian tiger’s cage and had it ripped from the socket. Nature does what it will always do. And housing economics and bubble psychology will always do what it always does. All market indicators are blinking red. By reviewing MLS data, nearly every large metro market in the US is reaching record inventory even after adjusting for population growth (we love making babies). Foreclosures and REOs are hitting the market like Tsunami waves. Sub-prime outlets are systematically being eradicated from the market. And fear of risky debt infecting the general market is prevalent. No wonder why this group of agents in Florida went to church to find housing religion.

Major Foreclosures Will Hurt the Public

Losing your home royally sucks. I’m not sure if we can find anything positive about foreclosures. It hurts families. It also displaces families and forces new inventory on the market via REOs. Sometimes foreclosures happen because a person loses a job or a family emergency. In usual housing markets, this was the majority of cases. Now, the majority of foreclosures are due to buying more than you can afford. Are you going to feel sorry about the person that bought a $700,000 home on a $14,000 a year income only to realize that maybe $6,000 a month is too much when you net $1,000? Maybe the blame should fall a little bit on the agent hungry for their commission check wouldn't you think? Even a back of the napkin calculation will show you this wouldn't work.

The demise of many sub-prime outlets is justified. They created their undoing for instant gratification and fast money. Easy come, easy go. When I worked as an agent, I would constantly hit heads with brokers that laughed about creative financing they were able to pull on buyers. I would look at financial statements and shake my head as buyers fudged numbers encouraged by brokers to get into overpriced homes. “Don’t worry, banks never check especially if we go stated income. All we need is your signature here stating you make $100,000.” I would hear statements like this constantly and this was a few years ago. God only knows what has been going on in the shady underbelly of housing since I left the industry. Oh yeah, we are already seeing what is going on. Ridiculous loans on massively overpriced homes with folks unable to afford the monthly payment.

Now foreclosures also hurt the market because it adds further inventory to a market that is reaching epic numbers. Prices are falling in many regions already. Many in Southern California look at the median price and with a look of dismay, see the median increasing! What is going on here? Well high priced homes are selling and lower priced homes are sitting on the market. A case of the Miss Universe contest; anyone that wins is beautiful. Yet they don’t represent a sample of the population. That is why sales are dropping in amazing numbers. But the market strain is taking a toll on many areas. Let us take a look at some hard data for Southern California:

So we have plenty of data showing that many zip codes in Los Angeles County are going down. And you’ll notice a general pattern here. Most of the homes listed above are in the $300 to $700 thousand dollar range; your typical Real Home of Genius. So why are median prices still going up? Well you’ll also notice that the sales numbers are rather low. If we are to look at the high priced areas selling, you’ll notice sales numbers and prices are much higher. Obviously looking at the current aggregate median of $550,000 does very little in highlighting the overall market conditions in Los Angeles County. The devil is in the details. Suddenly we have a spiritual overtone to housing. Maybe because certain price tags are actually sinful.

And notice of defaults are up a record 148% statewide. What this means is more foreclosures coming online in the next few months and growing inventory further pushing the median price down. And this isn’t just for California. Nationwide according to RealtyTrac foreclosures are up a whopping 17% as of Q3 of 2006. Many areas such as Miami, Fort Lauderdale, Las Vegas, and Denver are seeing numbers in foreclosures jump by 50% year-over-year. With the implosion of the sub-prime market and the prospect of more inventory hitting the market, this summer will break the stalemate of sellers thinking their home is worth what it once was. Banks will sell properties quick and dirty even if it means cutting prices to the bone.

Mortgage Debt Largest Debt in the US

Consumer spending makes up 70% of the $13.7 trillion dollar US economy. Mortgage debt has increased at a radical pace due to underwriting standards and the lax monetary policy taken by the Federal Reserve. Take a look below at the growth of mortgage debt in the US:

You’ll notice that in a matter of 5 years, we practically doubled the outstanding amount of mortgage debt. Mortgage debt outstanding rivals the amount of consumer spending that makes up 70% of our economy. Now you can understand why a spook in the mortgage market will send the market into a tailspin. The interesting thing to note is that as mortgage debt increases each year by double-digit figures, according to our government plutocrats we are facing very minor inflation. Too bad for most middle-class Americans, housing payments are the largest line-item payment each month. Oh yeah, and based on ridiculous hedonics used at the Bureau of Labor and Statistics, we are facing moderate 3 to 4 percent inflation according to the Ministry of Truth. Keep in mind they use owner’s equivalent of rent, take out energy and food prices, and pretty much anything useful for a daily life. As a consolation they’ll adjust for electronics since we buy computers and HDTVs on a weekly basis. Good job government.

We know how scared the market is right now. Remember long ago (in March 2007) with the sub-prime implosion and the stock market dropping 400+ points in one day? Fears of mortgage implosions sent the market down hard. The market recovered quickly because all the talking head pundits would have you believe that it was contained principally to the sub-prime market. They also discussed in great detail the legend of the summer housing easter bunny and how the market will come roaring back. Summer is here and no bouncing bunnies are to be found. We now have Bear Sterns issuing warnings about Merrill Lynch pulling assets out of a mortgage hedge fund that made idiotic bets. Bear Sterns and Merrill Lynch are not New Century Financial. This is as prime as it gets. Bear is throwing money to keep this afloat because it is a major embarrassment to their asset management. The market got hit once again and bad money is chasing more bad money to keep the party going a little bit longer.

