[RP TownTalk] U.S. Housing Bust!
Andrew Farrington
somefool at dvnt.com
Tue Mar 14 13:56:25 UTC 2006
Did you really just forward fear-mongering commercial email to the town
talk list? "Be terrified! Give me $130 bucks or you'll DIE!! Booga
booga!" Just curious: Did you send the guy $130?
Andrew Farrington
On Tue, 14 Mar 2006 bruce.wernek at mindspring.com wrote:
> All,
>
> This is a financial news letter I receive daily from Weiss Research.
> Since there is a proposal on the table for a "condominum" complex at
> Dumms Corner, I thought the following would be interesting reading. I
> fear this "condominum" complex will either be just another vacant
> property in our Town Center or an apartment building, most likely the
> later. I don't consider this economic development, but you can make
> your own decisions.
>
> Bruce
>
>
>
> To make sure you don't miss our urgent updates, add Weiss Research to
> your address book. Just follow these simple steps.
>
>
>
> Money and Markets Tuesday, March 14, 2006
>
>
>
> • U.S. Housing Bust by Michael Larson
> • Asian Tech Boom by Tony Sagami
>
>
> Dear Stanley Bruce,
>
>
> [larson.jpg] Tony Sagami’s so worried about what’s happening to U.S.
> tech stocks, he’s hopped on a plane and flown off to Asia. He’ll give
> you a sneak preview of his research tour in just a moment.
>
>
> But first, Martin has asked me to give you an urgent update on what’s
> happening in the U.S. housing market.
>
>
> If you’re like most of my friends and family, your home is your biggest
> and best investment. It’s worth more than any single stock or mutual
> fund in your portfolio — perhaps more than all your other investments
> combined. But right now ...
>
>
> Home Prices
> Are Falling!
>
>
> In Bethesda, Maryland, prices have tumbled 16% from December to
> January.
>
>
> In a key area of Fresno, California, the median sale price for homes
> was $439,000. But in just the last 60 days, those homes have plummeted
> $51,000, to $388,000.
>
>
> In San Diego, new home prices have just suffered the sharpest
> month-to-month dive ever recorded.
>
>
> [img1.jpg] In Palm Beach County, Florida, where we live, we see the
> same thing. Every day, when we drive to work, we see “house for sale”
> signs sprouting like unwanted weeds along the road. And every night, as
> we drive home, our eyes turn to a skyline sculpted by dozens of new
> high-rise condominiums, nearly all in darkness, nearly all unoccupied.
>
>
> And this is just a small sampling. I can give you a dozen more examples
> — from Sarasota ... Chicago ... Phoenix ... Washington D.C. and more
> that show this “adjustment” in prices could be sharp, severe and
> widespread.
>
>
> This Housing Bubble is Busting.
> And the Bust Could Spread from
> Coast to Coast Like a Giant Storm.
>
>
> It may have reached your area already. Or it may be on its way. In
> either case, my question for you today is: Are you planning to just
> ride it out? Or are you going to do something about it?
>
>
> Suppose your home falls 30% in value. What about 40% or 50%? Given how
> fast and far home values have surged, that would not be unusual.
>
>
> Heck, even if the price of your home falls by a “mild” 10%, that could
> be a huge hit to your net worth.
>
>
> Let’s say, for example, your home is worth $500,000, and you’ve got a
> $450,000 mortgage. Guess what: Just a 10% decline wipes out 100% of
> your equity. Even if you’ve got another $50,000 in the bank, that still
> means that half of your net worth has gone up in smoke.
>
>
> I’m writing you now because you don’t have to ride it out. You don’t
> have to sit there passively while a housing bust wipes out much or most
> of your net worth. Indeed, there’s a lot you can do to protect yourself
> — even to go after unusually large profits.
>
>
> And it does not require selling your home.
>
>
> The Biggest Glut of
> Unsold Homes of All Time
>
>
> All across the USA, brand new, single-family homes are begging for
> buyers.
>
>
> And empty condos are about as popular as lepers at a kissing contest.
>
>
> Here’s why ...
>
>
> 1. Home sales are dropping.
>
>
> The sales of existing homes are at their lowest level in nearly two
> years ... and sinking fast. That means if you want to try selling your
> home right now, it’s probably going to take a heck of a lot longer to
> move it. And more and more people are putting their homes up for sale.
>
>
> The same is happening in the new home market, where sales just plunged
> to a one-year low. But builders are committed to past contracts. So
> they’re still building record numbers of shiny new homes.
>
>
> As a result ...
>
>
> [img2.jpg] 2. The supply of homes on the market is ballooning out of
> control!
>
>
> The number of new homes for sale just hit 528,000 in January. That was
> the worst at any time in U.S. history.
>
>
> At the same time, in the used home market, a whopping 2.9 million units
> have flooded the market. That’s just shy of an 18-year high.
>
>
>
> 3. Condos are getting hit the hardest of all.
>
>
> Nationwide, condo and co-op sales have plunged 7.8% over the last 12
> months. And supplies surged by 49.5%! If you own a condo, good luck
> selling! And even if you don’t own one, the drop in condo prices will
> naturally put pressure on your properties as home buyers choose the
> cheaper alternatives.
>
>
> These warning signs would be troubling for any market. Yet the real
> estate lobby keeps whistling past the graveyard.
