March 18, 2007

The housing crash is here. The final act is now upon us. So where does HousingPANIC go from here?

HP went through a similar transition a year or so ago, when we moved from "Act I: Is there a housing bubble?" to "Act II: The housing bubble ends".

Well, now it feels like Act II firmly and unequivocally ended last week, and we've now entered Act III - The Great Downfall (and eventual recovery).

During Act II, the REIC liars, conmen and manipulators were harshly and solidly exposed. HP and the bubble bloggers were validated. The HP community did a good job pulling the various pieces together, getting a robust feel of how the bubble happened, who and what was involved, and what the crash will look like. And the MSM finally got off their ass (except for Time magazine), taking some of the burden off of HP, and started reporting the truth, vs. REIC and NAR spin and lies.

So now we enter the final act.

How long will Act III last? What should HP's role and focus be? What is our raison d'ĂȘtre?

HP has been accused by corrupt REIC blowhards of being evil, and in our role as messengers we will continue to be personally attacked and blamed. I think that's a certainty, especially with millions of REIC about go unemployed, trillions of dollars of paper wealth disappearing, and millions of homedebtors and speculators facing certain financial ruin.

However, HP'ers know that what we do here is good. While the REIC is trying to protect their fat commissions, the HP community fights on as a rag-tag volunteer army. We didn't want this fight - all we wanted was for the damn bubble to end.

All we want now is simply for houses to be homes again - not get rich quick lottery tickets. We want the REIC and NAR lying and deception to stop. We want young couples out of school to be able to buy a nice home, with a reasonable payment, and the security that the asset value will keep up with inflation.

We want the commission-hungry realtors and mortgage brokers gone. Now. All of them. We want the NAR and realtor profession to be discredited and disbanded. We want the REIC to be regulated. We want the MSM to do their jobs and report, versus copy and paste. And we want people to wake the f*ck up and live within their means once again.

So have at it. What do you want from HP? Where do we go from here? How can we continue to best serve our fellow man? And how can we help each other weather this unavoidable storm?


Anonymous said...

We can keep the truth alive. There is much lying still, about Alt-A mortgages and etc... I bet there are still many lies out there within the corportate offices of the lenders. Spin doctors are sharpening their pencils slanting the truth in favour or the biz.

Noodles said...
This comment has been removed by the author.
Shakster said...

The Job of R/E Watchdog will never end,and to hand it over to regulators only insures that bubbles,ponzi schemes ,and ripoffs will continue.We can't stop the scheming,but we can throw a major Flying Monkey Wrench into it. The final act will be a very long grind.Where the value of homes will end up falling behind food,gasoline,old etc.

Anonymous said...


That's the closest thing to the John Galt speech, from the mountain valley hideaway, that I've ever seen in the real world.

Anonymous said...

Let's keep hearing from people all over the country as to what's going on in their part of the world so we can get a balanced look. I'm in Colorado, and everyone says it's fine here (the western slope, not the Denver side, where it's bad). W/o this blog, I'd believe drivel like the below and go ahead and buy a house. Thanks for this blog!

Nationwide, many of the people losing their houses found that they just couldn’t keep up with large mortgage payments, or fell impossibly behind after a layoff or medical emergency.

But in San Miguel County, where the average home sold for $960,000 last year, buyers are cut from a more gilded cloth. Many buy for cash or are insulated from the economic bumps that shatter middle-class people.

Even if homeowners sink into debt or lose their jobs, the house itself can often rescue them, bankers said. Housing values have soared by as much as 15 percent every year, and realtors say they see little sign of a slowdown.

This means homeowners can easily refinance their mortgages or cash out their home’s rising value by taking out a home-equity loan. If they get desperate, they can easily sell their home and pay off the bank.

Kenning, the Alpine regional president, said it would take an earthquake in the global economy to cripple the demand for land around Telluride.

“It’s an international market here,” he said. “We’ve got stock brokers from New York, oil executives from Dallas, attorneys from Los Angeles. We’ve got high-tech people, we’ve got medical people, we’ve got Hollywood people.”

---I personally think everywhere is going to be affected, even the rich places like Telluride (and Aspen, etc.) where people say "it's different here." Any comments?

Noodles said...

I personally can attest to the fact that because of this blog site I and my family were saved from financial ruin.