Keep in mind that we are only entering the first stages of trillions of dollars in mortgage resets. Nothing is contained. The main question everyone should be asking is can the American public sustain monthly payment jumps while real estate prices fall? If the answer is no, how long can the market withstand jumping resets and foreclosures before a panic arises? Ronald Reagan had one thing right when he said a Recession is when a neighbor loses his job. Depression is when you lose yours.”

Public Infatuation with all Things Real Estate

Never has the industrial world been so infatuated with real estate. Turn on your television and you’ll see shows such as Flip this House and Extreme Makeover. If you are up passed 1am or stay home on a weekday from 10-2pm, you’ll see infomercials with tanned Hawaiian shirt wearing gurus showing you how no money down is the key to financial success. Robert Allen actually was a pioneer of the no money down technique. The funny thing is that his ideas were geared toward sophisticated investors that were able to get sellers to buy/create notes, assume mortgages, and find short-term carry over loans. Not easy at all for anyone that has tried it. Reading his books, I learned a lot but it was not simple like the title implied. Fast forward to now. No money down is institutionalized. Forget no money down, we have lenders giving you cash-back at closing! By the way, cash back at closing is illegal but so is lying on a mortgage application but apparently what is illegal in one area of justice, is perfectly okay in another.

Then we have the boom of Home Depot and Lowes. Stores that cater to the housing infatuation. Ceramic tiles, granite countertops, pseudo-rock pool fountains, stainless steel stovetops, and everything that would arouse a housing enthusiast. These things don’t come cheap. They are expensive and for practical purposes, don’t do anything else than visually make your home look better; a boob job for your house or a tummy tuck for your condo. But wages haven’t increased in relation to other cost of living items. How can Americans afford this? Come in American Express and Visa to the rescue. Americans carry an amazing amount of credit card debt. Debt that usually has rates of 20%+ and has so many penalties, you’d think you were at a Detroit Red Wings hockey game. Yet home prices kept climbing and Americans needed more credit for their growing consumption appetite. Welcome home equity withdrawals.

*Source: The Economist

To keep up with the hunger of spending, folks decided to slap a virtual Diebold ATM to their house, and start pumping out equity at amazing rates. The sun was bright again and grass was greener on your Bermuda lawn. The problem however is that home equity lines of credit and home loans are other credit instruments. In other words, you need to pay the money back. All that was created was a low rate loan locking yourself into an overvalued asset. You became your own appraiser. Your house has $100,000 in equity? Okay, here’s the money at 7 percent. But what if your house isn't worth more than $100,000? Ahhh, the pickle that we are currently in. Maybe housing isn’t worth what the market is saying. Maybe $500,000 for a 500 foot box in an area where rents go for $900 isn’t so economically priced. But now you have a 2nd mortgage on a house you can't unload. This love affair had to end and summer seems like a good time to end many flings.

Redefining Failure and Success

We’ve all heard about the 25 year old mortgage broker making $15,000 a month. Or the 22 year old agent with a high school diploma raking in six-figures a year simply for showing houses. We’ve also heard about a 24 year old investor that went $2.2 million in debt with an income of less than $40,000 a year. The theme? Getting rich quick isn’t enough. Getting rich young became the new standard. Forget about education because school is for elites who care about issues surrounding the world. Street knowledge and the love for the almighty dollar became the new Mammon.

We obviously live in a capitalist society. Yet this ideal breaks down when you have a system flooding the market with easy credit and encourages frivolous and downright idiotic spending. The public subsidizes this spending on the back of false inflation numbers and a higher cost of living. Think this isn't the case? Go to Europe and see how far your dollar goes. You have a market telling you that saving is pointless. Why save when bank rates are giving you 1% and real estate is making you 20%? Interesting to note that historically real estate trends with inflation, which we already mentioned by the government's own data, is hovering around 3 to 4 percent. So if we are to use logical thinking, this would imply that either inflation is amazingly understated or housing is incredibly overpriced. I knew basic college logic and philosophy would come in handy at some point in life.

But I have a news flash for you. Failure is wealth. Amazingly, we have folks to be proven bad at what they do, claiming to be experts! They are passing on their real estate horror stories as a method of investing. Call it what it is. An idiot with a fascinating story garnering massive attention and creating a social epidemic; like Paris Hilton going to jail. But no way can you call these people gurus or investors. Last time I looked at a dictionary investing meant making money, not losing it. To go further with this, Paris has indicated that she will use her stature for improving the world. Well good for her. But what about all the people that are currently making an impact on the world; firefighters, police officers, volunteer workers at shelters, missionaries, soldiers, and those in the helping professions? Why don’t we profile them? Because psychologically we love seeing losers turn into winners. This goes back to the Horatio Alger rags to riches story. It is part of the American psyche. However taking advice and guidance from these modern day gurus is like praying for real estate to go up. Oh yeah, we’re already doing that.

You should be a guru too! Your voice has as much weight as others. Here is the recipe for success. Do everything possible to fail; gamble, cheat, commit fraud, and smoke weed because we all love a good joint. If you can, do these things all at once. I haven’t had any luck combining all four but maybe you can succeed where I failed. Then, make it all public. Get the paparazzi to follow you or chronicle it online. Don’t commit crimes that’ll put you away for life, that’ll defeat the purpose. Mortgage fraud seems to be okay so go for that one. Then, decide to write a book and ride the gravy train to Tuscany. See! And you wonder why I’m writing a book? It is the key to riches in this country baby!

