Marc Perkel Rantz

I have always thought taking out loans is equal to having buttsex with Satan.

You'll never catch me with a mortgage. I simply refuse to let society buttfuck me. I'd rather live in a rental home until automatic housebuilding is here:

http://www.laweekly.com/ink/03/30/quark-wertheim.php

http://www.usc.edu/uscnews/story.php?id=10009

And you guys think YOUR houseprices are bad... In Holland, you pay TWICE as much, because our land per square meter is much higher (higher relative population and all).

The house I have lived in for the past 26 years of my life is pretty big, and it cost 200.000 guilders several decades ago. This same amount now buys you a tiny appartment in a bad neighborhood.

How does this work? Have we all started making 10 times as much money these last few decades?

I think not. Methinks the common people are simply getting fucked really bad by the upper 1%.

Sorry to get off topic a little, but I just found some interesting info on AmericanProgress.org. This comment:

Despite a $480 billion deficit, "the number of pork projects skyrocketed from under 2,000 five years ago to 9,362 in the 2003 budget. Total spending on pork projects has correspondingly increased to over $23 billion." - Heritage Foundation, 12/3/03

Noted that it is 2004, but still, the amount of pork projects has increased almost 5 fold. Give me a break, this administration isn't for corporate interests, bull. For those who don't know, a pork project is: "Government funds, appointments, or benefits dispensed or legislated by politicians to gain favor with their constituents".

Again, don't know if anyone has been following this, but I really feel this says it all.

http://www.us-election.org/wv-results.php?region=asi&country=iq

Yah, these people obviously love us, and will love us even more if we re-elect bush.

A little good doesnt outweigh a lot of bad...

Ok, on comments where I am being sarcastic I will put (sarcasm) from now on, jesh. I didn't mean that they love the country, hell, they all are voting for Kerry, 8-23 yesterday. And think, most people that can afford, get internet access at this point over there are students/government/etc. not the common people. Just think of the numbers, if they could cast their vote on there.

It has to do with MONEY SUPPLY. The amount of currency has doubled in the last 14 years, therefore the cost of housing has doubled. It is all relative. ALL is still the same. But, I agree that the price of housing is going to collapse in this country. AND I CANNOT WAIT FOR IT TO HAPPEN. I bought my five bedroom/ three batroom house for 237,000 in 1997, which is now valued at 550,000 plus. I think it is RIDICULOUS. Like the NASDAQ, houses will trade hands at 50% of todays prices. I was just on vacation in Northern Wisconsin. Stayed at my in laws house. Four bedrooms/ three baths on the second biggest lake in Wisconsin. They bought it in 1991 for 190,000. The guy across the bay just payed 420,000 for (are you ready for this) a two bedroom seasonal cabin built in 1925. OUCH! He told me that he hopes to sell it in a couple of years for more money. Sounds like the greater fool theory to me.