It was in the summer of 2005 I started having doubts, but everyone was a RE cheerleader (Government, Wall St. Financial Advisors, Friends & Family)

I got a bad vibe but had no where to actually voice and study the info that now we see is so slanted and almost propaganda. I made up my mind and pushed my wife to upgrade and sell our renter home. We were very lucky and were able to sell.

This site gave me understanding that made me an outsider to all my house owning friends they come to me for advice...

I feel bad for the good people that will get fucked along with the liars, braggers and cheaters.

In the end the government will have to step in...the smart liars will disappear...many families will end up divorced...the economy will be in semi-shambles and the lower economic side of society will get fucked again and then shoot themselves in the foot by:

1. Whining too much & not doing
2. Getting pregnant
3. Using drugs or overdoing
4. Getting arrested

I'm afraid this downturn will be here for maybe 10 years as it spreads--->housing--->loss of construction/RE/material supplying/trucking jobs--->less luxury items (TVs, Autos, furniture etc)--->Say good bye Ford and GM and most of our manufacturing--->It's Reagan's "Piss Down" theory.

For all those hoping for a crash...don't come crying when your son gets shot for his car or when your daughter gets hit for her purse...every action has a reaction and if you think shit only happens in the big cities then you're wrong....crime happens where there's an abundence of males age 17-28 with little or no employment...I should know I'm a prison Guard at a level 4 be advised the State of California is preparing for serious problems but we're doing it quietly.

Am I wrong? We'll see in these next 3 years how many companies hold their mud...High unemployment with limited social services and all the $$$ being spent on war will cause real problems.

Silex said...

Found the following analysis in:

[url=]Why the US sub-prime mortgage bust will spread to the global finance system. by Henry C.K. Liu[/url]

"Through mortgage-backed securitization, banks now are mere loan intermediaries that assume no long-term risk on the risky loans they make, which are sold as securitized debt of unbundled levels of risk to institutional investors with varying risk appetite commensurate with their varying need for higher returns. But who are institutional investors? They are mostly pension funds that manage the money the US working public depends on for retirement. In other words, the aggregate retirement assets of the working public are exposed to the risk of the same working public defaulting on their house mortgages.

When a homeowner loses his or her home through default of its mortgage, the homeowner will also lose his or her retirement nest egg invested in the securitized mortgage pool, while the banks stay technically solvent. That is the hidden network of linked financial landmines in a housing bubble financed by mortgage-backed securitization to which no one until recently has been paying attention. The bursting of the housing bubble will act as a detonator for a massive pension crisis."

Anonymous said...

How about making sure our tax dollars aren't helping out those "poor souls" who overspent? I son't want to bail them (subprime) out. Too bad for them. Who hasn't taken a gamble that didn't pay off - why should someone else pay their debt?

Anonymous said...

Two years ago, a crack commando unit was sent to prison by a military court for a crime they didn't commit. These men promptly escaped from a maximum security stockade to the Los Angeles underground. Today, still wanted by the government, they survive as soldiers of fortune. If you have a problem, if no one else can help, and if you can find them, maybe you can hire... The bubble bloggers.

Anonymous said...

Face it Keith. You're finished.

Now all that's left is interviews with CNBC about how right you were.

yourdollars said...

I have been a loyal HP’er since September 2006 and agree with the conclusions and predictions generally presented even though my initial impression was that HP was a “radical” or extreme blog.

I believe that since we are in Stage III, rather than presenting information with a “we told you so” approach, HP should focus more on providing useful, sympathetic advice for those who did get themselves into bad situations. Instead of placing blame, let’s be helpful and figure out how to best move forward from here. That way we’ll be serving a higher purpose. None of us wishes (or should wish) ill on our fellow man.

True, some HAVE been greedy – some mortgage brokers, realtors, investors, and others. Many others, along with “everyday” people, have simply been trying to use current economic realities to their advantage, as anyone legitimately trying to get ahead would do. Those who did so dishonestly or who took unwise risk will receive their “rewards.” But let’s not throw away the baby with the bath wash. Realtors do serve a legitimate role, aiding consumers who want to become homeowners but who otherwise would be clueless about matters such as finding suitable properties, writing contracts, negotiating, finding financing, etc. Let’s not cast out an entire profession due to the behaviors of some.

Let’s not “punish” or overly criticize honest working folks because they weren’t part of the “smart” money that got in early or because they entered the working world a bit too late.

HP HAS been “right.” We have credibility. Let’s use that to our advantage in a positive and be a resource for those in need.


Anonymous said...