Destroying the Middle Class Psychology

Hard to believe we are only entering the first stage of this bubble. Bubbles follow a systematic pattern. Below you can see the typical cycle of any bubble:

*Source: Real Estate Decline

Currently we are between denial and fear. You still have your delusional sellers pining for yesteryear prices but a market with growing inventory from builders and REOs is quickly changing the pace of things. As far as bubbles are documented, data going back to the 1600s, this pattern is typical and rarely fails to follow through. Timing is always an issue but the stages seem to hold true.

So what does this do to the middle-class? What is the middle-class after all? We always hear political pundits using this term. Well in terms of median income for the U.S., it is approximately $47,000 per year. Net worth looks like this:

*Source: CNN Money

And 70% of all households own their home. Keep in mind that the net worth statistics include a large portion of equity in home. So even though the numbers may look high, it is because we are in a nationally distorted housing market. So you can see that a national decline in housing will impact a large portion of Americans. I’m fascinated with the 70% number. 70% of our economy is based on consumption and 70% of Americans own their home. Coincidence? I think not. What say you dear public?

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June 21, 2007

Housing Cross Contamination: Subprime Infecting Prime Lenders.

Bear Sterns seems to be having some problems with their subprime portfolio fund. Since the March subprime firework show, we had many Wall Street pundits telling us that subprime was contained in a silo and would not impact other lenders who managed funds prudently and hedged for risk. Well guess what? They didn’t. The news coming out this week is that two Bear Sterns funds are close to being shut down after Merrill Lynch decided to seize about $850 million in assets and began selling assets off almost immediately (aka highly motivated seller). Merrill is smart in trying to liquidate whatever it can before the market hits full speed implosion. The major signal here and what sent Wall Street tumbling is that solid funds are not immune to the risky loan implosion, a chant many in the industry were preaching after notables such as New Century Financial bit the dust. Refinancing and mortgage equity withdrawals are dropping at high rates. These mortgage goliaths claimed that they had systematically filtered out risk from their portfolios and all would be well since housing, rent, and credit never went away. But when you have $1 trillion in loans resetting and a housing market in the shamble, there is no way you can engineer your way out of this one. Thank Alan Greenspan for recommending adjustable rate mortgages to the American public.

Dumb, Dumber, and Hedge Funds

There was a study conducted showing that those with high IQs usually made the dumbest mistakes in finance. They usually had high incomes due to their educational background, but somehow made idiotic moves in financial markets. Why? Sometimes they mistakenly believe they are immune to economic cycles or the risk of chance. Think Long Term Capital Management (LTCM) and Amaranth. Both highly managed funds with unbelievably intelligent financial engineers running the show. Where are they now? It reminds me of the story of the would be mail bomber who sent out a package with not enough postage; as the package was returned to sender he decided to open it up. Hilarity ensued. These mortgage backed securities funds have been holding up rather strong up until this point. We’ve been seeing boiler room mortgage fund operations running with a bunch of frat guys dropping like flies which is expected. But seeing a major player such as Bear Sterns draws the ire of Wall Street raises some eyebrows and makes us think twice about pulling out that American Express card for vacations. This implosion will impact everyone.

Private Mortgage Insurance

Private Mortgage Insurance (PMI) is insurance paid by the buyer to protect the mortgage holder on loans over 80% loan-to-value. As a buyer this is ridiculous since you can careless if a mortgage company goes down in flames. They should manage their risk accordingly and not push this charge onto the consumer. PMI issues a yearly risk assessment of the market based on a 50 to 1000 point scale. The higher the score, the more likely said market is to fall. Let us take a look at numbers for last year:

San Diego-Carlsbad-San Marcos, Calif., 599
Nassau-Suffolk, N.Y., 589
Boston-Quincy, Mass., 588
Santa Ana-Anaheim-Irvine, Calif., 588
Sacramento-Arden-Arcade-Roseville, Calif., 585
Riverside-San Bernardino-Ontario, Calif., 583
Oakland-Fremont-Hayward, Calif., 582
Los Angeles-Long Beach-Glendale, Calif., 575
Providence-New Bedford-Fall River, RI-Mass., 568
San Francisco-San Mateo-Redwood City, Calif., 560
San Jose-Sunnyvale-Santa Clara, Calif., 559
Cambridge-Newton-Framingham, Mass., 537
Edison, N.J., 536
New York-White Plains-Wayne, N.Y.-N.J., 498
Las Vegas-Paradise, Nev., 481
Newark-Union, N.J.-Penn., 459
Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla., 441
Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va., 431
Miami-Miami Beach-Kendall, Fla., 359

To simplify the data, according to the above data San Diego has a 59.9% chance of falling in 2007. The data has been out since early 2006. My question to these financial juggernauts at Wall Street is, if you have multiple metro areas in California blinking red with 50% or higher risk assessments, why in the world did they continue to fund risky mortgages? Doesn’t matter at this point. We are seeing what is happening. Fund holders are getting smoked while assets are being distributed out. Guess what this will do to the overall market? More inventory and more motivated sellers. What does this do to prices? Knocks them down. No financial engineering degree needed to see this stupidity unfold.