The Real Estate Bust of 2006

By Gabor Sandor Acs

The real estate market has peaked, in fact it is already rapidly barreling south, but don’t tell that to the Federal Government, Greenspan, Bankers, Mortgage Brokers, or even home sellers. They don’t want to hear it. Rather they would like to look at the market as more of being in a pause, rather than in steep decline. Let us look at all the contrarian indicators in the market and sift through the false data being bandied about and make some real sense out of what I predict will be the biggest loss in dollar terms in the history of this planet.
Two years ago bookstore shelves were stocked full of real estate books. Literally thousands of books telling you how to get rich buying real estate were published in the last ten years by almost every major publishing house in America. Those book sales peaked about six months ago as the reading public began watching the Fed raise interest rates and maintained a stance that it would continue doing so in the near term.
They included titles such as Real Estate Miracles, Why Real Estate Will Go Up in Value for 10 Years, The Baby Boomer Vacation Real Estate Boom, The Weekend Millionaire’s Secrets to Investing in Real Estate: How to Become Wealthy in Your Spare Time, Flipping Properties: Generate Instant Cash Profits in Real Estate, How to Buy Real Estate and Walk Away with Cash, and the aptly titled Real Estate for Dummies, and of course those old reprints of titles like No Money Down, How I turned $1,000 into Millions, and other long time favorites of hucksters who actually make more money selling their books and seminars than from investing in real estate.
After the stock market crashed in 2001, the masses had grown disinterested in stock speculation and were shifting like a herd of thundering bulls rampaging toward the cliffs of real estate moguldom. Those who have seen the edge of the cliff know that now is the time to sell, sell, and sell.
As a result of the herd mentality of investors, the past 5 years have seen home prices in New Jersey more than triple in value. Those who bought for less than $300,000 have seen their homes rocket upwards toward a million dollars.
This type of speculative bubble was often fueled by neighbors who came together in little community cabals by putting their homes up for sale in tightly knit conspiracies so that a high asking price on one house would allow serious sellers to make more money when someone new coming into the community bought them. Then when they did sell, those who were just “testing the market” took their homes off the market, creating less supply, thus fueling a spiral of upward price speculation.
Many people didn’t sell because they couldn’t afford buying another house on the income they had, regardless of the capital gains they may have made. They wouldn’t ever sell despite multiple offers and spiraling out of control price movements. They were in on the game, just like the real sellers who were cashing in and trading up. Many opted for home equity lines of credit instead, while they continued to enjoy watching their homes ratchet skyward.
Many vacation condos have also tripled in value. Some smart salesman began pitching real estate investors on a false “new rule of thumb in real estate investment” stating that it is considered a good buy if you can purchase it at “100 times what you can get for a monthly rental payment.”
Some Beach properties have peaked going at almost triples of that multiple. It was the same trick used by stock promoters and brokers to get investors into the stock market, only the vehicle was now real estate. The only reason people were buying Beach properties was for the appreciation, but that appreciation has stalled over the past three months and the real data has not hit the markets yet.
Most people who bought investment property during the past year didn’t buy it as a rental investment. Properties with 1% cap rates just do not make any financial sense when treasury securities with almost no risk are going for 4-500% greater percentage compared to percentage returns. These “investors” bought at the tail end of the speculative price appreciation curve. Try telling people that they are seeing the tail end of a bubble, and they come back with defenses to validate their own incorrect perceptions of the market.
Some think that the baby boomers are going to retire and won’t stop buying the properties, but they already have. Many have bought homes and built up huge equities in this last decade of price run-up and even took out home equity loans to pay off credit cards, buy new cars, and second homes, and jump into the national land speculation, particularly in California which didn’t learn its lessons from the 1990’s bust that left 50,000 homes going into foreclosure per month for almost three years.
What fueled the real estate craze was the low rates of interest Alan Greenspan and company had given America in the aftermath of 911. The Federal Reserve knew twelve months ago that real estate was getting totally out of hand.
The signs were on the wall written in the Minutes of the December 2004 FOMC meeting which revealed:
“Some participants believed that the prolonged period of policy accommodation had generated a significant degree of liquidity that might be contributing to signs of potentially excessive risk-taking in financial markets evidenced by quite narrow credit spreads, a pickup in initial public offerings, an upturn in mergers and acquisition activity, and anecdotal reports that speculative demands were becoming apparent in the markets for single-family homes and condominiums.”
While short term rates continue to rise, longer term rates have not experience rapid increases in correlation, yet. Many have forgotten the lessons of the Savings and Loans Scandals and the bust it caused. Short term rates went above long term rates, and what followed was a major consolidation in the banking industry. The blood letting had to occur to pave the way for the next economic expansion.
