May 30, 2006

The US hard landing starts now.


Well, that about sums it up. Good luck out there. (BTW - it's an Air Canada plane, but assume it's landing in Phoenix!)


We have repeatedly said that the key indicator for most of the world’s major stock markets is the US housing market. The Philadelphia Housing Market Index has now fallen to its major support level of 225. Any further weakness from here would be a prelude to a shock.

Because of the importance of this indicator, it has been our policy each fortnight to publish the latest news from the US housing market – it is getting worse!

Ten Las Vegas house projects have been halted or put on hold.

Toll Brothers, one of the major luxury house builders in the US, have said that their second quarter orders were down 33%.

Not surprising, bearing in mind the above, the National Association of House Builders say that the industry’s confidence is the lowest it has been since 1995.

According to the Washington Post a greater proportion of mortgage financers tapped their home equity for cash in the first quarter 2006 than any other quarter in 15 years. More than 50% of these applicants borrowed at higher rates.

One of America’s leading mortgage lenders, Ameriquest, is closing 229 branches and laying off 3,500 employees. (A clear indication of sharply lower activity.)

According to the Commerce Department, housing starts in April were down 7.4% at an annual rate of 1.85 million, the third consecutive monthly decline and the slowest since November 2004.

According to the Wall Street Journal, late payments on mortgages are rising. Delinquencies are sharply higher on loans made last year.

According to a recent study, 29% of 2005 purchasers now have no equity in the homes.
America’s new jobs figure for March was 138,000 - economists had estimated 200,000. 138,000 is the lowest since October last year and it followed three months of downward revisions.

The University of Michigan’s Consumer Confidence Index for April was 79, compared to 87.4 in March, the lowest since Hurricane Katrina.

Lombard Street Research said this week that the US economy had peaked and was tipping into an unstoppable bust. The property market is crumbling - “the real US hard landing starts now”.

63 comments:

David said...

agreed. The recession is coming soon. The current economy is built on a pile of debt.

deDesertKnight said...

The recession is unavoidable...ARM's adjusting to higher payments, higher interest rates, higher fuel prices....everything is in place

Anonymous said...

Are spammers targeting housing bubble blog sites?

3 of my favorite housing bubble blogs have recently been taken over by spammers:

overvalued.blogspot.com

thereisnohousingbubble.blogspot.com (this one seems to change from a housing bubble blog back to a spammer and back to housing bubble. I think he's trying to get his site back from the spammer but somehow the spammer regains control)

crash2006.blogspot.com

Los Angeles Friends In Deed said...
This comment has been removed by a blog administrator.
Anonymous said...

AOOGA!!!!!!!!! Dive, Dive!!!!

Los Angeles Friends In Deed said...

I saw an ad on Craigslist Los Angeles that is pleaded for offers and then pleads for people not to bring offers. Ahhh... I am confused. (wink)(smile)

$235000 - Bring your offer!!! Motivated to Sell!
Reply to: j_sherman82@hotmail.com
Date: 2006-05-27, 10:00PM PDT
"PLEASE, NO investors with low ball offers!"


What is puzzling is why, as this property is located in Pheonix, that they are advertising in Los Angeles, and they get upset about an investor giving an offer. I suppose that seller will need to take some sleeping pills and get back to their dreamland. They apparently are not ready to face the real world.

Los Angeles Friends In Deed

ocrenter said...

For those of you that follows my Extreme Flipper series, the latest installment of EF I is now available. There will be no soft landing for Vegas, not with folks like EF I.

Out at the peak said...

That's a classic bipolar post from CL. Sherman 82? Probably was born in 82. A 24 year old guy who followed the cool crowd and is almost desperate to get out of the trap. How soon will he be in panic?

moman said...

What is up with all this pessimism? The world economy is pretty strong although I am certainly worried about the MBS and the housing market. A telling tale may be what just happened to my friends - bought in 2001 for $133k, put on market last month for $189. Had one offer (insulting) at $170k. They've decided to pull the house off the market and stay there for a couple more years. If enough people feel the same way it will prolong the downward spiral and keep the economy afloat for longer than we may realize.

panicearly said...

moman, did your friend find the 170k offer insulting? 10% off doesnt sound that bad for a realtively quick sale.

Anonymous said...

As the housing market goes, so goes the economy. Down. Down. Down.

panicearly said...

I cant see how home sellers holding on to their price prolongs anything.
All it does is prolong their agony in a down hill market.
lets say that 100% of the sellers
decide to hold their prices at the current high asking price. sales may drop close to zero. But that does not mean prices are stable still decide the price. it only takes a small trickle bofre soon the dam will burst.

autofx in Phx said...

I hope a few of you bought gold and/or silver during the pullback we had.