Peak-a-Boo I See you Hedge Funds

The problem in this industry is transparency and public apathy. Everyone does whatever they want. Government oversight is a joke. The major political action committees get cash from the National Association of Realtors. So where is their allegiance? But many people were screaming a siren call long ago. Folks like Bill Gross and Robert Shiller. Yet the pundits used their media outlets to marginalize these folks as tinfoil hat wearing bubblelistas. Why ruin the party with these neg-heads? Well now everyone is waking up with a major hangover wondering what happened. When you drive on the freeway, do you ever see those folks that pick their nose behind tinted windows? For some reason, they think the tint is strong enough to hide their facial nugget digging so they go at it with a vengeance. But guess what? The sun shines and illuminates your shadow idiot! We can see your entire exercise in one finger gymnastics.

Think this mortgage mess isn’t prevalent? “A recent sample of 100 stated income loans which were compared to IRS records (which is allowed through IRS forms 4506, but hardly done) found that 90% of the income was exaggerated by 5% or more. MORE DISTURBINGLY, ALMOST 60% OF THE STATED AMOUNTS WERE EXAGGERATED BY MORE THAN 50%." These results suggest that the stated income loans deserves the nickname used by many in the industry, the “liar’s loan.” Good times. Think housing isn’t a big deal? As of 2006, residential housing now makes up 16 percent, or $1.9 trillion, of the gross domestic product and is the economy's largest single sector, slightly bigger than the industries and services that supply health care. Housing is the economy.

So is the case with the mortgage backed securities market and collateralized debt obligations (CDOs). They figure the public is too busy and dumb picking their nose to understand what is going on in Wall Street. What they did is repackage financially irresponsible loans with prime loans and sold them off on the securities market. Like taking a whiz in the sea; no one will notice right? Well what if it wasn’t the sea and your county pool? And everyone simultaneously decided to let go of their liquid wealth? Would you want to swim in that pool? Well we have a dirty mortgage market with horrible debt floating all over the place. Care to take a dive into the housing industry?

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June 20, 2007

Real Homes of Genius: Today we Salute you Monterey Park. 800 Square Feet for $479,000.

You would expect in a declining housing market sellers would have the wherewithal to adjust prices to meet market expectations. You would also expect sellers to put some effort in marketing their home by sprucing it up with new paint or staged photos to entice prospective clients. Well you are wrong! Welcome to Southern California, home of overpriced Wonderland housing followed by the stubborn seller mantra of “you can take it or leave it.” Today we salute Monterey Park with our Real Homes of Genius Award.

This marvelous 800 square foot villa is a looker. Enjoy 2 bedrooms and 1 large bathroom as you entertain your finicky friends. Make sure you tell your pals to watch out for the cracked driveway. Let them know that the cracks represent every major river in the world from the Nile to the Mississippi. Aside from impressing peers with geography, what home wouldn’t be complete without a custom installation of a modern television antenna?

Professionally installed, you’ll create healthy sibling rivalry as mom and dad race over to your place for some UHF/VHF channel surfing. No need for American Express payments to DirectTV when you can surf the free airwaves. If you stare at the home picture long enough, it starts bending in the middle as if partaking in a Matrix simulator. Alan Greenspan had it right when he stated that adjustable rate antennas where the wave of the future (or was it adjustable mortgages?). Either way, you’ll be making so much appreciation that in a few years, you can refinance and add a fresh coat of paint. But why ruin a good thing right? So let us take a look at sales history for this breathtaking place:

Sale History
06/01/1978: $52,000

Now we’re talking. A healthy 8% annual growth rate for 29 years! Since typical housing growth is at the rate of inflation, we are nearly twice that. After running a few numbers, the median rent in the area is $1,200. Keep in mind that this home is selling for half a million dollars and you can rent it for $1,200. Do we really need to run the numbers to find out what the prudent thing is? I know you're itching to catch this falling knife so go ahead and give your broker a call.

Today we Salute you Monterey Park with our Real Homes of Genius Award.

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June 18, 2007

Living Under the Shady Tree of Mortgage Advertising: 6 Advertisements That’ll Convert you to the Housing Bubble Camp.

I’ve been getting a lot of solicitations in the mail from mortgage companies. And apparently desperate times call for desperate measures. Some of the ads are good. And some are downright misleading, like a tobacco company telling you nicotine isn’t addictive and you are more likely to get hooked on drinking tap water. I wanted to show 6 advertisements all from mortgage companies or brokers that not only show the extent of the credit bubble we are living in, but the subtle implications each ad conveys of the American psyche. We will analyze each ad. So let us get to it.

Ad #1 – You Got a Pulse, we Got a Mortgage Ad

Where to begin with this ad. Well first, you don’t need to verify your income. Second, who cares if you have every infraction on your credit record. Foreclosure(s)? Who cares. Bankruptcies? No problem. Mortgage lates? Call now! This last one really makes me laugh. So you are willing to give a mortgage to someone that already is chronically not going to pay a mortgage? One would think this ad is the pinnacle of common financial sense. Do you have an educated guess as to why we are in this mortgage mess? After reading this ad, I sure as hell don’t. Another thing you’ll notice is the “ask about our liar loan and referral paid program” in case the subtleties eluded you up until that point. And I love the sentence structure at the top of “mortgage payments around as low as 1%.” Brilliant.

Ad #2 – You’ll Never Own Your Home

This ad strikes at an underlying message of American homeownership that is rather new. You will never own one property for a long period of time. You will carpetbag your way to the top. Each property is a subsequent step for your next and larger McMansion. Why not keep your previous home and rent it out? Why not stay in one place and invest in other areas? Of course anyone can do whatever they want but this ad speaks to the public’s desire for bigger and more expensive places at the behest of bigger mortgages. “Chances are, you’ll sell your home before we sell your mortgage.” They may be right since Wall Street’s appetite for mortgages is drastically declining.

