Now THAT'S what I call a real estate crash! Lennar dumps $1.3 billion of land for $525 million (60% off)

Nah, real estate prices never fall.

Nah, there was no real estate bubble.

Meanwhile, the lesson for everyone from today's Lennar firesale should be:

GET OUT! GET OUT NOW! GET OUT AT ANY PRICE!

And for anyone interested in catching a falling knife (I know, it's just soooo tempting to buy things during 60% off sales), just remember, there's no rule that says it can't fall more. Look to the fundamentals. Look to the historic ratios. We're regressing to the mean. And the mean is still a long, long way down.

And just think, that's a 60% fall in a matter of months. Can you say panic?

Lennar sells homesites valued at US$1.3B for $525M as it becomes "near assetless"

MIAMI - Home builder Lennar Corp. formed a land investment venture with Morgan Stanley Real Estate to acquire, develop, manage and sell residential real estate, with Lennar selling properties valued at US$1.3 billion to the venture for $525 million.

The acquired properties include about 11,000 homesites in 32 communities throughout the United States, consisting of raw land as well as partially and fully developed homesites in California, Colorado, Florida, Illinois, Maryland, Massachusetts, Nevada and New Jersey.

As of Sept. 30, the acquired properties had a book value of about $1.3 billion for one of the country's largest home builders.

Don't think a historic real estate crash is underway? Tell that to Hovnanian who just lost 75% on land in 24 months

Folks, when you pay $85,000 and sell for $20,000 two years later, that's an epic, historic, mind-blowing meltdown.

And makes you wonder, after falling 75%, can it fall even farther? Big message is don't buy real estate for 10% off or 40% off. We're going to see firesale pricing that'll make your head spin. 75% off. Wow.

Geesh. This is amazing.

The following is a transcript from today's HOV conference call:

Stephen S. Kim - Citigroup Smith Barney

That’s what I thought. Could you give us a sense, or maybe what magnitude it was lower than what you had initially paid?

Ara K. Hovnanian

Well, we did not buy all of that land in one transaction. These are, if you remember, scattered lots in that area so they were literally bought in small increments on a regular basis.

To give you an idea on how significantly that market corrected, at the peak lot transactions happened in one of the areas at about $80,000 a piece.

The market continued to come all the way down. We wrote it down, and not all of ours, by the way, was purchased at $85,000 but that was where it was at the peak.

We wrote down the values to the low 20s, and I think the contract amount off the top of my head came in just slightly below that level.

Stephen S. Kim - Citigroup Smith Barney

Thank you. That’s what I was looking for. Thanks a lot.

Donald Trump's buddy Kiyosaki knows what's coming, says get to gold and cash now

I can't stand the guy, I think he all about publicity and selling books, but damn, he's spot-on here. Just like he is about the entitlements disaster awaiting America, and some other great points. Don't throw the baby out with the bathwater they say. And if Mr. Real Estate, Mr. Donald Trump Buddy, says get to gold and cash, well, there's something there...

I wonder if he told The Donald?

Throwing Good Money After Bad - All booms eventually go bust.

We all remember the stock market crash of 2000, and most of us remember the real estate crash after the implementation of the 1986 Tax Reform Act. Today, many people are anticipating another real estate crash.

Unfortunately, despite our understanding of booms and inevitable busts, it's always near the top of a boom that "dumb money" buys in. Currently, this has set the scene for a potential market bust of which few people are aware.

About a year ago, I wrote a Yahoo! Finance column warning readers that the real estate boom was over. How did I forecast the end of the boom? I got my hot tip from the cashier at my local Safeway supermarket.

While she was tallying the cost of my apples, broccoli, and steaks, she handed me her new real estate agent's card and invited me to call her for my next real estate investment. Moments later, I was home writing that column. As my rich dad used to say, "When dumb money chases smart money, the party's over." Needless to say, many real estate agents and investors wrote me nasty notes.

For the next two years, I'm cautioning people to watch their ratios between good debt and bad debt, and keep liquid reserves such as cash, gold, or silver.

Good debt is debt that makes you rich. An example of good debt is the debt on the apartment houses I own. That debt is good only as long as there are tenants to pay my mortgages. If tenants stop paying their rent, my good debt turns into bad debt.

Most people don't have good debt -- all they have is bad debt. Bad debt is debt that makes you poorer. I count the mortgage on my home as bad debt, because I'm the one paying on it. Other forms of bad debt are car payments, credit card balances, or other consumer loans.

The good news is that during deflationary times, smart money reenters the market, so crashes are great for smart people with smart money. Instead of listening to the optimistic economists, then, you should eliminate bad debt and improve your debt-to-equity ratios on good debt.

HousingPANIC reporting from Holland - home of the tulip bulb craze of course

The carma here is amazing - a bubble blogger reporting from the home of the mother of all bubbles - the Dutch tulip craze of 1636 - 1637. I walked around today admiring the tulips for sale - pretty darn cheap. And I could feel the spirits of people caught up in a financial mania of untold proportions four hundred years ago.

"What were they thinking" any sane person would ask. As that sane person takes out an option-ARM, no-down, no-doc, teaser rate mortgage to buy a $1.2 million apartment.

Get it?

Looks like I missed more of the total meltdown in the subprime sector today. Good god it's gotten Depression-era ugly for that sector hasta pronto. I'm short LEND and CFC via my July puts so very nice. Maybe I'll go buy some tulips.

Moderation will be a bit slow next 48 hours. I'm back in bubble-central London Sunday.