I subscribe to 2 Blogs that cover the US Real Estate Market. They are fairly technical and give a lot of good macroeconomic data to support their findings. The blogs are:
While I am not a real estate professional, like everyone else, I do have common sense. And it doesn’t take much common sense to know that being unemployed leads to less income which naturally means that there’s not enough money to pay all the bills, including a mortgage.
If you agree with my reasoning, you need to read Doctor Housing Bubble’s May 12, 2010 article:
Housing never really improved – 10 charts showing the United States housing market is entering the second wave of problems. 1 out of 4 people with no mortgage payment in the last year are still not in the foreclosure process.
Here are the opening paragraphs:
To put it bluntly, the U.S. housing market today is in deep water. Nothing exemplifies the transfer of risk to the public from the private investment banks more than the deep losses at Fannie Mae and Freddie Mac. Fannie Mae announced a stunning first quarter loss of $13.1 billion while Freddie Mac lost $8 billion. At the same time, toxic mortgage superstar JP Morgan Chase announced a $3.3 billion profit for Q1. This reversal of fortunes has been orchestrated perfectly by Wall Street. Since the toxic assets were never marked to market, the big losses have been funneled to the big GSEs (and as we will show in this article, now makes up 96.5 percent of the entire mortgage market). In other words, banks are making profits gambling on Wall Street while pushing out mortgages that are completely backed by the government. We are letting the folks that clearly had no system of underwriting mortgages correctly or any financial prudence lend out government backed money and the losses are piling up but only in the nationalized Fannie Mae and Freddie Mac. What a sweet deal. Stick the junk in a taxpayer silo.
I wanted to go into the details on the current U.S. housing market and the data is not pleasant. In fact, it is downright disturbing. For background information, the U.S. has roughly 51 million active mortgages. As we go through the next 10 charts, it is important to keep this in mind. Whitney Tilson’s T2 Partners came out with some riveting charts regarding the current state of the housing market. Let us go through 10 of the most crucial charts.
Here are the titles of Whitney Tilson’s T2 Partners’ 10 charts (you have to see these charts):
- Homes in foreclosure
- Foreclosure filings
- Home prices dropping
- Nationalized housing market
- Housing overhang
- Distress inventory as sales
- Not paying and living with no foreclosure
- Home equity lines
- Nonpayment savings
- REO vs distress
And, here’s the final paragraph in this article:
In total the housing market is in worse shape today than it was a few years ago. If the stock market was tied to housing we probably have a Dow 20,000 with 14 million foreclosures. The bailouts have been one large transfer of wealth to the banking sector. Remember that the bailouts were brought about under the guise of helping the housing market and keeping people in their homes. None of that has happened. Ironically the only thing that seems to keep people in their home is when they stop paying their mortgage! If that is the strategy we have arrived at after $13 trillion in bailouts and backstops to Wall Street we are in for a world of problems.
Read Doctor Housing Bubble’s May 12, 2010 article here.
Technorati Tags: real estate, foreclosure, short sale, reo, mortgage, finance, money, house, distressed, bubble, recession
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