[RP TownTalk] U.S. Housing Bust!
ng_md at verizon.net
ng_md at verizon.net
Wed Mar 15 14:51:04 UTC 2006
You can't infer the performance of a single housing market based on national trends. There's wide variation from market to market; the only thing that DC and Chicago (or Riverdale Park and Roslyn Hts, NY) have in common is the same prevailing interest rates on mortgages.
And you can't infer the performace of a single project based on the overall area housing market. You have to look to how well the project matches local demand, whether the developer/builder is providing quality that matches the market price, and in the long run, whether the building owner maintains the building sufficiently.
Whether it's a good idea for Riverdale Park or a good idea for the neighbors are different questions.
There. That's what you get for letting a policy analyst on the list. ;-)
Nancy, Riverdale Rd
=====================
From: "Regina M. Kreger" <regina at kreger.net>
Date: Wed Mar 15 06:55:01 CST 2006
To: Andrew Farrington <somefool at dvnt.com>
Cc: towntalk at riverdale-park.org
Subject: Re: [RP TownTalk] U.S. Housing Bust!
Jeez, Andrew. So what -- you think the way the housing market hasbehaved over the last few years is rational and sustainable?? I thinkBruce is bringing up an extremely important point, and I share hisdoubts over the viability of the Dumms condo proposal. It is only oneof several doubts I have about the proposal, but it's one of the mostserious ones.
Regina Kreger
5903 Cleveland Ave.
Andrew Farrington wrote:Did you really just forward fear-mongering commercialemail to the town talk list? "Be terrified! Give me $130 bucks oryou'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 Researchto
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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 toU.S.
tech stocks, he�s hopped on a plane and flown off to Asia. He�llgive
you a sneak preview of his research tour in just a moment.
But first, Martin has asked me to give you an urgent update onwhat�s
happening in the U.S. housing market.
If you�re like most of my friends and family, your home is yourbiggest
and best investment. It�s worth more than any single stock ormutual
fund in your portfolio � perhaps more than all your otherinvestments
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 forhomes
was $439,000. But in just the last 60 days, those homes haveplummeted
$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 seethe
same thing. Every day, when we drive to work, we see �house forsale�
signs sprouting like unwanted weeds along the road. And everynight, as
we drive home, our eyes turn to a skyline sculpted by dozens ofnew
high-rise condominiums, nearly all in darkness, nearly allunoccupied.
And this is just a small sampling. I can give you a dozen moreexamples
� from Sarasota ... Chicago ... Phoenix ... Washington D.C. andmore
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 tojust
ride it out? Or are you going to do something about it?
Suppose your home falls 30% in value. What about 40% or 50%? Givenhow
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%, thatcould
be a huge hit to your net worth.
Let�s say, for example, your home is worth $500,000, and you�vegot 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, thatstill
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. Youdon�t
have to sit there passively while a housing bust wipes out much ormost
of your net worth. Indeed, there�s a lot you can do to protectyourself
� 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 beggingfor
buyers.
And empty condos are about as popular as lepers at a kissingcontest.
Here�s why ...
1. Home sales are dropping.
The sales of existing homes are at their lowest level in nearlytwo
years ... and sinking fast. That means if you want to try sellingyour
home right now, it�s probably going to take a heck of a lot longerto
move it. And more and more people are putting their homes up forsale.
The same is happening in the new home market, where sales justplunged
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 outof
control!
The number of new homes for sale just hit 528,000 in January. Thatwas
the worst at any time in U.S. history.
At the same time, in the used home market, a whopping 2.9 millionunits
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 last12
months. And supplies surged by 49.5%! If you own a condo, goodluck
selling! And even if you don�t own one, the drop in condo priceswill
naturally put pressure on your properties as home buyers choosethe
cheaper alternatives.
These warning signs would be troubling for any market. Yet thereal
estate lobby keeps whistling past the graveyard.
Just yesterday, the National Association of Realtors published its2006
sales outlook, forecasting sales declines of almost 6% forexisting
homes and 8% for new homes, the biggest drops since the 1990s.
But their headline is pure spin: �Housing Market Readjusting toNormal
Balance.� Ha! That�s the kind of doublespeak that would makeGeorge
Orwell proud.
Look. We�ve just seen the most massive real estate run-up inrecent
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 theprice
of your home along with it.
From Dream Home
to Financial Nightmare
What�s next?
Millions of American families, already stretched beyond their meansto
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. Justthis
past Saturday, the lead article in the Wall Street Journal issueda
very similar warning:
Over $2 trillion in adjustable-rate mortgages (ARMs) are going toreset
to higher rates this year and next.
Already, a growing number of homebuyers are having a hard timemaking
their monthly mortgage payments. And now, they�ll suddenly seetheir
payments jump 30%, 40% even 50%. Past-due notices will startpouring
into the nation�s mail stream � from hundreds of mortgage lendersand
banks to hundreds of thousands of households.
Suddenly, nearly everyone will be in a rush to put up their �forsale�
sign before their neighbors do the same.
A man�s home is his castle, but when it�s unsellable, it becomesa
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 foreclosurein
January. That�s up 27% in a month ... 45% in a year, the biggestsurge
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 Bustof
2006-2008,� with detailed steps on what to do immediately. Hereare
seven to help get you started ...
Step 1. Sell your investment real estate. Don�t wait. Don�t worryabout
replacing the income right now. Just move quickly to protectyour
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 youthan
just an investment, stick with it. If not, run the numbers onowning
vs. renting. You�ll probably find that renting is cheaper evenafter
you factor in the tax advantages of owning. By selling, you notonly
protect your nest-egg ... you also cut your monthly expenses.
Step 3. If you absolutely must buy now for reasons that havenothing to
do with the ups and downs in home prices, I understand. But don�tspend
more than 25% of your gross income on principal, interest, taxesand
insurance. And don�t miss the section in my report �10 Ways to Bea
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 � sellnow.
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 discussseven
vulnerable sectors, and I name up to six stocks in each.
Step 6. A housing bust can do more financial damage to moreproperties
than any hurricane. You have insurance to protect your homeagainst
storm damage. So why don�t you buy some protection against ahousing
bust? In my report, I explain how.
Step 7. Go for a profit bonanza! There are investments you canbuy
right now that are designed to double and triple in value as thereal
estate market crumbles.
For example, you can buy long-term options, called LEAPS, on thetwo
home builders named in my report. The more the stocks fall, themore
money you stand to make.
If you download my report now, you�ll be entitled to fourfollow-up
reports. The entire package � my special report and the fourfollow-ups
� is normally priced at $495. But right now, the complete packageis
$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.
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