Anyway,

$235000 - Bring your offer!!! Motivated to Sell!
Reply to: j_sherman82@hotmail.com
Date: 2006-05-27, 10:00PM PDT
"PLEASE, NO investors with low ball offers!"


Looks like raw panic to me.

Anonymous said...

the great stock market crash of 2006 is now underway

look out below

Anonymous said...

Anonymous said...

"Are spammers targeting housing bubble blog sites?

"3 of my favorite housing bubble blogs have recently been taken over by spammers:

"overvalued.blogspot.com

"thereisnohousingbubble.blogspot.com (this one seems to change from a housing bubble blog back to a spammer and back to housing bubble. I think he's trying to get his site back from the spammer but somehow the spammer regains control)

"crash2006.blogspot.com "

I noticed the same thing. The first is the most freakish, since typing in the address now takes one to a site selling Atlanta real estate. Yes, hacks are screwing with something, using re-directs and hiding the URL of the actual sites to which visitors are diverted.

Anonymous said...

the great stock market crash of 2006 is now underway

look out below

SWEET!!!!!!!!!!

Mark said...

Economy turning on a dime

Does anyone else get the feeling that things are going down hill fast? I predicted a slowing late in 2006 and a recession in 2007, but Emerging markets tankend last week (See Top Headline on Financial Times - ft.com) and now consumer confidence is down in USA, housing bubble has burst, and stock market is tanking. . .also oil is up because June 1st starts hurricane season. . .I feel recession will start by late summer.

Anonymous said...

How soon do you think it will be before prices really start to come back down? We are in the market to buy, but still holding out.

moman said...

panic,

Yes my friends were insulted. I felt that $170k is a fair offer for their property but as is the case with too many sellers, their idea of value has become detached from reality. They have decided to pull it off the market and hang out until they get what they want, which IMO will never happen.

My thoughts are that if just 20% of the people feel like my friends, the housing crash may be delayed although prices will still drop slightly due to panic sellers and those who can't afford it.

Follow the money said...

My initial thoughts about attacks on RE crash blogs: The money behind the attacks is not from the NAR. It is the chicom gov't that bought so much of the housing debt. They are in line to lose big if these defaults keep climbing.

Any other ideas?

Anonymous said...

How soon do you think it will be before prices really start to come back down? We are in the market to buy, but still holding out.

Hold out for forecloseur city. Keep an eye out in your area. Problem is that the longer you wait, the higher interest rates will go.

Los Angeles Friends In Deed said...

Thanks for the link.

I am doing research into real estate price changes in Southern California, and especially Los Angeles, from Mid 1960's to mid 1970's.

The reason for the research, in part is to see what happened to real estate prices before, during, and after the Sylmar Earthquake in 1971.

And I want to see what was going on in real estate prices before the push for Prop 13.

Interesting note. It is my understanding that the current governor made their fortune as a result of the Sylmar earthquake, first by forming a contracting business with a body building buddy, doing brick laying, repairing brick walls, fireplaces, etc. He amassed large sums of money and invested the money into rental income producing property.

I would like to get more data on what the prices of real estate were like before the real estate price run up which is reported to have started sometime around 1976 or 1977.

If you have info to assist, please email me. the email address is in the profile at: Los Angeles Friends In Deed
Los Angeles Friends In Deed

Thanks.

autofx in Phx said...

All this talk of the stock market tanking...come on, folks, get a grip. I'm not in the stock market, long or short, but let's be objective.

Look at a 5-year chart of the DJIA, for example. The latest tumble isn't much more than a blip. We're still well above 10,000.

Of all the things that are going to tumble a great deal, DO NOT count on it that the stock market is going to be it.

The dollar may tumble much more in relation to stock prices (which will only mean that the artificially elevated stock prices are actually worth less than before).

And housing prices...oh yeah, "look out below" is right.

awaiting bubble rubble said...

"Problem is that the longer you wait, the higher interest rates will go."

Interest rates rise and fall with the state of the economy. They are rising now, but after housing prices crash and the economy goes into recession they may well fall again as investors move their money from equities to bonds to preserve capital. I often hear people rationalizing a decision to buy into a grossly inflated market with "by the time prices come down, interest rates will be sky high." This may be true but you can renegotiate your interest rate once they change and you cannot renegotiate an absurdly inflated purchase price on a home. Don't buy ANYTHING until similar properties obtained with a 15 or 30-year fixed loan and 20% down can be made to cash flow as a rental. This is the only real insurance against the further downward corrections that are now beginning.

Anonymous said...

Bernanke is getting ready to pump us up in the form of huge injections of "liquidity", aka funny money. This will force interest rates down as long as he can keep up the happy talk about inflation. The other central banks have no choice but to go along as a bust in the U.S. will be reflected in Japan, Korea, and China.

