Press Zero for Reset: Are we out of the Subprime Mess?

Before the subprime issues, there were many articles and research papers highlighting the impending challenge the mortgage market would face once rates started their inevitable reset descent. Two camps emerged; one believed that the subprime market would be contained while the other camp saw it as the tip of something much larger. There is no point in rehashing which side won this debate since it is already clear. The next step is to focus on a market analysis and assess the current situation. Recently, we haven’t seen much analysis in this area because it is a foregone conclusion that many subprime loans are resetting and this is causing a profound market impact beyond the subprime sector. But what does the future potentially hold? There is a great article that was published in the O.C. Register talking to a BofA analyst, Robert Lacoursiere discussing the future of the mortgage correction. The chart provided on the site provides a disturbing picture:

*Soucre: O.C. Register

From past articles and projections, we already knew that September through December of 2007 would see the largest number of subprime resets. We've seen a couple of reports putting monthly rate resets in the range of $50 billion to over $100 billion. This is important because it will be a litmus test on the resiliency of the housing market. It is clear that many lenders and financial institutions are buckling even with the current environment. A few other things will place additional strain on the market including third quarter results that unfortunately, will reflect a slow and underwhelming summer housing market. This coupled with growing inventory, stalling appreciation, and the massive wave of resets will make it very difficult for housing prices not to depreciate.

Option One – Refinance

According to DataQuick, during the first half of the year over 43.4 percent of loans in Southern California were jumbo loans. Jumbo loans are home mortgages that go above $417,000. The typical monthly payment buyers committed to was $2,421. Sellers facing reset issues have the option of refinancing into a fixed rate mortgage. Thanks to a low interest rate environment, rates are still hovering at all time lows. Unfortunately, many home owners are unable to refinance even into reasonable conventional loans because they stretched into their current home. If we take a look at notice of defaults (NODs) in Southern California, we are seeing an exponential jump:

The illuminating thing of this data is that many of these NODs are turning into foreclosures. This is a phenomenon absent in the previous decade of the housing boom. Sellers facing trouble were bailed out by a rising market and rapid appreciation. There was no need to refinance aside from taking out money or lowering a higher previous rate. Those sellers that desperately wanted to stay in their home, used creative methods such as tapping into a home equity line of credit and bought extra time for paying off their current mortgage. The burden has now shifted since the mortgage markets are tightening their belts and appreciation is stagnant. In fact, this is the first year of serious market issues in Southern California in over 10 years. The refinance option may not be a viable choice for many home owners that have a subprime loan and are facing a reset in the next few months. That is why many housing bears cautioned that these loans had a biased toward continued appreciation and no insurance in case the housing market started losing any steam.

Option Two – Sell

Last month sales volume fell over 50 percent in Los Angeles on a year-over-year basis. The last option of hope for many home owners in trouble was selling. In fact, many sellers were able to unload their homes before their rate reset and profited nicely. This went on for multiple years. In a bubble, rational behavior and fundamentals seem to take a backseat. Even staunch opponents of housing started singing a different tune. It is almost a historical prerequisite that once a bubble forms and is in full stride, rhetoric regarding a “new era” creep into the mainstream lexicon. Selling is becoming a challenge in the current market because of market depreciation, increased inventory, and buyer psychology. Another characteristic of any bubble is irrational logic guiding fundamental economic decisions. There was really no reason for housing prices to run up the way they did with no income support, population growth numbers that didn’t instigate amazing jumps, and renovations that didn’t reflect hundreds of thousands of dollars in price premiums. In addition, buyers are no longer fighting for the one home on the block. Any person living in Southern California need only get in their car for a weekend drive and cruise the local streets. Without fail you will find one or two homes for sale within your field of vision. The growing number of foreclosures doesn't help:

Sellers are also competing with short-sales and foreclosures. The worst time to negotiate is when you are hostage to spiraling debt. Many of these sellers have no choice but to sell. Life goes on and things such as divorce, employment disruptions, or crushing debt payments are enough reason to move out. At a recent presentation by Countrywide, they announced that the number one reason for people facing foreclosure was “curtailment of income” at 58.3 percent of all causes. The second leading cause? Medical or illness coming in at 13.2 percent. This paints a contrasting view to the current reports that employment and income is strong and healthy. We need to start examining leading indicators such as building permits, insurance claims, and the money supply because this will tell us where we are heading. Looking at lagging indicators such as the unemployment rate only tell us where we have been. They are both important but clearly we are at a tipping point of market data not reflecting market reality.

Option Three – Foreclosure

It goes without saying that most people do not want to lose their home through foreclosure. It is a financially and emotionally stressful life event. 100 percent of people do not want to lose money. Yet looking at the exploding number of foreclosures, it is becoming more apparent that the country debt load is becoming too much to handle. Keep in mind that we have never witnessed a time in history of such extraordinary national real estate appreciation. We had previous regional housing bubbles such as the Florida housing boom during the 1920s. In addition, our unemployment rate is relatively low and inflation according to government statistics is still under control. We examined this in a previous article and highlighted that in modern day society, avoiding debt is nearly impossible for most working class Americans. The cost of education, healthcare, housing, food, and energy have all gone up dramatically in the last decade. Let us take a look at the national mortgage debt load for the entire country:

As you can see from the above chart mortgage debt has tripled from 1992. It went from approximately $4 trillion to about $12 trillion in the current market. You can also see the inflexion point at roughly 1999. It is hard to imagine that such a booming economy with relatively low unemployment is facing the debt struggles that we are facing. One of the main reasons is that employment in the housing sector has boomed in the last decade. It goes without saying that a slower housing market will equal unemployment for those in the housing industry.

Solutions

Policy makers are providing their solutions to this mortgage crises. Initially what started as a subprime problem is now spilling over into multiple sectors. This has the potential of pushing the economy into recession and more and more economist are chiming in with future odds. What are some of the current solutions on the plate?