I'm not sure there's going to be a "recovery" at all...where housing is affordable for young couples...maintains its value against inflation, etc. Clearly, we're already in a recession (housing, retail, auto, capital investment) and the question is whither a depression. Problem is, we don't manufacture anything much anymore. What are we going to base a recovery on? I fear we are headed toward a welfare state of the permanently unemployed - much like the UK in the '70s, but worse. There are just no more assets to inflate. We're at the Minsky Moment - borrowing to pay interest. Worse, energy cost are set to rise and that's just going to compound everything.

So, what should be HP's focus? Cover the gov't hearings, the lawsuits, the charts, the sad stories, all the din and noise. But lets also encourage folks to keep a level head. Start to reach out to the trapped owners, the foreclosed on, the bankrupt, the unemployed. Help them see how they were conned, and the mistakes they made - without meanness. Encourage them to keep their marriages and families intact, and to keep going whatever it takes. After all, we need each other - if especially when things go wrong - as families, as communities, and as Americans.

Anonymous said...

ACT IV, Get 'em out by Friday! (Long)

Prescient Peter Gabriel's lyrics view the 2012 market on Genesis's 'Foxtrot' album of 1972....

('John Pebble, Styx Enterprises'):

Get 'em out by Friday!
You don't get paid till the last ones well on his way.
Get 'em out by Friday!
Its important that we keep to schedule, there must be no delay.

(Mark Hall of Styx Enterprises, otherwise known as the Winkler'):

I represent a firm of gentlemen who recently purchased this
House and all the others in the road,
In the interest of humanity we've found a better place for you
To go, go-woh, go-woh

('Mrs. barrow (a tenant)'):

Oh no, this I cant believe,
Oh Mary, they're asking us to leave.

('Mr. Pebble'):

Get 'em out by Friday!
I've told you before, s good many gone if we let them stay.
And if it isn't easy,
You can squeeze a little grease and our troubles will soon run away.

('Mrs. Barrow'):

After all this time, they ask us to leave,
And I told them we could pay double the rent.
I don't know why it seemed so funny,
Seeing as how they'd take more money.
The Winkler called again, he came here this morning,
With four hundred pounds and a photograph of the place he has found.
A block of flats with central heating.
I think were going to find it hard.

('Mr. Pebble'):

Now we've got them!
I've always said that cash cash cash can do anything well.
Work can be rewarding
When a flash of intuition is a gift that helps you

('Mr. Hall'):

Here we are in Harlow New Town, did you recognize your block
Across the square, over there,
Sadly since last time we spoke, we've found we've had to raise
The rent again,
Just a bit.

('Mrs. barrow'):

Oh no, this I cant believe
Oh Mary, and we agreed to leave.

('a passage of time
18/9/2012 t.v. flash on all dial-a-program services'):

This is an announcement from genetic control:
It is my sad duty to inform you of a four foot restriction on
Humanoid height.

('Extract from conversation of Joe ordinary in local puborama'):

I hear the directors of genetic control have been buying all the
Properties that have recently been sold, taking risks oh so bold.
Its said now that people will be shorter in height,
They can fit twice as many in the same building site.
(they say its alright),
Beginning with the tenants of the town of Harlow,
In the interest of humanity, ' been told they must go,
Told they must go-go-go-go.

('Sir john de pebble of united Blacksprings international'):

I think I've fixed a new deal
A dozen properties - well buy at five and sell at thirty four,
Some are still inhabited,
Its time to send the Winkler to see them,
Hell have to work some more.

('Memo from satin peter of Rock Development Ltd.'):

With land in your hand, you'll be happy on earth
Then, invest in the church for your heaven.

Anonymous said...

Keith I think you and the other housing bloggers have only just begun. At Housing Doom the blogger just outed the NAR for attempting to prostitute the FHA into the latest source of low income liquidity. These wolf-in-sheeps clothing solutions will proliferate and someone needs to make them transparent, all the better if it is in ways the MSM can quote.

Anonymous said...

HP should continue to educate others how we got into this mess!

1) Give them the history of the corrupt Federal Reserve and educate people how it isn't even federal and keeps us all in debt servitude.

2) Educate people about the debt bubble in credits cards, student loans, trade deficits etc. and why the housing bubble isn't the only bubble that will harm this country.

3) Educate people that K street here in Washington, DC has bought off our politicians and show them the revolving door that is Congress when it comes to corporate lobbying money.