Yes, it's a suicide pact for sure, but what other choice do they have?

autofx in Phx said...

moman said...
What is up with all this pessimism? The world economy is pretty strong although I am certainly worried about the MBS and the housing market. A telling tale may be what just happened to my friends - bought in 2001 for $133k, put on market last month for $189. Had one offer (insulting) at $170k.

Oh man, do people need to get some perspective.

In the current market conditions, the offer was not an insult, it was a gift.

The decision to hang on to the house has the same kind of thinking behind it that saw people riding tech stocks they'd bought in spring 2000 down into the dirt in 2002.

autofx in Phx said...

Anonymous said...
the great stock market crash of 2006 is now underway

You're really jumping the gun very badly.

A sustained break below Dow 7,000 and you can start talking like that. We're a long, long way from that.

panicearly said...

regarding interest rates: anon,

would you rather pay more for the houseor more for int. rate.
I would rather the house be priced low, even if rates were 10%.
same house
100,000 @ 10%
or 200,000 at 5%

payment is the same but i would go with the first option

Anonymous said...

You're right autofx, the DOW is NOT going down more than 10% as the Fed and other central banks will pull out all the stops to try and prop this thing up.

The same is true for the housing market. They can't afford to let home prices plunge because the economic consequences are simply too dire. I think they'll drive interest rates down to record low levels and provide even stranger ways for the idiots to refi their mortgages.

Bernanke said that in theory there is no limit to how much money the Fed can put into the banking system. Now watch as his theory is tested before our very eyes.

autofx in Phx said...

Anonymous said...
The same is true for the housing market. They can't afford to let home prices plunge because the economic consequences are simply too dire. I think they'll drive interest rates down to record low levels and provide even stranger ways for the idiots to refi their mortgages.

The problem with this is that the housing market isn't nearly as easily manipulated as the stock market.

If they do what you suggest, the dollar will utterly collapse, and they can't have that, either.

Anonymous said...

What about

http://overpriceddc.blogspot.com

That has gone also.

Lee in Irvine said...

I moved back to Irvine Calif. a couple of months ago, For those of you who don't know, Irvine is right next to Newport Beach in Orange county.
Well, I went house hunting this last weekend, just so see if the market has started to turn here, like it is in Riverside County to the east.
There are some town homes by Woodbridge Lake the I decided to use as my test case to gage the market. All of these town homes have about the same s/f and lot size. Well, from Aug of last year to yesterday the price is down $70,000!!!!!!
All afternoon going from open house to open house, my girlfriend and I saw only one other couple. Every agent, before we left, told us just to make any offer!
In case you need to know. In Aug. these homes were selling for about $818,000. The best looking unit yesterday went for $749,000.
It's HERE !!!!!!!!

Anonymous said...

walmart disappoints, gm down 5%, home depot falling, lowes falling - yup, the market has figured out the consumer may be in a bit of a spot

Anonymous said...

man you look at housing and the stock market over the last few weeks, its going to get much worse before it gets better.

Anonymous said...

Place your bets, which will happen first:

Phoenix listing hitting 50,000

or

DOW hitting 10,000

Anonymous said...

Phoenix for 50000, Alex.

Later followed by Dow 10000.

Anonymous said...

it'll be a race, but phoenix 50,000 will be in June for sure

$inthebank said...

I'm for Phx 50,000 first as well.

zinger said...

Bernanke said that in theory there is no limit to how much money the Fed can put into the banking system. Now watch as his theory is tested before our very eyes.

TRUE ENOUGH... BUT

AND IT A REALLY BIG B U T !

The Fed lost control of the GOLD market. The FED and its CB allies are trying to slow the advance of GOLD. From time to time, they will continue to let go of the rope in the tug of war with the market... let it skyrocket up; then yank back with all their might to try to knock the momentum out of this gold freight train. BUT their physical supplies are very limited and shrinking; and many big money player are wise to the paper-gold tricks; and are playing along all-the-while draining the CB-allies of physical.

The jig is up when the CB's are out of gold and lose the dominance of the peto-dollar. [Note: this may happen in the 2nd half of 2006].

When that happens you will see globally held USD $TRILLIONS chase physical PM and other commodities. When this D-Day comes... Gold will trade for $10,000+ UDS per gram. Silver over $100+ USD per gram.

Rumor has it that the FED ordered $2 Trillion printed and warehoused. For what possible purpose would they do this?

ANSWER: To redeem US assets held by the rest of the world when D-Day hits the US Markets and the foreigner's want out. The fed will cash out and make good on all those T-Bills, Stocks, Bonds, MBS's that the foreigner want to cash in... and they will physically ship out by SECURE AIR FREIGHT pallets of $100 dollar bills to foreign CB's.