*Tax forgiveness for those in foreclosure

*Lowering the Fed Funds Rate trying to make credit products more attractive

*Increasing loan caps through government sponsored entities (GSEs)

*Funding for credit counseling

These solutions may help but they only put a bandaid on the overall broken housing market. In a politically charged environment with so much at stake next year, both sides of the political spectrum are treading water carefully. No one wants to be seen as the party that didn’t help suffering home owners. Bernanke is a student of the Great Depression and realizes that history doesn’t bode well for a Fed and government that doesn’t act swiftly. Even though they publicly echo fears of inflation, policy moves and data point toward a more permeating fear of deflation. I truly believe Americans do not want to see their fellow citizens fail and suffer. In fact, I believe most Americans have a strong work ethic and hold that people that sacrifice and work diligently should be rewarded. What frustrates most Americans is a game where the uber-wealthy are given corporate welfare when times are tough but poorer Americans by these same groups are seen as not being able to pull themselves up from their own bootstraps. The solution to this, even though people do not want to hear this, is a market correction. This means that local income levels and the new tighter credit standards will dictate future housing prices. In some areas this means 10 percent drops while in others this can reach 50 percent or higher. Will this happen? The data is already pointing toward this. Even if property drops 30 percent over 5 years, combined with inflation adjustments this is close to a 50 percent drop. Some areas in Los Angeles are already seeing 20 percent adjustments year-over-year.

By looking at the reset charts, we realize that the housing correction still has a long way to go. What will happen in the next year through policy and market sentiment will set the tone for the next decade of housing in America.

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Operation Destroy the Dollar: H.R. 1852 Objective Number One – Bailout the Lenders.

You can tell it is an election year when political operatives try to pander to every single group with no long-term thought process of the implications of instant gratification. Maybe that is why the United States on a personal level, has a negative savings rate. How can the government encourage people to save and be prudent when they do the complete opposite? Let us take a look at the winners with this newfound ease in lending:

Home Loans: Winner because they become cheaper

Auto Loans: Winner because payments will be lower

Credit Cards: Winner since your APR just dropped from 18 percent to 16 percent
Lenders: Winner since they are given a lifeline to do more loans

Savings Account: Losers since your interest rate is lower than inflation

Dollar: Loser as you can clearly see by the drop below the 80 support level

Pretty basic right? But if you think about the deeper ramifications of the decision it shines the light on an eerie part of our economy. The only way we can keep this game going is by making savings unattractive to the masses and encourage spending at all cost. Many investors realize the game is up and are diversifying out into foreign currencies, stock, and everything else that will benefit from a falling dollar. Many are doing short-term call options and figure they can make a profit on these pseudo bull runs. This does not help the massive majority of Americans. How is this good for our country in the long run? Today we will take a look at an absurd piece of legislation that passed the house, H.R. 1852. I will translate the key points for you into blunt language and what it means to you and our country. Take a look at this press release issued a few days ago from the House Committee on Financial Services:

· Lower Down Payments. Authorizes zero and lower down payment loans for borrowers that can afford mortgage payments, but lack the cash for a required down payment.

Translation? We are going to institutionalize subprime lending! Forget about the tried and tested 10 and 20 percent down payments of yesteryear. We are overhauling the system to remove down payments. After all, we have a hard enough time saving anything month-over-month so how can we expect people to save a few thousand dollars? So instead of requiring this archaic “saving” that is so passé, we are going to allow people, assuming they can make the monthly payment, to purchase homes even if the prices go beyond financially prudent ratios. Down payments exist for a reason. They show that a prospective buyer has the ability to tighten their belt and manage their finances for a few years to purchase a home; normally this is achieved by foregoing spending on other discretionary items. But you can have your cake and eat it too in the mortgage world! Debt is saving in this apparently brave new world.

· Housing Counseling. Authorizes more than double the current funding level for housing counseling, to help subprime homebuyers and borrowers late on mortgage loan payments.

Do we really need housing counseling? I can imagine one of these sessions:

Counselor: “Can you tell me about your current situation?”
Supbrime Borrower: “Ok. Someone from one of those now bankrupt lenders gave me this great 1.25% teaser loan and told me it wouldn’t reset for a long time. I didn’t read the note because hey, I trusted him since he was in a nicely ironed suit. When he said long time I thought he meant 10 years, not 2 years. Now my payment went from $1,250 a month to $2,200. What can I do? I barely was able to afford it even with the crazy teaser rate?”

Counselor: “Damn. Looks like you need to increase your income by adding an all America 2^nd or 3^rd job. Another option is to go into foreclosure since the market price on your home is now less then the mortgage balance. Oh hold on a second…I’m getting a fax from our blessed government. [pause to get fax] Hey! Good news. We can refinance you into another loan with another teaser rate since the government is now subsidizing these loans.”

Subprime: “Great! Because I was looking at this other home that I would like to flip…”

The folks that need “counseling” are the lenders and the policy makers for thinking this is a good long-term strategy.

· Subprime borrowers. Directs FHA to provide mortgage loans to higher risk (but qualified) borrowers, without authorizing unnecessary fee hikes on such borrowers.
Reverse Mortgages. Enhances the FHA reverse mortgage loan program to help seniors pay for health and other expenses, by removing the loan cap to avoid program shutdowns, raising loan limits, and by reducing the maximum fee lenders can charge for these loans.

Higher risk but qualified borrowers? Bwahaha! You couldn’t write more Orwellian language. Could it be that they are high risk because maybe they can’t afford the home? This is like saying that a person is perfectly suitable for working at the drug enforcement agency so long as his cocaine and heroine addiction doesn’t rear its ugly head while raiding a drug house. As we are seeing, it is unethical to give someone that doesn’t have their financial house in a row $100s of thousands of dollars in the form of a mortgage only to have them lose their house later on. That is why we have [had] lending standards. When lenders had to hold the notes they actually vetted the loans with higher scrutiny because a foreclosure would hurt their books. Now we have this moral hazard where we are encouraging irresponsible lending. This doesn’t help the homeowner. This is horrible classical conditioning on a mass scale. What we are telling people is credit doesn’t matter, saving is irrelevant, and bad financial moves will have a bailout from the government. Does this make sense?

Then the reverse mortgage portion is just classic. You can see the light bulb over these congressmen go off. “Next year is so important. Older voters are an important constituency group.” Since Social Security is peanuts and the cost of living adjustments are based on ministry of truth data, they only see marginal increases. The majority don’t have adequate savings but what do they have? Over inflated home equity! How about we slap on another virtual ATM and drain all their savings so instead of the equity going on to their children or grandchildren, it will go to the good old government. Amazing planning here. Let us keep reading.

· Multifamily Loans. Raises FHA multifamily loan limits, so these loans can fully fund construction costs in high cost areas, and enhances sale of foreclosed FHA rental housing loans to localities, so that affordable housing can be maintained in local communities.