4) Remind people that all this war in the Middle East is not leading to peace but more and more debt which is making the Federal Reserve and the Military Industrial Complex rich beyond means and creating the US more enemies.

5) Housing crash has only just begun so keep up the coverage...alot of the people are still asleep at the wheel.

DC Beltway Girl

Anonymous said...

Keith you have plenty of reporting to do over the next 10 years or so on the Greater Depression.

That is if we don't fall into some sort of Marxism in which case the only available news will be force fed.

Most Americans have sold their soul for materialism. I have a pretty good idea of what they will do for a slice of bread.

Anonymous said...

How Will The Markets React?

Anonymous said...

I agree with Noodles that the fallout from the housing crash will be felt throughout society - and in an increase in crime. I have long held the opinion that we are already in a depression 25% UNDEREMPLOYMENT - where 20% are doing just fine, and 80% are getting screwed. In the great depression there was 25% unemployment, now we have at least that much underemployment. Very few have a positive net worth, and now housing equity has or will vanish.

The direction we should go is to inform people about the larger issue - DEBT! Americans must get out of debt, and start NOT keeping up with the neighbors - parents need to tell their children they can't afford a Nintendo or a Plasma TV. I could go on, but you get my drift.

Anonymous said...

I don't think the word is completely out there yet - did anyone read that wishy-washy piece of fluff by Roger Lowenstein in the NYT Key Magazine section? The article wobbles both ways without actually defining anything. Then they have a section about Santa Barbara trying to offer middle class housing only costing $595K for people with incomes between 130K-145K. Clearly we are not done with this act yet. But I agree with anon above - In theory I'm all about helping my fellow man but it's hard to want to lend a hand to the idiots that were delusional enough to think they could afford a $700K house with a $75K income. I think HP can ride the aftermath for a good long time.

Westside Bubble said...

We need to focus on what happens next in Washington. The housing bubble community could rally a lot of contacts to elected officials across the country with a message like "no taxpayer bailout of predatory lenders (that also keeps house prices unaffordably high)."

Is Senator Christoper Dodd's potential legislation really a bailout of lenders at taxpayer expense that would slow the market from returning to normal?

Marketwatch gave a good summary Wednesday:

"Dodd, who is seeking his party's 2008 nomination for the White House, said in a statement on Tuesday that he was mulling legislation and other options that would protect consumers from abusive lending practices and allow them to keep their homes."

Bearmaster is very concerned:

"A massive Socialist bailout for subprime borrowers is being cooked up in Congress right now. The very thought of it makes me sick. Now is the time to let Congress know exactly what you think."

From the LA Times "Clinton: Industry 'clearly broken'". A key quote:

"As this crisis worsens, mortgage tsunamis will ravage working-class neighborhoods across the country," warned John Taylor, president of the National Community Reinvestment Coalition. "Sheriffs will be knocking on people's doors only to find keys and furniture left behind."

Taylor called for legislation to create a national rescue fund to support beleaguered borrowers and stricter standards to eliminate predatory lending.

Allowing borrowers to refinance under easier terms "is the most sensible way for Congress and the administration to deal with this problem," ....

What would those "easier terms" be, if borrowers can't afford anything but below market rates and/or negative amortization?

See also OC Renter's exposing of two current sob stories in the LA Times.

Anonymous said...

You thought subprime was bad? Wait until you see what's next.

GK said...

HP Act III: Return to Constitutional government.

1. Return currency creation power to US Treasury, by revoking Federal Reserve Act of 1913.

2. Retire all Federal Debt using new US Treasury Greenbacks.

3. Remove Federal Tax started in 1915.

President Ron Paul 2008 can help with all this.

veritas_faust said...

Housing Panic should be the witness and troubadour of the crash, fallout and human experience it leaves in its wake.

All we need now is theme music. Something tragic...a requiem perhaps?

Anonymous said...

I'm going to serve my fellow man by buying his house for pennies on the dollar.

I feel its my moral obligation to help him salvage his future.

Detachable Cletus said...

From Greg Swann's blog today:

"Whether or not I’m right about Phoenix, the world at large seems to be in for a long-term real estate boom."

Send him some flying monkey love won'tcha?

Anonymous said...

What Westside Bubble said. I'm preparing to write to my representatives. Let's be more proactive.
Ditto to previous suggestions: understanding the trajectory of past panics; resources for those in trouble.
Survivalism? Sure, but there's a middle ground between the status quo and gloom & doom. Check and refine the set of assumptions - MSM's and our own. We seem to be witnessing the destruction of an unsustainable, corrupt system. If so, how to make sure it is replaced with something better? What would that look like?
Vulturish short sale picks are well and good. But what about eco-friendly housing? Liveable communities, disintermediated REIC, high speed trains? (motherhood, creampuffs, & apple pie...)