Ad #3 – Why Read Your Mortgage Plan? Its Only Your Largest Purchase Ever!

I love the implication of this ad. You’re too busy to care about your largest financial obligation, so we’ll handle it for you. Let us worry about it and milk you to death with fees and coax you to refinance so we can get continuous payments. You’ll have time to worry about other things, like getting a second job because you were too lazy to read the fine print and didn’t realize the teaser rate was only good for 2 years. Don’t worry, you can trust us.

Ad #4 – I Can Finance while Driving!

Not only can we finance you for 125% of the value of your home, we’ll also drive you to get your dry cleaning. I’m not sure about you, but I get a better sense of security getting a $400,000 mortgage through a traditional brick and mortar operation. Mobile operations always scream transient to me but I may be old fashioned. Car ads are a mixed blessing. You increase your visibility but at what cost? Maybe we should have bumper stickers that say, “I financed my home through a mobile operation and all I got was this lousy license plate frame.”

Ad #5 – Time to Bolt to the Caribbean with $5,000,000

I love this ad. First we have the comfort of getting remarkable service. And then in the next line we have loans up to $20,000,000. But the amazing part is the next line, “no income or asset verification.” Okay, $20,000,000 and no income verification shouldn’t appear on the same document ever but here we have them appear in the next sentence. This is a perfect example for breeding fraud. Why don’t we find a $20,000,000 home and do a 125% cash-out refinance? Since that’ll give us $5,000,000 in the pocket, we can fly off to the beautiful blue beaches of the Caribbean or South America and never be heard from again. The dollar goes far in many places and this money will keep us going for a very long time. You can write that novel kicking up in your head. Maybe explore ancient ruins and take up your love of archeology. This sounds great! Am I forgetting something? Oh yeah, the $20,000,000 home and mortgage note accompanying it. So much for unrestricted dreams. And we wonder why we have so many first payment defaults.

Ad #6 – Try and not Get this Loan! We Dare you!

And finally we have the try and fail to get this loan. I totally dig the line of “it’s almost impossible not to qualify!” They are dropping the gauntlet and challenging you to fail to get this loan. No income, job, money, life, food, or heart but we will find a way to get you into a loan. If we were to take score of restrictions for getting this loan like a baseball game, this would be a shut out. 125% loan to value? Yes! $400,000 for $1,280 a month? You got it boss! The public should be furious at the contempt these people have for your financial intelligence. They treat your home like an American Express card. Refinance to prosperity! Why rent when you can own…and rent from us with your home equity line of credit. These ads are so dysfunctional you’d think we were living in Bobby and Whitney’s relationship. I’m not sure what kind of finance calculator these people are using because 5.44% at 100% financing is $2,256 simply for P and I. But who cares! It’ll only take 5 minutes and then we can buy a Real Home of Genius.

There you have it folks. A sample of 6 ads from the mortgage industry demonstrating a disdain for financial prudence. I am amazed at the lack of risk management in the industry. Many companies have sealed their fate for instant gratification. The companies that are staying afloat kept more conservative mortgage portfolios in lieu of high rates on subprime or Alt-A risky loans. As you sift through your mail, don’t fall for the irrational exuberance of refinancing into risky teaser loans. I know we are all tempted to buy those bouncing-bobble-head-colorful-animal mortgage ads that sell us crazy mortgages because the animal is so freaking funny! Who can resist a talking cat trying to sell you a mortgage? Or the countless spam you get telling you about a $400,000 mortgage for $800 a month. Housing has tipped into a different dimension. I would show you more ads but I’m going to refinance my house at .0125% for 200 years.

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June 16, 2007

Putting Home Sellers on the Couch: The Psychology of why Sellers Refuse to Lower Prices.

Driving to a meeting today, I tuned into a show called House Calls on a local FM talk radio station. The show centers on real estate investing and taking calls (massively prescreened) from the public. Whenever I’m in the car on a Saturday morning driving with the gorgeous California sun, I usually tune into this station to see what the media and the public are saying about the housing market. I’ve listened to this show for a very long time. And I can tell you that last year they were cheerleading Southern California housing like you wouldn’t believe. Any caller mentioning the word “bubble” was painted as a tinfoil hat wearing bubblelista. Fast forward one year to summer 2007 and they are giving the advice of investing out of state for cash flow properties. Sounds like the strategy I’ve been purporting since the beginning but why mince words, these are the experts.

One call however summed up the psychology of current sellers. A woman called up and the conversation went as follows:

“We purchased a wonderful condo in Orange County in 2001. Last year, homes in the same area were selling for $749,000 and quickly. These were horrible condos in bad condition. We have our place on the market for $779,000 since November and we’ve had no visitors. What gives? We have granite countertops and removed the popcorn on the ceiling. We were wondering what we could do. It seems the days on market (DOM) is hurting our negotiations and giving buyers the upper-hand. We were thinking of taking the home off the market for a few months and relisting it. What do you suggest?”