You really need to put on your doublespeak reading glasses for this one. So they want to raise FHA multifamily loan limits to encourage affordable housing? They are basically forcing prices to go up. If the market played itself out, construction companies that are able to acquire cheaper resources and labor would be forced to pass on the savings to consumers via more affordable housing. But this legislation assumes that current housing bubble prices are justified and are trying to institutionalize them under the guise of good public policy. What we need is less legislation and more open market competition. Think about it. If you have two companies and materials are being driven down because of competition and efficiencies, then the company that can provide lower priced goods to the market will win. That means lower priced homes and more sales. Did you notice how Hovnanian had no problem attracting buyers when it slashed prices by $100,000? But here, we have this big government mentality and you’ve seen the ridiculous budgets where toilets cost $2,000 and pens go for $30 each. Do you really think these companies compete when they know they have a locked in price? Why do you think communism failed so miserably? And the language is scary. What do they mean “fully fund construction costs” in bubble areas? They call them more expensive areas instead of overpriced bubble metro areas fueled by rancid loans but I think the PR folks removed that language. This is a blank check. Make sure you contact your representatives in both houses and contact the White House to veto this. Maybe Bush will dust off the pen and use it for once.

· Affordable Housing Fund. Authorizes up to $300 million a year from the bill’s excess profits for affordable housing, instead of returning such funds to the General Treasury.

You don’t need the affordable housing fund if you relax zoning rules, stop bailing out lenders, and make these folks accountable for their actions. They are trying to seal high prices into the system as a paradigm shift. These folks want you to believe that higher prices are just a thing of the modern day as opposed to being fueled by exotic funky lending and mass greed.

· Higher Loan Limits. Adopts the Frank/Miller/Cardoza amendment that would raise FHA single family loan limits, which now bar loans above 95% of the median home price in each local area and shut FHA out of higher cost home markets. The amendment raises the FHA loan limit in each area to the lower of (a) 125% of the local area median home price or (b) 175% of the national GSE conforming loan limit. The amendment also also retains the bill’s provision for a nationwide FHA loan floor of 65% of the GSE conforming loan limit, and gives HUD authority to raise these loan limit amounts by up to $100,000 “if market conditions warrant.”retains the bill’s provision for a nationwide FHA loan floor of 65% of the GSE conforming loan limit, and gives HUD authority to raise these loan limit amounts by up to $100,000 “if market conditions warrant.”

This is the one that is getting everyone worked up. How is raising loan caps going to help the family on main street USA by pushing limits over $500,000? I thought the median price was somewhere around $225,000 for most Americans? Oh! I forgot. Lenders make their most profits from overpriced bubble metro areas therefore we should ask our brothers and sisters in Wyoming, Montana, Arkansas, and every other non-bubble state to contribute to their mass greed. Make no mistake. This bill is 95 percent for the housing industry. It will not help you or your family if you are facing foreclosure. They will use the 1 or 2 examples to get media heart bleeding and lenders going into crying moments (did you see that Youtube video of the guy pleading for Brittany?); it’ll be something to that effect but everything is garbled up in this translation. Pandering at its finest. How is someone in a high priced area with a $400,000 or $500,000 mortgage with a family income of $50,000 going to get help if the main problem is a pricing and income issues? Unless they want to give everyone a 50 percent mandatory raise, I’m not sure how this helps anyone except lenders on the large part by washing their hands clean ala Pontius Pilate of unethical and corrupt mortgage products?

Doublespeak: Helping Minorities Pad our Bottom-line

Someone once told me that getting married is easy, staying married is the hard part. During a presentation, one of the nation’s mortgage lending leader reiterated their goal of helping minorities to own homes. The government always throws this PC statement out. The last few years these lenders have done the most damage to minorities. Guess who are the folks who are losing their homes because of subprime lending in the largest numbers? These greedy lenders didn’t care about folks’ long-term well being, they only cared about putting people into homes and getting their nice commission cuts. So what if 1, 2, or 3 years down the road the family drowns in their own debt service? Setting people up for failure is not the American way.

The fact that many are subprime meant they couldn’t afford homes to begin with. Simple way to avoid this mess from the start. If people want to buy homes why is it so bad to ask that they save a minimal down payment? You know why? Because this slows the real estate complex down. During this time people aren’t buying, selling, refinancing, busting out home equity lines of credit and all things where the housing Ponzi Scheme gets their money from. To use this “we are helping minorities” line is arrogant and absurd. Why don’t they address the real reason that of massive inequities in pay for minority groups? Oh! We can’t talk about income because that is taboo. Yet they are okay with putting people into ticking time bombs. A good senator and representative, for example, in voting for a war should always ask themselves if they would send their own child to a conflict. In the case of lending, a good lender should be required to ask, “would I loan this person money if it came out of my own bank account?” Guess what your answer would be?

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The Real Cost of a Picket White Fence: 3 Housing Factors to Think About; Prices set at the margin, income discrepancies, and bubble euphoria.

After drinking water out of the bailout fire hydrant, I think most people are scrambling to get an idea of what is happening. An issue placed on the back burner by many politicians is suddenly garnering massive media playtime. Amazingly, Americans in a large percentage are against any bailout talks or consideration. The nationwide MSNBC and a local station KTLA ran unscientific polls asking the questions, “do you support a government bailout for the mortgage industry?” The answer was a resounding NO. In fact, from a brief review of these polls 95 percent of Americans are against any form of corporate welfare. They realize that deep down this is only a ploy for the government to subsidize maverick hedge funds, Wall Street circus acts, renegade brokers, and Vegas inspired buyer gambling. They want you to believe that they are doing it for the person on the street. How are they going to help out expensive counties such as Los Angeles where the median home price is $547,000? And what about those that have been foreclosed or are being foreclosed on? Don't they deserve a retroactive bailout? Come to think of it, why don't they give me money I invested in tech stocks back in 1999 that was wiped out since these companies had P/E ratios higher than Barry Bonds' batting average. Or the money I lost in Vegas two months ago on blackjack (I suspect that the dealer was a former hedge fund manager since he asked if I wanted margin and wanted to flip a home in Henderson). A decade of conspicuous housing consumption has left the nation hanging on a thread looking for more bubbles to fuel their credit addiction. What other highflying act will allow American consumers, a large part of the economy, to continue their spending marathon? We’ve already seen that mortgage equity withdrawals had a lot to do with bolstering the economy over the past years. Unfortunately you can’t tap into your home equity line of credit if you are swimming underwater Jacque Cousteau style. See, like any Ponzi Scheme, those that get in early do well on the backs of those that come in late. And like any good Ponzi Scheme those coming in at the end are left holding the manure filled bag of worthless mortgage backed securities; it turns out a 600 square foot Real Home of Genius isn’t really worth $500,000.