"Where does HP go from here?" boils down to "what information can a blog rapidly assemble and digest that can't be done reliably any other way?" As things unfold, keep that question in mind. Hope for the best, and keep up the humor.

Anonymous said...


I'm another almost-FB saved by this blog from a way-premature "investment" in a condo. (Building of choice, formerly popular and full, now has 8 units for sale, but none have actually sold in months).
Whew! I'm feeling very lucky.

Here are some interesting HP questions:

1) Where are all the foreclosure people going to live, anyway? Most of their cash was in their lost "investment," plus their credit will be ruined as well.

2) Low-wage service jobs can't pay even for foreclosed McMansions. The banks and other investors in junk mortage securities are going to end up with lots of faux cheateaux in exchange, and they didn't set out to be Mr. Roper. How low can they go?

3) REIC member Ramen stories will soon appear even in the MSM. Career changers with gold blazers in the back of the closet will make some interesting life choices well worth writing about. Suzanne, what are you researching these days?

Anonymous said...

noodles, I agree with most of what you said, especially about crime, etc.

In general, I don't expect the government to come in and save the day though. Counting on the government to do much of anything is a big mistake. If there is a bailout, it will be similar to the S&L bailout where only the bankers and rich fat cats get to divide the government spoils. The little guy will get screwed again.

Also, I'd much rather be in a rural area where you are growing some of your own food. Yes, crime will happen everywhere but the cities and exurbia will be a living hell.

One solution to the prison overcrowding would be to seal the border with Mexico and immediately deport all illegal aliens that are filling our prisons. I've heard estimates that 40% of all inmates are illegal aliens. Immediate deportation would go a long way towards solving this issue. Also, any illegal should be branded and deported - that would serve as their first and last warning. If a branded illegal is caught crossing again they should be processed and then executed (no vigilante justice - too similar to anarchy.) This would send a strong message to any would-be illegals. We can't afford to support all of these illegals when our own citizens will be starving in GD2. This may sound harsh but my guess is that this is exactly what will be happening within 5-7 years. JMHO.

Anonymous said...

The meltdown in So Calif will last at least three more years, probably five or six. During that time we should:

1. Write letters, raise our voices and prevent any taxpayer funded bailout of this corrupt industry and the fools who bought more than they could afford.

2. After attempts to stop a bailout fail, we should ensure that an affordible housing component is included in the bill's language and also that sanity and common sense are part of the lenders' business practice by regulation. This is far more serious than what led to Sarbanes-Oxley and should be addressed legislatively.
3. Find a way to learn the lessons here and spread them, so they won't reappear with some new bubble.

Anonymous said...

It's not a bailout of subprime borrowers, that's just a hoax to lend it altruistic credibility, it's a bailout of banks and the REIC. In fact, these "victims" have 0 equity at stake and are no further behind then they would have been had they paid rent for the past 2 years. In fact they are probably further ahead because of the tax break on the interest.

Anonymous said...

I wouldn't worry about pension funds going belly up. Only 25% of the working class gets to collect a pension. The other 75% do not, so they will be fine.

Anonymous said...


I have no clue if you actually read every post so I just wanted to show you something that you may want to contribute a blog entry to.


One of the HPers pointed out a quote from this Reuters Story from today.

take note of the "tone" of this mortgage lender.

now compare it to an entry that I am surprised hasn't been deleted on her realtor blog.

this is the blog thread...Jillayne Schlicke is comment #14.

just so you can preview what her comment was I cut & pasted it below.

14. Jillayne Schlicke - February 12, 2007

Why would we want to spend our tax dollars for use in the classroom teaching children how to be financially sound citizens?

I would rather have my tax dollars be spent teaching kids how to read, write, and pass the minimum competency exams (Here in WA state we have the WASL test, which our children are not all passing)

I’m not following you guys; help me out:

Why would a consumer need a class before embarking on homeownership? Isn’t this what real estate agents and lenders are for: to help educate the consumer?

That’s like saying we should all be required to take a class before we go see our doctor or our lawyer.

The teachers have enough to do in the classroom. Instead, real estate and lending corporations can pay to educate the consumer out of their corporate profits, if they so choose.