I’ll get to the advice offered to this women later but let us analyze what is going on here. First, we have the belief that peak prices will come back. Her belief that somehow her home is worth what a buyer was willing to pay last year is massively incorrect. The actual value of the home is whatever a buyer is willing to pay, today. And buyers aren’t willing to pay Pollyanna prices simply because she removed remnant 70s popcorn from her ceiling. You would think that this Trump wannabe would quickly take a survey of the market and ask herself the following questions:

1. Am I not marketing the property correctly?
2. Could it be that the price is too high for the current market?
3. What can I do to make it sell given the current market sentiment?

These questions don’t matter because the ultimate answer is something she does not want to hear. Lower the damn price! It isn’t the granite tops or the green Behr paint you added, it is the fact that the market has drastically changed. Sellers are no longer in the bargaining chair. In addition, many sellers last year were able to squeeze into the party by buying with risky subprime loans. The subprime market is now toast. Banks are becoming stricter on their lending standards. Need we point out that inventory is growing therefore giving buyers more choice?

The second point of contention is overvaluing basic remodeling jobs. It is the case in other states that sellers actually need to replace a roof/carpet, install ceramic tiling, and work on the garden simply to move the home. Not only that, the seller usually under prices these updates so the house can sell. In California, as demonstrated by this seller, they believe that adding granite countertops and doing a basic cosmetic update has made their home worth hundreds of thousand more. Can we say delusional? The great thing about the market once fraudulent credit is removed, no one will buy this place and that will be her outcome. The home will not sell until she reconciles her cognitive dissonance regarding missing the bus in selling the home. Sorry, the lights are out on this party.

Then we get shady tactics that once worked before. She is obviously on the up about relisting her home. Somehow, these yesteryear tactics are pointless in a market brimming with REOs and soon to be added foreclosures. The bank won’t hesitate to cut prices. To them the home is a liability on their accounting books. They will drop prices until market interest is stirred up. This seller? Well they are pining for the days of 2006 as if it were a lost high school love interest. Keep in mind for the last 7 years, sellers only competed with themselves. They had a monopoly on the market. Now REOs and foreclosures are rapidly growing and their market share is increasing. Result? A competitive market driving prices down.

Equity Out of Your Bubble Home to Other States

So what was the advice given to this aspiring seller? Get this. Tap out your equity and invest elsewhere! So let me get this straight, we are in a national housing bubble and you want this person to lock in her overpriced asset and invest elsewhere? In effect, this will make her the buyer of her own home. Say she taps out $100,000 in equity from her house, she has essentially created a pseudo American Express agreement with her home for 10 years. And get this, she will need to pay that $100,000 completely back. It amazes me how so many people in the mainstream media see HELOC or home loans as your money. All you are doing is creating a relatively affordable loan against your biggest asset. Financially retarded in a declining real estate market.

I’m all for investing in real estate. But not at the cost of locking you into an overpriced asset and pulling a 2nd for leverage. Doesn’t make sense. Equity is only yours when escrow closes and you have a cashier’s check in your hand. Maybe they should wait for a year and save up to see how things are in 2008 and try to sell their home again. At that point, they’ll realize that they should have cut and sold in 2007 because some greater fool is still out there. I’m not sure about next year.

The advice is typical for those in the real estate industry. Keep doing things that churn commission cuts. You refinance, the broker gets a cut. You sell, an agent makes money. You buy out of state, you make a loan executive and an agent money. But wait out the market. Ahhh, the silver lining. If you wait, which in investing is prudent at times, you will make yourself money but others may suffer. If you want to buy, go ahead. No one is stopping you. Heck we have enablers everywhere. Give this seller a call for her $779,000 condo. You might be able to get her to chip in a few bucks for closing cost.

Horrible financial advice under the guise of investing. Sorry folks, if you want true investing knowledge purchase a few books and educate yourself. It’ll cost you $30 bucks on Amazon or even free at your local library but you’ll save tens of thousands in the long run. Don’t fall for the mainstream debt trap. Debt is not wealth. Slavery is not freedom. And removing popcorn does not cost $779,000.

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June 14, 2007

Real Homes of Genius: Today we Salute you Maywood. 853 Square feet for $385,000.

Everyone by now must know about the dramatic drop in sales for Southern California. The numbers released yesterday show Southern California sales numbers dropping by a whopping 34.4 percent. Some regions like San Bernardino and Riverside fell 45+ percent. Now that is a dramatic drop. Los Angeles faced a similar fate with a 30 percent drop. But don’t tell this Maywood seller that! This Real Home of Genius is living in housing Wonderland. And why not? Prime locations like Maywood and Lynwood (currently housing Ms. Hilton) are sure to go up in value. The median Los Angeles County price actually increased to $550,000 even in the face of this fantastic news of sales dropping like flies. Where are all the realtors and brokers with their massive summer rebound? Sales down and prices up. Inventory increasing and sellers digging in. The great summer standoff of 2007 is finally here.

Back to this wonderful work of art that puts Rembrandt to shame. This 835 square foot home is fantastic for entertaining. With 2 large bedrooms and 1 bathroom, you’ll be the envy of your neighborhood. Why covet John’s BMW when you can lust after this green palace? Not only is this green, but I did some research and this turns out to be a middle emerald green or traffic green. See how fancy this place is? We can’t even use basic rudimentary colors to explain the exquisiteness of this place. Truly a crowd pleaser. And if that isn’t enough for you, what do you say to having a big two story pink apartment behind you? Pink? Emerald Green? For less than $400,000? Crazy you say? We say maximum flipping opportunity!