Then we have the fear mongering by the politicians and the media. The new line that I’m hearing dished out is “well you wouldn’t want your entire neighborhood full of foreclosures eh?” Instead of drop kicking my monitor Jackie Chan style at this completely stupid and moronic assertion, I will show you that at any given time, only a very small percentage of all housing units are up for sale. So why all the brouhaha? Because housing prices are set at the margin; meaning, homes are priced by the units that are currently sitting on the market. And the fact of the matter is we’ve been operating on a one-trick pony economy where housing has kept us out of any recession and has provided the fuel to keep this SUV of spending going forward. But now that housing is depreciating we are realizing that yes, this economy is based on housing. Otherwise, who really cares that housing prices are trending downward? If we are such a diverse economy this one tiny sector shouldn’t mean so much; but it does because of the massive credit bubble we are living in.

So today we will examine 3 new factors that you should keep in the back of your mind since I have a feeling this housing mess won’t go away anytime soon. First, home prices are set at the margin so we will examine the actual numbers. Since politicians and the media like churning information and creating a fear cycle we will carefully look at housing supply in relation to units being sold. And again, anyone following this housing bubble isn’t surprised. In fact, it was predicted here a very long time ago. You may be saying, “but I feel safe because daddy Bernanke is here to save the day, he saw this coming.” Let us take a trip down memory lane:

"At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained," Ben Bernanke Quote to Congress' Joint Economic Committee. March 2007

“Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited,” Bernanke said in May 2007.

“In particular, the further tightening of credit conditions, if sustained, would increase the risk that the current weakness in housing could be deeper or more prolonged than previously expected, with possible adverse effects on consumer spending and the economy more generally.” –August 31 Ben Bernanke

Wrong, wrong, and now you get it. Even the last statement is misleading because how did we go from “fundamental factors” being okay in May to “weakness in housing” in August? So given that the Fed Chairman didn’t see this coming even as early as May of this year, do you have confidence that these other yahoo politicians have the right policy decision in mind? We can discuss other policy mistakes regarding the current administration but that would require much more than this housing blog.

The second factor we will look at is income discrepancies. Current home prices are not in line with current family incomes. Unless you think making $14,000 and buying a $720,000 home is perfectly fine and makes economic sense. Finally we will examine the current market panic. Bubbles burst in typical fashion (see Manias, Panics, and Crashes) and this credit bubble will pop in the same way. We can pull the Band-Aid off fast or continue the absurd policies and allow for more guerilla mortgage products to enter the market.

Prices set at the margins

At any given point in time there is only a small fraction of homes on the market for sale. Drive down any street of the 88 cities in Los Angeles and you will see homes for sale, but not many. Unless you are driving in some home builder subdivision in Arizona or a condo high-rise in Florida, the majority of this country isn’t selling each and every single home on the block. But the media now has this fear mongering idea that if the market corrects, every person is going to be bumming cigarettes under the San Gabriel River. So instead of their verbal attacks on the public let us take a look at the actual numbers for Southern California:

*Data Source: Census.gov

There are approximately 6,000,000 housing units in Southern California. Keep in mind this includes apartments, rentals, and owner occupied homes. Now how many homes are for sale as of today in SoCal? How about 139,689 or to make it more tangible, only 2.33 percent of all available housing units in the area. Doesn’t seem like the entire neighborhood is going to hell in a hand basket as the media would like us to believe. And keep in mind that we are seeing record foreclosures and inventory here in Southern California and as of today, we are still only seeing 2.33 percent of all available units on the market for sale. See, not everyone bought into this housing bubble. Some people decided to rent. As I’ve pointed out the majority of households in Los Angeles County rent. Some people decided that they would rather save their money and wait the market out. Some are simply going to rent because they unfortunately cannot afford a home. This idea that everyone should own their home is dangerous and has also led us into this mortgage market debacle. If you are unable to buy a home without a shady zero down mortgage maybe you should wait until you can buy a home with more conventional financing. Others, bought before this entire bubble game started. So they are still sitting pretty on equity and have no plans of selling. There are also approximately 20 percent of people in Los Angeles that own their homes outright; many of these people are retired or nearing retirement and have no vision of flipping their homes. So the battle comes down to those that want to buy and those that want to sell right now. It looks like more and more people are wanting to sell and less and less people want to buy (or at least buy at current market prices). And why would you buy right now with prices decreasing each and every day? In addition, the prospect of you flipping and turning a profit now is as likely as finding Michael Vick at a PETA fundraiser as an honorary member.

Show me the Income!

Again the media likes to believe that everyone is earning $300,000 so a $547,000 median home price isn’t so far fetched. I’ve discussed this affluent façade in a previous article but let us take a quick look at income statistics for this country:

Household income (overall percent of US households over):

Income Percent of Households over:

$65,000 34.72%

$80,000 25.6%

$91,705 20.0%

$100,000 17.8%

$118,200 10%

$166,200 5%

$200,000 2.67%

$250,000 1.5%

$1,600,000 0.12%

So what does this tell us? In order for a family to comfortably afford a median priced home in Los Angeles County they would need to make $200,000. As you can see from the above data, only 2.67% of all households make this much. And I doubt any family making $200,000 will want to buy a Real Home of Genius as they would probably prefer to rent in a better neighborhood and invest the massive difference they are saving from buying a home. Are there tax benefits to owning? Of course. Many housing pundits want to use some voodoo economics to make you think spending $1 so you can get two quarters back is smart math. If you really need a tax break buy a rental property in a non-bubble city; you’ll get cash-flow, the benefit of owning real estate, and the feeling of owning a home if that is something that you desperately need. With all this talk, isn’t it fascinating that the media doesn’t state the obvious? That homes are massively overpriced! Incomes cannot support current prices without using mythical fantasy world exotic mortgages that seem to be a thing of yesteryear. 2/28 mortgages, option ARMS, negative amortization, stated (liar) income loans, and all variations of these dubious mortgages will come under the congressional microscope in months to come, just watch.