I would think that first, corporations would pay to educate their own agents and loan originators.

I JUST finished a 4-hour class with a group of Realtors. They told me one of the biggest values they bring to the consumer is knowledge and education.

You can help educate consumers about the pros and cons of purchasing the luxury cars, but it’s up to the individual to make the final decision.

Besides, high school kids aren’t going to listen to us anyways. They’d be like, “shhhyeah, right, you sound like my mother. I am so, like, done with this financial class. Teach us how to make as much money as you do, drivin’ that lexus, teacher lady.”

Anonymous said...

Act II just beginning in Honolulu!

Anonymous said...

Be a watchdog! Yes, keep an eye on them. The mass media, the government and its army of regulators let it all happen. As they will not do their job, then its upon us to do it. What warrants close attention now is the response of the government. HP and others must insure that the lenders and REIC are NOT Bailed out at the expense of the taxpayer! Without HP and others like it, the clean up will be very currupt and bail out the fatcats who got us in this mess in the first place. You work is far from over--sorry!

Anonymous said...

The lending problems in the 1980s — both in the savings and loan mortgage market and the junk bond mania on Wall Street — were much worse that anything we've seen so far today.

There now go to bed, it's nothing

Anonymous said...

Stay with it. Make sure the cure is not worse than the disease. Keep an eye on Dodd and Hillary and the nostrums they will offer to "fix" the problem. Make sure we all do not have to pay for the mistakes of others. Of course the question (as the housing panic is the tip of the iceberg on a brader debt probelm) is even if they wanted to baile em put, what will they bail em out with? Bonds? Printing press? Nahh--taxes on all of us thats how......

Paul E. Math said...

There are many housing-related issues that we still need to discuss and educate others on.

As an example, I agree with anon 8:25 PM when he argues against rescuing the subprime and alt-a FBs. This is a serious concern because many average homeowners will identify with these FBs and it will also be in the interest of the average homeowner to prevent more supply from going onto the market by rescuing FBs.

But it's not right. The taxpaying renter should NOT have to pay for the sins of the subprime mortgage market and subprime mortgage holders or the purchasers of subprime mortgage backed securities.

This is just one of many issues. HP still has a mandate which is as critical as ever. We must help the housing market back to sanity.

Anonymous said...

It is time for the pompous prognosticators and the long way down to despair.

Anonymous said...

There's plenty to do yet- "no Bailouts for FB's" is a good place to start and be vigilant.

Anonymous said...

Removing the Federal Tax would be a great idea.

The State tax I'm fine with, but the federal we could do away with.

Does Ron Paul really want to get rid of the Federal Tax?

Roccman said...

Yes - the final act is upon us and it has nothing to do with the housing crash and everything to do with oil.

Roccman said...


By far one of the best posts I have ever read on HP!!

Can you give a little more detail on Cali Prisons and the preparations for social strife and lock down leading to martial law?

Very we more closer to die off...these conditions will only get worse.

Best lock and load while you canj still get ammo and MRE's.

Anonymous said...

I say we just keep monitoring this bugger of of meltdown. There is still much news to be forth coming.

Let's keep up the pressure, enjoy the show, and keep alerting others to the biggest meltdown in modern times.

Oh Keith, the Implode-O-Meter is up to 37.

Anonymous said...

Hi Keith,

What can you say about the hedge funds and derivities that are supposed to mitigate the rirk going on here?

You will never run out os a story, Keith.

Hope that you didn't miss much in Capri.

jrinlv said...

Keith, I am confused. What is the cause for celebration? I still do not see a reduction in home prices (at least in Las Vegas) where the average person definitely cannot reasonably purchase the average house. With a median income of approximately $40,000 - $50,000/year the average person can afford a $150,000 house. Unfortunately, with the median price of an existing house about $310,000, prices are still way too high. They need to come down by at least 50%.
So, please explain why Phase II is completed and why the average person should rejoice. What has really been accomplished other than a lot of words being printed and many people being foreclosed on?

Anonymous said...

It's Going to Be a Tough Spring for Home Sellers

Even in prime locations, larger, high-end homes in the $400,000-to-$700,000 range (double that on the coasts) have come under increasing pricing pressure, as buyers who had hoped to trade up put off their moves.

"First, you have to sell your house, and then you've got to give up that 5 percent mortgage and take out a new one at 6.5 percent," Standard & Poor's chief economist David Wyss says of the weakest segment of the market. "So a lot of people are deciding, 'I don't really need that extra bedroom after all.' "

Call them the three stages of real estate grief.