I know exactly what you are thinking. “For such a bargain, how much appreciation can I expect?” Well let us take a look at the home's sale history:

Sale History
11/24/2004: $256,000
10/13/2000: $142,000
10/18/1994: $10,000

Now that is mad money appreciation! Let us use 2000 as the reference point since that is the start of all this bubble mayhem. We’ll assume the $10,000 in 1994 was used to remodel and add the professional basketball court. For 7 years, this place averaged 15 percent appreciation annually; now considering that housing trends toe-to-toe with inflation at 3 to 4 percent, this is pretty freaking good! Maybe this place is a true emerald! So what if we continue at 15 percent for another 7 years? What will this wonderful piece of sunlight be worth? $1,024,107.65

Bwahaha! Can you see why this is absolutely clinically insane? Maywood and million dollar homes does not compute; it is like trying to divide by zero. Go ahead and try it (the Windows calculator will magically show you it is not possible). What do average rental rates in Maywood look like? Well this place would rent for a whopping $900 a month! So assuming rental rates increase 1 billion percent a year, you may cash-flow by the time you sell in 2014 for $1 million.

Today we salute you Maywood with our Real Homes of Genius Award.

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You Want Mortgage Rates? You Can’t Handle the Rates! Why Rates only Matter to Over Leveraged Owners and Banks: A Few Good Mortgages

In a land far, far away rests a place where homes are bought with 20% down and mortgage rates hover around 8%. In this world, we also have moderate credit growth and a government making a decent effort at decreasing budget deficits. In this mythical world, people try an antiquated concept of spending less than they earn. Welcome to the world of the Financially Prudent.

Somehow in the last few years, we’ve had this mortgage rate fixation that seems to be the dominating tour de force in all things economic. If Ben Bernanke hints at a rate decrease the markets get all excited and stocks go up like hot air balloons in Napa Valley. And when rates spike, the market gets hammered. For all this rhetoric about housing being a small sliver of the economy, it sure makes a big impact when Ben sneezes and it infects the entire stock market which theoretically, is a sample size of the American economy.

We are still at record low mortgage rates. Take a look at the historical 30 year mortgage:

Somehow the threat of a .25 increase sends the market into a tornado of dark mysterious destruction. But what does this truly say about our economy? What it implies is that we are codependent on low rates to sustain the economic growth we’ve experienced. What it also implies is our addiction to credit. When rates increase the money supply contracts and this leads to scarcer credit. In addition, with record low savings rate and the imprudent approach to the down payment, you can now finance your entire home purchase and even get cash back. Cash back you say? It may be a little harder to do this now given market sentiment but this was commonplace just a few years ago. In fact, we had loans with 125% loan-to-value ratios. Buy a house and get $50,000 in your pocket. No wonder why we are enjoying a 70% record home ownership rate. There is one small and infinitesimal caveat, you need to pay the money back! Somehow folks felt that they bolted on a silver Diebold ATM to the side of their house and any equity in the palace was earmarked for vacations, remodels, paying higher credit card debt, or buying a car. Otherwise the home was ground zero for our consumption economy and has kept it afloat after the 9/11 attacks.

Let us take a look at another chart, the Fed rate chart:

As you can see from above, we nearly went to zero percent in 2003. Think about what this means. Banks have fractional reserves with the Fed banks. The lower the Fed rate, the more they can borrow and lend out. Since fractional reserve banking isn’t one-2-one, any drop in rates means an exponential growth in the money supply. And with lax underwriting standards and the foreign debt appetite, we were able to finance nearly anything in our economy. There are many dense economic books talking about monetary policy but suffice it to say that anything below 3% for all intents is viewed by and large as free money. We hovered below 3% for 3 years! It was like an orgy of credit; images of Scrooge swimming in gold coins and $100 green bills come to mind.

Yet we forgot one thing in all this free money. Rates only encourage spending or stifle spending. Sound economic policy is based on monitoring credit expansion. Of course asking the wolves to mind the hen house isn’t the smartest thing, this is the policy we have been following since the start of the millennium. But for consumers, rates do not matter. The first thing you learn in real estate investing is location, location, location. Okay, lesson one is finished. But the second paramount thing to understand is you become successful by the purchase price of the home.

Rates Do Not Matter!

This fixation on the monthly payment I’m starting to find is based in behavioral economics and psychology. Everything is boiled down to the monthly payment.

“ReplayTV for only $39.99 a month!”

“Cell phone family plans for only $69.99 a month!”
“Enjoy credit protection for $19.99 a month.”
“Your interest-only payment for $1,600 a month.”

Sound familiar? When was the last time you heard an ad for “cell phone family plans for $840 a year?” How do you eat an elephant? One bite at a time. How do you bamboozle the public? Apparently by breaking everything down to the monthly payment.

Ironically this only works with spending and not savings. Why not save this much a month in your 401(K)? Why not sock away 10% a month for 30 years and be a millionaire like every self-help financial books discusses? Psychologically spending and saving are processed differently. They are diametrically opposed. If you spend $5 you cannot save that same $5. Marketing companies have honed into this message and have it down to a science. But again, the monthly amount does not matter, it is the price of the item.

Let us take a look at two scenarios for a home. We’ll use two different scenarios to point this out.