>
>
> Just yesterday, the National Association of Realtors published its 2006
> sales outlook, forecasting sales declines of almost 6% for existing
> homes and 8% for new homes, the biggest drops since the 1990s.
>
>
> But their headline is pure spin: “Housing Market Readjusting to Normal
> Balance.” Ha! That’s the kind of doublespeak that would make George
> Orwell proud.
>
>
> Look. We’ve just seen the most massive real estate run-up in recent
> memory. We’ve got a market that’s grossly overbuilt and overpriced. We
> have millions of unsold homes all over the country.
>
>
> Result: We’re on the brink of a free fall. And it could take the price
> of your home along with it.
>
>
> From Dream Home
> to Financial Nightmare
>
>
> What’s next?
>
>
> Millions of American families, already stretched beyond their means to
> afford their dream homes, will snap beneath the burden of rising
> monthly payments.
>
>
> And we’re no longer the only ones warning you about this. Just this
> past Saturday, the lead article in the Wall Street Journal issued a
> very similar warning:
>
>
> Over $2 trillion in adjustable-rate mortgages (ARMs) are going to reset
> to higher rates this year and next.
>
>
> Already, a growing number of homebuyers are having a hard time making
> their monthly mortgage payments. And now, they’ll suddenly see their
> payments jump 30%, 40% even 50%. Past-due notices will start pouring
> into the nation’s mail stream — from hundreds of mortgage lenders and
> banks to hundreds of thousands of households.
>
>
> Suddenly, nearly everyone will be in a rush to put up their “for sale”
> sign before their neighbors do the same.
>
>
> A man’s home is his castle, but when it’s unsellable, it becomes a
> prison.
>
>
> Home foreclosures are already rising ominously. According to
> RealtyTrac, an online marketplace for foreclosure properties, about
> 103,540 properties nationwide entered some stage of foreclosure in
> January. That’s up 27% in a month ... 45% in a year, the biggest surge
> I’ve ever seen.
>
>
> Result: Still more pressure on the value of your property.
>
>
> Steps You Should
> Take Right Away
>
>
> I’ve just written a special report, “The Great Real Estate Bust of
> 2006-2008,” with detailed steps on what to do immediately. Here are
> seven to help get you started ...
>
>
> Step 1. Sell your investment real estate. Don’t wait. Don’t worry about
> replacing the income right now. Just move quickly to protect your
> capital. (More details on why, how and where in my report).
>
>
> Step 2. Think about your own home. If it means a lot more to you than
> just an investment, stick with it. If not, run the numbers on owning
> vs. renting. You’ll probably find that renting is cheaper even after
> you factor in the tax advantages of owning. By selling, you not only
> protect your nest-egg ... you also cut your monthly expenses.
>
>
> Step 3. If you absolutely must buy now for reasons that have nothing to
> do with the ups and downs in home prices, I understand. But don’t spend
> more than 25% of your gross income on principal, interest, taxes and
> insurance. And don’t miss the section in my report “10 Ways to Be a
> Smarter Home Buyer.”
>
>
> Step 4. If you’re holding mortgage bonds — from Fannie Mae, from
> Freddie Mac, or based on the high-risk “subprime” mortgages — sell now.
> The market value of these bonds is likely to fall as home prices
> decline and mortgage delinquencies rise.
>
>
> Step 5. From your stock portfolio, dump construction companies,
> subprime lenders and mortgage REITS. In my report, I discuss seven
> vulnerable sectors, and I name up to six stocks in each.
>
>
> Step 6. A housing bust can do more financial damage to more properties
> than any hurricane. You have insurance to protect your home against
> storm damage. So why don’t you buy some protection against a housing
> bust? In my report, I explain how.
>
>
> Step 7. Go for a profit bonanza! There are investments you can buy
> right now that are designed to double and triple in value as the real
> estate market crumbles.
>
>
> For example, you can buy long-term options, called LEAPS, on the two
> home builders named in my report. The more the stocks fall, the more
> money you stand to make.
>
>
> If you download my report now, you’ll be entitled to four follow-up
> reports. The entire package — my special report and the four follow-ups
> — is normally priced at $495. But right now, the complete package is
> $129.
>
>
> Your overarching goals: Avoid the avalanche of properties that’s
> starting to hit the market. Get out of debt. Grow your wealth. Build
> your cash. And stash it away in a safe place.
>
>
>
>
>
>
> _______________________________________________________________________________
>
> For more information and archived issues, visit
> http://www.moneyandmarkets.com.
>
>
> About MONEY AND MARKETS
>
>
> MONEY AND MARKETS (MAM) is published by Weiss Research, Inc. and
> written by Martin D. Weiss along with Larry Edelson, Tony Sagami and
> other contributors. To avoid conflicts of interest, Weiss Research and
> its staff do not hold positions in companies recommended in MAM. Nor do
> we accept any compensation for such recommendations. The comments,
> graphs, forecasts, and indices published in MAM are based upon data
> whose accuracy is deemed reliable but not guaranteed. Performance
> returns cited are derived from our best estimates but must be
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> Burke, Beth Cain, Amber Dakar, Michael Larson, Monica Lewman-Garcia,
> Julie Trudeau and others.
>
>
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>
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