At first, there is denial,

Then, after denial, comes anger.

Finally, there is acceptance,

bobbyj0708 said...

As exciting and as quick as Act II was, Act III will be the complete and total opposite. Act III will be depressing and it will seem like it's going to last forever.

Sub-prime has blown up and taken away a ton of buyers due to stricter guidelines. But now we have several years worth of Neg-am Alt-A & prime buyers who are going to succumb to higher payments and lower property values. It will make sub-prime seem like a walk in the park.

Jobs will be lost, crime will rise and divorce will be even more commonplace than it is today. And this will be happening to people you know and probably like and there won't be a thing you can do about it.

Keith, you'll get tired of Act III, even the schadenfreuders will be sick of it in a heartbeat. It's gonna be awful.

I think it might be time to take a vacation, a real long vacation.

Anonymous said...


i suggest that hper's will focus this time in comforting people who are in tremendous economic pain. that's the christian way.

Anonymous said...


we can help prosecute the coorupt and lying people like lereah.

Anonymous said...

"All we want now is simply for houses to be homes again - not get rich quick lottery tickets. We want the REIC and NAR lying and deception to stop. We want young couples out of school to be able to buy a nice home, with a reasonable payment, and the security that the asset value will keep up with inflation.

We want the commission-hungry realtors and mortgage brokers gone. Now. All of them. We want the NAR and realtor profession to be discredited and disbanded. We want the REIC to be regulated. We want the MSM to do their jobs and report, versus copy and paste. And we want people to wake the f*ck up and live within their means once again."

Excellent summary......that is EXACTLY what I want post meltdown.

Anonymous said...

Nice piece on the chinese property bubble:

I have one criticism of this otherwise great blog; it is too focused on the US market. We need to draw the the dots up. This is a worldwide phenomenon.

You might not agree with me here, housingpanic, but I think that the US housing bubble is one of the more restrained and manageable bubbles. We are only looking at 20-30 percent falls in house prices.

Elsewhere in the world, it will be a bloodbath. I'll give you five more inflated markets straight off - UK, Spain, Moscow, signapore and Ireland. All are more inflated than the US market.

Unknown said...
This comment has been removed by the author.
Anonymous said...

Watch an episode of “Little House on the Prairie” and then turn on the news, and notice the contrast from what we used to consider virtues to strive for, and what passes as ‘leadership’ today.

We, as a citizens, subjects or serfs…
whatever it is that we are now and might be soon…
had better remember where we tossed away the soul of this country and the principles it was founded on…
and we’d better get them back.

Or… maybe it’s just an inevitable cycle that we’re in….

Throughout history civilizations have progressed:
From bondage to spiritual faith;
from spiritual faith to great courage;
from courage to liberty;
from liberty to abundance;
from abundance to selfishness;
from selfishness to complacency;
from complaceny to apathy;
from apathy to dependence;
from dependency back again into bondage.

Sir Alex Fraser Tyler: (1742-1813)

Anonymous said...

These are still early days yet for your site Keith.

We are probably in late '1929' stages yet....there is a long decade ahead of us.

I don't think the 'effects' of the housing bubble are yet to come through both on a national and international scale.......that for me is where the interesting things will start happening.

Will the Fed save the dollar, ala Volcker?

What is happening internationally ?

Deflation, is it coming ? If so when ?




Still lots of stuff to talk about Keith.

Miss Goldbug said...

Homeowners are still "digesting RE doesnt always go up". I don't think it will truely sink in until mid summer when they finally realize that something is terribly wrong when buyers can't qualify.

It might be a good time to look forward to what will happen to our economy, and discuss what this country can manufacture besides candles & widgets.

My personal thoughts are we need to manufacture reasonably priced solar power panels-and I'm not talking about the expensive flexible sheets of solar cells that private companies are producing as we speak.

This country needs solar panels that are cost effective to install that will last longer than 10 years.

This country needs to manufacture again-or we will become a third world country for sure.

Anonymous said...

"Housing Panic: How I Learned to Stop Worrying and Thrive among the Ruins of the Housing Collapse."

A blog dedicated to helping HP'ers navigate through this thing step by step

Anonymous said...

In SW Florida we suddenly have a rash of arson fires -two or more a day. Surprise, surprise. They just went to the grocery store for an hour and when they came home the house was on fire.