Smoking the Housing Bubble Peace Pipe

We’ve been living in a housing obsessed society. In fact, I’ll be happy in a few years where you will be able to go to a party and not have to listen to some wannabe Trump talk about his recent flip in the Valley and how he pocketed $50,000. The hardest part listening to this hogwash is knowing that they are part of this speculation bust that we are now seeing; deep down anyone that has a basic idea of finance and economics knew that this couldn’t go on forever. And here it stops in Q3 of 2007. In fact, I haven’t heard much of this talk in the last year. Yet in this housing bubble decade we have seen the media eat up the housing game and carry the party line. Take a look at some of the shows that have made the air in recent years:

Property Ladder

Discovery Home's "Flip That House"

A&E's "Flip This House,"

HGTV's "Bought and Sold,"

Bravo's "Flipping Out"

TLC's "Real Estate Pros."

The Apprentice

And the list goes on. Everyone suddenly had housing religion. But the good thing about bubbles is after the pop, slowly the talk dissipates. Remember the technology bubble? For years this was all the talk and anything with a dot com was worth putting your entire retirement funds into. How much talk have we had about these once high flying companies after 2001? Not much. I think by 2009 we’ll be more concerned about cleaning up the mess of 2 back-to-back bubbles, that is if we don’t see another bubble after this one. And yes, housing is very different from stocks. But what do you think funded this game? Mortgage backed securities. Where did these MBS trade? Hopefully you realize that not everything is linear but following the interconnectedness of this credit bubble you can understand why we are truly in an epic once in a lifetime housing bubble.

Do you think politicians and the media are handling this housing bubble burst correctly?

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Lessons From the Great Depression: A Letter from a former Banking President Discussing the Bubble.

As we hit record lows with the markets, it is clear that we are entering a correction phase. With the incredible response we had to a personal letter from a lawyer discussing in great deal, the failures of the previous Great Depression bubble we can see many parallels emerge to our current potential future. For one, the wanton greed and disregard of financial prudence. The inability to see beyond the current market and realize that history has a mischievous way of sneaking up on those who forget her. There is no longer a debate regarding the once fabled housing bubble. We can all take off our tinfoil hats off and begin to construct a vision of the future in the midst of a collapsing housing market. Today I’ll be posting an article that came out in the Saturday Evening Post in November of 1932 from a former bank president in New York, three years after the crash, highlighting the economic situation of a post bubble world. This is an old article so I retyped the important paragraphs:

“If I draw illustrations from the banking field to indicate the limits to which the depression reached, it is only because I am writing about banks and not because the banks are the one glaring example marking the extent of the financial cataclysm. The railroads, the insurance companies, the building-and-loan societies and mortgage companies would quite as well depict the situation.”

The collective memories of many Americans believe and associate the Great Depression igniting from the heart of Wall Street. However, it is clear that many industries built around financial imprudence also failed during the Great Depression. Think of the many industries currently facing hard times with the housing decline: insurance companies, mortgage lenders, hedge funds, the auto industry, home remodeling centers, and many other housing associated industries. Can it be that for the past decade, we have been using the home as a center of economic prosperity? Clearly it has helped to a certain extent with unparalleled amounts of mortgage equity withdrawals. There are estimates from the FDIC that $5 trillion in wealth has been directly linked to this housing boom. How much was really lost during the three years following the Crash?:

“The decline in the price of bank stocks was only a minor phase of our debacle. The quoted value of all stocks listed on the New York Stock Exchange was, on September 1, 1929, $89,668,276,854. By July 1, 1932, the quoted value of all stocks had fallen to $15,633,479,577.”

“Stockholders had lost $74,000,000,000. This figure is so large that not many minds can grasp it. It is $616 for every one of us in America. It is, roughly, three times what we spent in fighting the World War. The bursting of the South Sea Bubble concerned a single company. In the bursting of the New York Stock Exchange bubble, the value of all stocks fell to 17 per cent of their September 1, 1929, price – almost as great a drop as the South Sea Company stock, with its fall to 13 per cent of its top price. Remember that this calculation is not a selected example. It is made from the average of all stocks listed on the Exchange.”

So $74 billion was lost. A massive amount. What would happen if say the $5 trillion in housing wealth would suddenly disappear? Instead of bank failures we are now facing hedge fund debacles and everyday it appears that another mortgage outfit is closing shop. Mortgage resets are hitting the market to the tune of $30 billion a month with our peak month hitting in October with $50 billion resetting. We will not fall below the $30 billion monthly mark until September of 2008. Most experts are now predicting a declining market until 2009 and these are optimistic projections.

“The South Sea Bubble wasn’t so much! We have done pretty well in the way of bubbles in our own time. All financial history shows no parallel to what we have been going through. Never before, in this country or anywhere else, has there been such a general loss in “security” values.”

Bubbles will always occur in profit driven systems because of human nature and bubbles will bust when they reach a Minsky Moment. In addition, the psychology at a certain point tips and the market no longer follows previous rules. The system was built on consistently appreciating real estate and when this ended, it turns out that millions of people were swimming naked. The only question now is how long will the market retrench. Unbelievably, those that pumped up the bubble are crying for compassion for the desolate homeowner now losing his home even though he is laughing all the way to the bank. Since he is partly responsible for the massive speculation, why doesn't he cut a check from his decade long bubble profits if he feels so bad? Instead, they want the entire nation to carry the burden of this massive credit orgy. If they truly believe in free market capitalism, then what is currently happening is the end result; the market is washing out all the excess from the system. Yet the Fed injecting liquidity amounts to corporate welfare and is only prolonging the inevitable decline.

“The decline in the quoted value of New York listed stocks is only part of the story. The total of real-estate mortgages in default, particularly mortgages on city property, is unexampled. The value of real estate can no longer be accurately appraised, because the market for real estate has been practically paralyzed.”

We are already seeing this. Many REO properties are simply sitting on the market and stubborn lenders and sellers are refusing to lower prices. Buyers are refusing to buy or are unable to get loans. It is a Catch-22 that is accelerating the market on a downward spiral. People realize that housing is going down and are suddenly reluctant to buy. The MBS market now seeing the intestines of their portfolios is realizing that some overpricing may have occurred. I’m not sure if any of you have seen the new housing syndicate marketing angle (I caught a glimpse of this on late night infomercial happy television). They are now pushing, get this, FHA loans! Suddenly, the industry that pumped interest only, hybrid, reverse mortgage, 2/28 loans, stated income, and every other weird concoction of loans is coming home to the safest of the safe. But the scary implication here is they are touting, “no need to worry here, these are government insured.” Guess that means the American tax payer is going to bail out the housing industry. At least this is what the housing industry expects.