When the foreigner’s get their hands on these greenbacks, they are going to bid up real THINGS like there is no tomorrow IN THE MOTHER OF ALL BIDDING WARS. Hence the reason I say gold and silver will go far beyond what anyone thinks is remotely possible. $2 Trillion in CASH is just too large a number to really comprehend. This money will never be evenly distributed among the masses; but will be spent by the upper classes of the foreigner’s who hold this CASH.

It is no longer a matter of IF, but WHEN.

Penned by Blogger Zinger on http://housingpanic.blogspot.com/
© 2006 Zinger and placed in the public domain 5-30-2006.
Unedited exact full length copies may be cut and post anywhere on the net or in publications.

fish said...

Zinger,

Do you have any confirmation about the 2 trillion in new currency rumor....I first heard about it about 6 weeks ago but then any additional info just stopped!

Post here or e-mail directly at:

fishdinner@comcast.net

Thanks~!

zinger said...

Do you have any confirmation about the 2 trillion in new currency rumor....I first heard about it about 6 weeks ago but then any additional info just stopped!

No. That's why I referred to it as a rumor. I did ask my inside sources about this and was told, "Sorry, I just can't talk about it."

This is the standard response whenever your questions deviate into classifed territory. Bottom line is that I have no idea if its true or not. But things seem to be adding up. For example, there is no way in hell that the FED could publish M3 when monitizing the debt with pallets of 100 dollar bills. It would be like globally advertising the USD MELT DOWN and would most likely bring down the entire global financial system in less than 30 days.

Don't expect to learn anything about this... except for whispers and rumors (direct or indirect leaks from people on the inside to close freinds and family in violation of Federal Law).

An indirect leak could be simple body language to certian questions; not officially breaking the law but otherwise leaking the info. I said to much already.

Anonymous said...

Air Canada! LOL, thats YOUR type of jumbo jet...full of left-wing liberal socialists.

autofx in Phx said...

zinger said...
The Fed lost control of the GOLD market. The FED and its CB allies are trying to slow the advance of GOLD...

I love this kind of talk! I don't bank on it coming true, but if it happens to pan out like this, it won't break my heart.

Great stuff, zinger!

autofx in Phx said...

zinger,

What you're saying connects some dots. Didn't the G7 recently decide that a 30%-plus decrease in USD would be a good thing?

What a sh**storm this'll be if it happens!

autofx in Phx said...

Anonymous said...
Place your bets, which will happen first:

Phoenix listing hitting 50,000

or

DOW hitting 10,000


I had to think about it, but I'll bet an ounce of silver the Phoenix listing hitting 50,000 comes first.

lookout below said...

That was a great pic. Someone really is good at Photoshop!

Great metaphore - the bottom falls out in the crash! Love it.

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Anonymous said...

The No. 1 sellers' complaint on the is the "showing" process ... the line of people trudging through their home, inspecting their lives, in search of who knows what .

Anonymous said...

In the year prior to Hurricane Wilma, which ripped through south Florida in October, 2005, 64 homes had new owners at the . A snapshot of the present may show the Housing Bubble has already popped.

Anonymous said...

Hint #11 for . You Can Sell Pride Of Ownership. Cleanliness counts. Potpourrie works. So does a nice-smelling stew simmering on the stove. Happy buyers often tell us: "I liked the smell of the home." And you'd be surprised how many people walked away from a "perfect" home because "the owners were smokers."

Anonymous said...

Hint #8 for . Clean Your Closets: Neat, well ordered closets look bigger, suggesting that storage space is ample. One of any home's biggest deal-killers remains: "Not enough closet space."

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Anonymous said...

Here's the home buying process into a single weekend. She does it by compressing the real estate marketing budget into a much tighter timeframe than normal .

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Anonymous said...

. Pets Underfoot? Keep them out of the way ... preferably out of the house. Many people are acutely uncomfortable around animals. Nothing can stop a sale faster than man's best friend, wagging its friendly tail at a prospect with an allergy.
Go here for more ideas.

Anonymous said...

Even if you sell your home "as is, subject to inspection" � you can do a lot to . A top-notch Realtor� will probably hand you a list of at least a dozen things you can do to help improve your sale. If they don't, well, maybe you need to .

Anonymous said...

Hint #3 for . Let The Sun Shine In: Open draperies and curtains and let the prospect see how cheerful your home can be. Dark rooms do not appeal. One trick which always seems to work is to replace 60-watt bulbs with 100-watt bulbs, and have your Realtor� turn them all on, even for a daytime showing (and off again after the showing).

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