An emergency responder told me that sometimes they get to the scene of the fire and the insurance adjuster shows up while the fire is still burning.

My business offers fax service. Interesting how many faxes I am sending to insurance companies because dump trucks (owned by out of work construction workers) are burning up.
Also, I may make a fortune faxing letters by distressed homeowners to Countrywide.

So, my prediction is that the debt problem may just burn itself out.

I am glad I don't work in the insurance industry right now.

lagwagon said...

I would like u to focus on efforts by politicians to bail out the failing mortgage industry.

I didn't participate in this financial mess but something tells me my honest and valuable contribution to society (my job and taxes) will be used to save these dishonest crooks.

FlyingMonkeyWarrior said...


Big machines, big aspirations
Applied Materials bets its solar-production gear will reshape market

By Matt Andrejczak, MarketWatch
Last Update: 12:16 AM ET Mar 5, 2007

SAN FRANCISCO (MarketWatch) -- For over 40 years, Applied Materials Inc. has helped electronics makers cut product costs. It's done it for computer-chip makers, flat-panel TV makers and consumer-electronics providers. Now, it's taking the same playbook to the growing solar market.
Charlie Gay, who runs the company's solar machine group, likes to tell this analogy between the solar machine market and semiconductor-equipment: Due to the costs of transistors and the equipment that made them, it would have cost $1 billion to make an iPod 30 years ago.
"We're going to make a huge impact on cost reduction for solar," bets Gay, who Applied Materials plucked from nearby solar firm SunPower Corp. to run its show. "We're on a very predictable learning curve."

Jip said...

Keep providing access (links) to information the MSM is STILL trying to bury. It seems to me they are either:

1. Trying to make the problem smaller than it seems


2. Giving us the latest about Anna Nicole and/or Britney.

Anonymous said...

just think that at 15% interest on a 20 year treasury, and saving 50% a year, i might recoup the loss in purchace power, and inflationary price increases moneys lost, with my lending to house buyers over the last 10 years in about 12 years!!!!!, aint gonna happen

Anonymous said...

if house prices, take the 10% increase needed to end the borrowers problems, and stay there for 12 years

Anonymous said...

industrial development bonds from the railroad agency, two birds, one stone.

Anonymous said...

night work, rock miners??

Anonymous said...

prices are still way too high. They need to come down by at least 50%.
What has really been accomplished other than a lot of words being printed and many people being foreclosed on?

Prices CANNOT come down. The lenders are not going to allow a house to be sold for 50% of the loan amount! All the FB's can do is wait for the Sheriff to knock on the door.

Anonymous said...

equal to bullets, in the next great depression???

Anonymous said...

jrinlv- Don't worry, the Vegas crash is coming. The pressure is just building right now. Prices are down 5.8% in the last 12 months, and the inventory is up 31%. See here:

As for what we should do next:
Lobby to make creative mortgages illegal. Only fixed mortages with 20% down. Use the KISS method, nice and simple, predictable. If you can't afford that, then keep saving, baby.

Miss Goldbug said...

Thank you FMW. This is a very interesting article about Applied Materials!

I am a real fan of solar power. Finally, a company that is working hard on improving the cost factor.

FlyingMonkeyWarrior said...

You're welcome.

Anonymous said...

HP should become an advocate time tested and proven strategies of sound economics. One thing i can say about most Hper's is that they know economics. It is evident that the MSM and other economist are paid hacks that only peddle the latest bubble craze with absolutely no regard for honest reporting and guidance.

mcarleton said...

For Act III we need to remind people
that the bad guys will not be the same. They need to watch for people
who will take advantage of FB in
thier time of need.
The list includes forclosure voltures, gold bugs and pump and dump artists. We have to make sure we just
don't keep fighting the last war and
let people fall victim to new dangers.
We need to teach people how the realestate market will work from
here on out. Number one will be
to not chase the market down.
Choose a price that will bring in
buyers today rather then hold out
for bigger number only to have to
cut and cut below what you could
have sold it for early on. Time
is not on your side. For many,
holding pat might be the best move.
Remember it is those who follow the
herd who do the worst.

Anonymous said...

FMW ROCKS this site!

FlyingMonkeyWarrior said...


Anonymous said...

the crash is far from over. It still needs 3-5 years to fully unwind. That being said I have been surprised at how quickly the subprime market has unraveled.

Housing crash will be around until housing is again a "good investment", not that an illiquid asset with no stop loss is.