“The loss of $74,000,000,000 in the value of New York listed stocks is something more than a mere item of financial data. Implicated in it are ten million cruel heartaches. I am using “million” as an adjective, and making an understatement. The laborious savings of an uncounted number of lifetimes have been swept away. Prudent provisions for the future has been made to contrast unfavorably with the pleasures of spendthrift waste…”

The real pain is in what happens on a micro level. Like the couple earning $130,000 a year that lost their home to foreclosure and is now facing hard times; these are the real stories behind the bursting bubble. What is the psychological and financial impact of those put into 2/28 homes and are now facing foreclosure? There is no financial benefit to the buyer for jumping into a 2/28 loan aside from squeezing into a home they cannot afford over the long run. The only one benefiting from this is the mortgage broker who gets a stronger kick back for putting you into a risky loan and the agent from getting a commission check after escrow closes. What do they care? The loan is getting an extreme makeover on Wall Street and they'll never see it again. The transparency legislation now being pushed is 7 years too late. Wall Street has turned off the spigots earlier in the year. Don’t worry about the large mortgage outfits, many top CEOs and executives actually sold out [are in the process of selling out] near the peak.

“Not only did our investments shrivel in the last three years but we even frequently lost our pocketbooks. Cash in hand, left for safekeeping in a bank, often went the way of our investments, and worse. Almost $3,000,000,000 of our daily-used cash funds were sequestered in the doubtful assets of the 4835 insolvent banks. Widespread communities were left with only the mattress as a safe depository, and with little to put into it. People became so frightened in regard to the safety of the banks that they locked up in safe-deposit vaults, or selected elsewhere, more than $1,500,000,000.”

We don't have to worry much about losing savings accounts considering Americans now have a negative savings rate. Try imagining you are now in 2009. What do you think the sentiment of the American public will be when trials are going on regarding shady lending practices? Many defunct companies are now getting their legal houses in order preparing for this. Even with the previous scandals such as Enron, many folks saw this as something far and away since few even understood what Enron did or what laws they broke. But everyone will understand the debacle of the housing industry because it hits every American. It is a simple story of greed and financial negligence. And one thing is certain, Americans do not like gambling with their homes unless they are winning. Now that many are losing, they’ll be out for blood. The Democrats are already taking aim and claiming it is the mortgage brokers fault for putting us in this mess. Of course there are other major players including the Fed, hedge funds, buyers/sellers, agents, appraisers, and flat out greed.

“This is a shameful and humiliating exhibition. It is uniquely bad. Across the border in Canada, there was not a single bank failure during our period of depression, and one must go back to 1923 to find even a small one. Nowhere else in the world at any time, were it a time of war, or of famine, or of disaster, has any other people recorded so many bank failures in a similar period as did we. We were not experiencing a war, a famine or any other natural disaster. All the economic tribulations we have undergone in the past three years have been man-made troubles, and Nature has continued to shower us with an easy abundance – more, indeed, than we have known how to distribute with economic wisdom.”

We are facing a healthy economy as well. Unemployment is low. Wages are holding steady. GDP is still growing. Too bad most of this growth is heavily influenced by the credit bubble. Like the former banking president states, this credit bubble mess is another "man made problem" as well. Where this market will take us is anyone’s guess but I’ll leave you with the final paragraph of the article:

“Human stupidity and cupidity were the taproots of this great financial disaster. Those are evils which will always best us. There have, however, been revealed faults and weaknesses in our banking and investment practices that account in part for the extreme nature of this experience. Isn’t it about time that we began thoughtfully to examine some of the fundamentals of our banking and investment theories and methods?”

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3 Methods of Real Estate Valuation for Wonderland Housing: The Cost, Sales Comparison, and Income Capitalization Approaches.

You may be wondering how appraisers arrive at a market value for a home. In case you haven’t noticed in overpriced metro areas, we’ve been using the unconventional approach of flying by the seat of your pants. This phrase comes from the early days of aviation when pilots had few flight control systems and navigational aids; no GPS and flight towers for these folks. These pilots flew by intuition and experience, sort of like our modern day appraisers. After all, at the heart of speculation is going with your “gut” and making a big profit in a shorter time frame. Speculating in any bubble can be lucrative; as long as there is a greater fool that you can find to pass on your valuable commodity you'll make money. Once this perception breaks, the market hits a free fall mode and panic ensues. In our current housing and credit market, this doesn’t mean that homes will drop to zero and you’ll be able to go to your local bank with your American Express card to buy a REO home. Real estate does have a value. In fact, there are a few methods to calculate a market value that is based on fundamentals. These haven’t been used in a balanced approach in California, but they will come back as most things revert to the mean over time. The 3 approaches for real estate valuation we will examine in this article are the cost, sales comparison, and income capitalization approaches.

The Cost Approach

The cost approach factors in the price of the land plus construction, material, labor, and all other costs to replicate the home at current market rates. This approach doesn’t bode well for selling residential property because you can find land in North Dakota for dirt cheap (literally) and find that building a home there is cheap. So you build a home but what is the market for other homes? How is the employment base? Will someone give you a mortgage for a property? This method is generally more applicable to builders who try to ascertain the price per property for a project and find a break even point for profit. This approach is also used in special works projects since this may be the only approach that can reflect a realistic price range (i.e., a parking lot).

This approach requires first a value of the land if it was vacant and put to “best use.” In California that means dolling it up and flipping it in 0 to 60 in five seconds or less. Next, there needs to be an assessment of the replacement cost at current market rates for materials and labor. You factor in depreciation and reevaluate your other items including land and replacement cost and you should arrive at your cost approach value. Rarely do appraisers in the single family market use this approach. So what have they been using?

The Sales Comparison Approach v2.0

Location, location, location. We’ve all heard that real estate mantra. Here in California, we’ve been living in a Ponzi Scheme Mortgage Charged Sales Comparison Approach v2.0 mode these last few years. The sales comparison method is great in valuing housing in stable markets because for the most part, it’ll give you an accurate reflection of the current market of your local real estate. Again, that is if the market is stable. But what happens when prices go into bubblelista territory? If 2 homes sold, 1 that is 1,000 square feet and the other 1,500 square feet, for $200,000 and $300,000 respectively in the same area you can easily derive a value for a similar home that is 1,250 feet. First we figure that the square foot price for the previous two homes is $200. We simply multiply this with the current home, 1250 x $200 and this gives us a price of $250,000. Then you need to adjust for additional factors such as upgrades, the lovely granite countertops, nice shiny chrome faucets, and other positives or negatives. This basic approach, in theory, should give you a general idea of the current market price. Think of buying fruit or produce at your local supermarket. Not all apples are created the same but share very similar characteristics so you buy them by weight. You take a look at the red texture, give it a few taps, and pay per/pound. Is a mutant apple worth more simply because it weighs 5 pounds? In fact, you'll notice scales of economy on certain homes that are too big. That is, you may find the price per foot gets cheaper for super large McMansions.