Scenario 1

Los Angeles Home

$500,000 Purchase Price

20% Down = $100,000

Current Rate and Terms: 6%

Monthly Payment (taxes, insurance, principle) = $2,820

Scenario 2

Los Angeles Home (20% Drop)

$400,000 Purchase Price

20% Down = $80,000

Future Rate and Terms: 8% (closer to historical average)

Monthly Payment (taxes, insurance, principle) = $2,680

So not only do you save $20,000 on your down payment but you are also saving $140 a month on your payment. The above scenario is very likely. The reason I highlight this is because many lenders and brokers are trying to scare clients about the boogie man of interest rates. Give me a cheaper house with a higher interest rate any time. You want higher mortgage rates? You can’t handle higher rates! So the mortgage industry would like you to believe.

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June 12, 2007

Dr. Housing Bubble Celebrates Monumental 100th Post! Top 10 Housing Articles.

I’m in a celebratory mood. Today marks our 100th post on Dr. Housing Bubble! While reviewing the archives of previous posts, it turns out that I’ve written over 300 pages worth of housing bubble information since October of 2006. Easily enough to fill a book. We’ve also covered 25 Real Homes of Genius exposing the extraordinary housing bubble in Southern California.

Two years ago it was difficult to find solid mainstream academic articles covering the housing bubble. Now, it is a challenge parsing so much information into a succinct article. It is comparable to drinking water out of a fire hydrant. Alternatively a better comparison would be, “like being part of the audit team at New Century Financial.” While I gather more information for another article, I wanted to leave you with the Top 10 articles on Dr. Housing Bubble over the past year. This should be a great primer for anyone new to the site or for those veterans that would like to play armchair quarterback and realize that we saw this coming long ago.

#10 - Manias, Panics, and Crashes: 2007 First Quarter All-Stars – Foreclosures, Subprime, and Politics. Five Characteristics of a Housing Bubble.

Examining five stages of an asset bubble. Speculation, Credit Expansion, Financial Distress at Peak, Crisis, and finally Crash and Panic.

#9 - Lying Dirty Scoundrels of Housing: 3 Additional Factors to the Housing Explosion: Money Supply, Consumer Inflation, and Celebrities?

Where do you think the money for this housing bubble came from? This article takes a look at the money supply and how consumer inflation is vastly understated. Oh, and we also look at Trump’s the Apprentice for good measure.

#8 - Housing Premonition: When You Knew it in Your Gut That Housing is Overpriced.

When your gut says no but your mortgage broker says yes! Understanding the nature of snap judgments and how this affects market psychology toward housing. Wall Street owned the subprime market and we saw how quickly things turned sour for this market niche once Wall Street lost the appetite for high risk loans.

#7 - Zillow is Off by a Small Amount. Try $250,000 off with Proof!

An oldie but goodie. A short article showing the difficulty Zillow has in determining accurate prices in overpriced markets with quickly changing inventory and lots of mortgage fraud. When this article posted in November, I was getting doubters saying that subprime would continue its strong momentum upward. Oh really?

#6 - $640 Billion in Sub-prime Loans Originated. $386 Billion in Alt-A Loans Originated. $1.026 Trillion in Loans at Risk? Priceless.

Leverage is king in this market. Amazing how a company worth $80 million at one point was able to have $8.4 billion in loans outstanding. This article looks at the quick fall of share prices that many subprime lenders encountered during the subprime debacle.

#5 - Why Did the Housing Phenomenon Spread? 3 Key Reasons for a Social Epidemic: Housing Connectors; Mavens; and Salespeople.

Housing spread like wildfire. Many people played into this game but 3 kinds of key people were paramount in accelerating the housing bubble. We have the housing connectors, mavens, and salespeople.

#4 - Yearly Income, $14,000. Purchase of House, $720,000. Have we All Lost our Minds???

I think the title says it all on this one. The much touted $14,000 a year farmer being able to purchase a $720,000 home. Read the article to find out if his income was able to support the monthly payment.

#3 - Real Homes of Genius: Special Edition, Lifestyles of the Poor and Notorious. 10 Southern California Homes that Prove a Gargantuan Housing Bubble.

The ultimate Real Homes of Genius article. Not only do we look at one overpriced home, but we examine 10 homes in 5 counties! This bubble is equal opportunity across all of Southern California. At least it doesn’t discriminate right?

#2 - America’s Codependence on Housing: 30% of Job Growth Contributed by Real Estate. 5 Point Plan on how the Bubble Will Burst.

When 30% of your job growth is contributed by real estate since 2000, we got some massive issues. We also hear how diverse and stratified our economy is but we haven’t put this to the test with a declining housing market. Read the article for the 5 point plan of how this bubble will burst. So far it looks like we’re heading down this path.

#1 - The Housing Tipping Point. 3 Factors That Will Burst the Bubble: The Negative Wealth Effect, Negative Press, and Suffocating Debt Payments.

The article title says it all. Last year the housing market was on its last leg but the press was still cheer leading and David Lereah was still the NAR’s chief economist. So much has changed since 2006. What tipped the housing market into the doldrums? Well for one the press isn’t so housing friendly anymore.

And there you have it. The Top 10 articles based on your readership. As the housing bubble continues to deflate, more and more organic searches are hitting this website. It seems that Joe and Susie public are concerned about their mortgages resetting. When they try to contact their mortgage broker many times they are finding he/she/it is no longer employed with the same lending operation. Welcome to summer of 2007. I have so many articles and nuggets of information that I want to share with you. In the meantime, read up on these articles and you’ll have a solid understanding of the housing and credit bubble we are currently living in.

I also want to thank you for being a great community. What started out as a little tightly knit community is now a growing network of thousands of daily visitors. Here’s to another solid year of housing analysis!

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