But what happens when everyone is overpricing their home? Welcome to the sales comparison v2.0 bubble. Say the 2 homes above now sold for, $300,000 and $450,000 a year later, and nothing intrinsically has changed within the home. By the sales comparison approach, our current home is now “worth” a lot more. In fact, our square foot price went from $200 to $300, a 50 percent increase. This is great for anyone in the area because this inflates all homes in the immediate area. Yet you can see the fallacy in using only one approach.

If you were to factor in the cost approach as well, for example getting a true replacement value of the granite countertops and faucets, you may realize the home is only worth more by $10,000. Even if you factor inflation, you would realize that something is going on here. This type of rapid paced housing inflation has no economic fundamental sense. We are also seeing greater transparency in the industry. You can log into Zillow and find average square foot prices from recent sales in your local area. You can also use Google Earth to scout the area. Does your neighbor have a pool? Are you behind a restaurant or freeway? What is the average commute time to your work place? Maybe you are located near fantastic schools, which you can search again via free sources. These are the "intangibles" of setting a price. In a way, you become the future appraiser. There are other items that trained appraisers provide which go beyond this scope, but there is no reason for you not to have a thorough understanding of why the home you are buying or selling is worth the current price. Back to the current market, the reason so many people stayed [are staying] in denial is because they simply relied 100 percent on the sales comparison mode without factoring area income, intangible factors, cost approach methods, or even looking at the potential income of the property.

The Income Capitalization Approach

As I discussed in a previous article, Los Angeles County is a majority renting county. In fact, homeownership in California hovers around 57 percent, a far cry from the 70 percent of the overall nation. This means that a lot of people are landlords and renters. Most people do not invest money expecting a loss of their capital. It has become an act of futility to try to find an income producing property in the entire state of California. The income approach is used by real estate investors predominantly to arrive at a market price for a property. This is useful in evaluating multi-unit properties because you may not have many sales comparisons of 36 unit apartment buildings in the area. And zoning regulations may void the cost approach altogether. So you need another method of figuring out the value of the place. Let us use an example of a 4 unit property.

First, you need to determine the net operating income. In this case it is:

(Property gross income) – (All expenses excluding the loan payments) = NOI

Say the 4 units bring in $48,000 per year and the expenses amount to $21,600 (a 45 percent expense ratio which most seasoned investors rely heavily upon). So your net operating income is $26,400 per year. What do you do with this number? Well, most investors research the local market and try to find the prevailing expected rate of return for the area. This leads us into the capitalization rate of a home. The “cap rate” gives us a better understanding of what local investors are returning on their investments. Let us say that the area has a cap rate of 7 percent. To find an underlying value of this potential property we use the following information:

$26,400 divided by .07 = $377,143

So if we are expecting a cap rate of 7 percent the maximum amount we should pay for the property is approximately $377,143. Many in the housing industry will say these numbers mean nothing in California or any overpriced markets because land is volatile here and heck, we have the sunshine tax. Sun only hits the west coast, didn't you hear? Maybe the numbers from the income approach have little reflection on the price, but using 3 methods provides triangulation of multiple perspectives and will give you a better overall picture of the value of the home. It might even save you should you need to sell immediately.

The sales comparison approach will always be the prevailing method of valuation for the single family residential market. The various methods should be used in conjunction to give you a better overall picture of the market. Many people in California were buying “investment properties” with 2/28 loans going negative cash flow because in their mind’s eye, they didn’t care about the $700 to $1,000 loss each month because they were going to flip the property next year for $100,000 more. This worked for a few years but now you are seeing what happens when you rely too heavily on one method for investing. These folks are trying to unload their properties in a market that is saturated and any investor that has some basic knowledge of investing will never pay the current market rate. They’ll be negative cash flowing from here to Canada. Current buyers are looking at recent sales and see numbers dropping and appreciation at zero or even worse, negative. So they stay out. Plus you have brave souls still being brought into the shenanigans of the market but the credit markets are dry and actually checking income statements! The audacity. And then you have sellers trying to unload properties that are simply overpriced by any form of valuation except the flying by the seat of your pants approach. Welcome to the slow decline of housing.

Related Posts:

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

Housing and the age of Affluence: Transforming the Definition of Income and Wealth

Comparative Analysis of 3 U.S. Cities: Contrary to What Your Parents Told You, Not all Bubbles are Created Equally.

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Top 55 Housing Resource Blogs: Gaining a Solid Foundation in Housing and Finance Information.

When I started this blog nearly a year ago, there were a solid number of websites providing information regarding the housing and credit bubble. The mainstream media was slowly starting to produce some stories about the housing and credit markets but not to the level of the online blogging community. Three years ago, I started searching for information regarding the housing market and the amount of resources was limited at best. Very few dissenting voices even commented about the risky nature of subprime lending and the debt being created. The current atmosphere is very different.

I wanted to provide you a list of 55 housing resource blogs that have provided food for thought throughout this housing bubble and will (hopefully) continue to do so. Some of these sites are regional, some strictly talk about mortgages, and some dabble in the art of schadenfreude. Others examine the political nature of the current market. Many provide insight into managing your finances and preparing for a purchase or sale of a home. The list is not ranked in order of importance or significance and is not intended to be exhaustive.

Top 55 Housing Resources Blogs:

Regional Housing Sites

1. Bubble Markets Inventory Tracking – This great site hosted by ocrenter tracks inventory in many metro areas including San Diego, Los Angeles, Riverside, Phoenix, and Las Vegas to name a few.
2. California Housing Forecast – Excellent site examining the Southland and also discussing national housing trends.
3. Dr. Housing Bubble Blog – I may be biased about this one. Site looks at Southern California Real Homes of Genius and examines macroeconomic and mortgage issues that impact the Southland and nation.
4. Irvine Housing Blog – Site examines one of the most overpriced areas in Orange County, Irvine. Examples of overpriced homes and discussion about building issues.
5. LA Times Land Blog – A recent addition to the housing world. Glad to see a mainstream newspaper add a housing blog section. Updates regularly regarding the housing market and the Southern California area.
6. Piggington’s Econo-Almanac – One of the first housing blogs looking at the canary in the mine, San Diego. Examining the San Diego market with excellent charts and analysis.
7. Southern California Real Estate Bubble Crash Blog – Another older blog updated by Chuck Ponzi. Examines media information and provides links to pertinent housing information.
8. The Rancid Truth: Orange County – Blog examining the Orange County housing market with frequent updates and commentary.
9. Westside Bubble - Takes a look at data and examples of overpriced homes in Southern California. Nothing says housing bubble like an overpriced home in Southern California.
10. Sacramento Land(ing) – Excellent site examining the state capital and their overpriced housing market.
11. Sonoma Housing Bubble – An older site examining regional specific issues and offering commentary regarding the housing market.
12. The Central Coast Housing Bubble Blog – Examining housing price inflation and it’s effects on the economy from Santa Maria to Paso Robles.
13. Baltimore Housing Bubble – Blog examining the East Coast market and taking a deeper look at the Baltimore area.
14. Denver Real Estate Bubble – Blog examining floppers in the Denver Metro Area. Real Homes of Genius exist all over the country.
15. Housing Doom Blog – Site examining the Arizona housing market. Provides national commentary and updated information regarding the housing bubble.
16. Northern Virginia Housing Bubble Fallout – Examining the Greater Northern Virginia Real Estate Market as it slowly depreciates.
17. New York City Housing Bubble – Great site providing links, videos, and updates regarding the housing market from a New Yorker perspective.

National Housing Sites

18. Patrick.net – One of the original housing bloggers. Excellent website providing thoughtful analysis of the national housing market. Northern California birth but now encompasses entire housing market.
19. Speculative Bubble – This site collects updated information from multiple housing sites. An excellent resource to briefly examine what is new in the housing world.
20. Calculated Risk – Older site with thorough analysis of the housing market. Excellent articles and top notch graphs.
21. David Lereah Watch – I have to include this blog even though it is no longer updated. Site trying to keep the former NAR chief honest.
22. Lawrence Yun Watch – New site following the new head of NAR. What will they be saying with all that is going on in the housing market?
23. Mortgage Implode-o-Meter – Examining the junk yard of defunct mortgage lenders. The current list stands at 110. Will it grow this year? I’ll take a wild guess and say yes.
24. Mortgage Fraud Blog – Great site examining news articles about those mortgage lenders and brokers that did shady loans. A perspective from an attorney. I’m sure the articles will only be growing as the year progresses.
25. Housing Panic – One of the first housing blogs. Commentary and news post regarding the housing bubble. If you are looking for housing schadenfreude and updated content, this place is for you.
26. Countrywide Foreclosures Blog – Tracking the economic effects of the bubble by looking at the number and amount of foreclosures from Countrywide.
27. Blown Mortgage – Excellent site looking at mortgage issues from someone in the industry. Provides credit tips and commentary regarding the market.
28. The Great Depression 2006 – Providing housing market insight and commentary. How deep will the housing impact go?
29. Housebubble.com – One of the first news link resources regarding the housing bubble. Links to other blogs and headlines.
30. Housing Bubble Bust – Another older site examining links and housing information regarding the housing bust.
31. Housing Wire – Examining the mortgage industry and one of the first bloggers to give an inside look to what was transpiring in the industry.
32. Paper Money – Excellent website with charts and graphs regarding the overall national housing market.

Finance Sites

33. Bull! Not Bull! – Great site providing economic links and analysis regarding the housing, commodities, and political worlds.
34. The Digerati Life – You need to manage your finances before buying a home (okay, not everyone has followed this path but they unfortunately are now feeling pain). This great finance site provides tips regarding money and enhancing your overall net worth.
35. Dollar Collapse – Excellent site providing information regarding commodities, housing, credit, and political markets. Author of How to Profit from the Coming Real Estate Bust.
36. Economist’s View – You need to understand economics to understand what is going on in the current housing and credit markets. Excellent site providing insight into micro and macro economics.
37. Fall Street – Fall Street provides an excellent headline aggregator providing top stories regarding stocks and the housing market.
38. Fiend’s SuperBear Page – One of the older bear sites online with many links to relevant economic articles.
39. Financial Armageddon – Insights on debts, derivates, and other pressing issues concerning our economy. Excellent site from the author.
40. Financial Sense – Commentary from various articles from multiple industries. Excellent site for reading commentary on various sectors of the economy.
41. iTulip – Older site providing an excellent forum, links, and commentary regarding the credit bubble. One of the sites to predict the technology bubble decline.
42. The Mess That Greenspan Made – Take a guess what this blog is about? Interesting insight into the economic policies of bad macroeconomics and the current marketplace.
43. Money Files – Excellent news aggregator with links on housing, credit, debt, mortgages, commodities, and politics.
44. Steve Quayle – Interesting links and contrarian perspectives. Host of a radio show.
45. W.C. Varones Blog – Perspective regarding many issues from politics, economics, and other issues from our neighbor in San Francisco.

Online Research for Buyers/Sellers

46. Housing Tracker – Excellent resource site examining home asking prices with graphs and trend information.
47. DRE Real Estate Agent/Broker Number - How many people have their real estate/broker license in California? Currently the number stands at 537,038.
48. Real Estate Cycles – Quick look at previous real estate cycles; dates of peaks and intervals between boom and bust. We’ve been here before.
49. Zip Realty – Looking for information on buying or selling a house? You can sign up for free and take a look at home prices, neighborhood data, and inventory numbers with this site.
50. Zillow – The debate goes on about the future of home buying and selling. Zillow is an excellent resource for finding previous sales data and current market numbers in the U.S. Give it a shot and see what your “Zestimate” is on your home. The tool seems more accurate in stable markets that stayed away from the current housing bubble (i.e., large overpriced metro areas).
51. Redfin – Excellent site for researching your next home. Provides detailed sales information and neighborhood data. Not available in all areas. Is this the future of real estate buying and selling?
52. Quick View of Major Builder Stocks - A quick snapshot of how major builders are doing in the stock market.
53. Housing Sales Data – Great site providing tons of information regarding housing sales and information regarding the U.S. housing market.
54. National City Housing Valuation Analysis – One of the better interactive charts giving you an estimate of how over (or under) priced markets are in the U.S.
55. Census – You’re paying for this information with your taxes! Research your community for employment growth, housing stats, and population trends.

So there it is. Plenty of reading to keep you busy and informed regarding the housing market. It is hard to believe how much information is now out there including what the mainstream media is providing. There are many other housing, finance, and business related links that I’m sure come to your mind. Go ahead and post them in the comment section.

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