In testimony to Congress about the economy, Alan Greenspan pointed out that rising real estate values have kept consumer spending going and have contributed to our low national savings rate. He said:
“The sizable gains in consumer spending of recent years have been accompanied by a drop in the personal saving rate to an average of only 1 percent over 2004--a very low figure relative to the nearly 7 percent rate averaged over the previous three decades. Among the factors contributing to the strength of spending and the decline in saving have been developments in housing markets and home finance that have spurred rising household wealth and allowed greater access to that wealth. The rapid rise in home prices over the past several years has provided households with considerable capital gains. Moreover, a significant increase in the rate of single-family home turnover has meant that many consumers have been able to realize gains from the sale of their homes. To be sure, such capital gains, largely realized through an increase in mortgage debt on the home, do not increase the pool of national savings available to finance new capital investment. But from the perspective of an individual household, cash realized from capital gains has the same spending power as cash from any other source. “
“More broadly, rising home prices along with higher equity prices have outpaced the rise in household, largely mortgage, debt and have pushed up household net worth to about 5-1/2 times disposable income by the end of last year. Although the ratio of net worth to income is well below the peak attained in 1999, it remains above the long-term historical average. These gains in net worth help to explain why households in the aggregate do not appear uncomfortable with their financial position even though their reported personal saving rate is negligible. “
“Of course, household net worth may not continue to rise relative to income, and some reversal in that ratio is not out of the question. If that were to occur, households would probably perceive the need to save more out of current income; the personal saving rate would accordingly rise, and consumer spending would slow. “
Alan Greenspan's statements demonstrate that the Federal Reserve was worried about the real estate market back in 2004. It is now the tail end of 2005 and short term rates have been raised many more times since those statements were made, but the market has not quite realized the impact that higher rates are going to have.
They saw what effects the fallout of a stock market bubble had on the economy and are most likely worried that the implosion of a real estate bubble would have similar - if not worse - consequences. But instead of keeping rates steady, they raised them, knowing that eventually the market would some day realize it was time to sell, and the blood letting could begin.
Under Alan Greenspan’s tutelage, which ends at the end of January 2006, the Fed has always acted in panic and overreaction. In the 1990’s, interest rates were lowered too low - and kept low for too long - in reaction to several global economic crises in Asia, Russia and other markets.
At the end of 1999, the Fed printed money like madmen in fear of the phantom Y2K computer crisis. That created the stock market bubble. When that bubble began to unwind the Fed lowered interest rates to 50 year lows in fear that that process would create a deflationary depression.
Immediately after 911 the Fed pumped $200 billion into the market in one week to prevent the stock market from further imploding and the financial markets rippling effect around the globe from creating a backwater tide of downward spiraling cesspools of chaos.
The Fed has been worried that the housing market was getting too hot, because they have kept interest rates so low, so despite raising short term rates, the bond markets have been slow to respond. The Fed thinks in short term cycles and cannot see the long term, it is strictly near sighted, always has been, and always will be unless politics are removed and separated from the economic engines of the military financial media complex, which is highly unlikely even in the long term.
At the end of December 2005, the markets have come full circle. In 2000 Greenspan promised to create a “soft landing” for the economy and stock market. Now he is about to retire, and his successors will be left with the responsibility of trying to do something similar for real estate and more importantly the dollar. As multi-national investors got out of the stock market, they shifted into the dollar which rose, then when the dollar wasn’t giving such appreciative returns, they shifted into REITs and real estate while the consumer quickly followed suit. That cycle has finally come to an end.
The biggest danger to the American economy is not the current account deficit. The biggest danger is foreign investors getting spooked at three things coming to the forefront of economic issues at the same time. A sudden downward spiraling in the value of the dollar, the necessity to prop up interest rates to maintain and chase the value of the dollar upward, and the subsequent immediate short term collapse in real estate values, which were previously propelled upward by low interest rates, huge influxes of cash injections into the economy by deficit spending, and the national debt ballooning, forecasted to be $10 trillion by the year 2008.
These three confluences in the national economy are triggers for foreign investors to dump the dollar, push long term treasury rates upward, and pull out of real estate industry related stocks en masse.
Greenspan also said that it “will be essential” to “address our current account deficit without significant disruption. Besides market pressures, which appear poised to stabilize and over the longer run possibly to decrease the U.S. current account deficit and its attendant financing requirements, some forces in the domestic U.S. economy seem about to head in the same direction. Central to that adjustment must be an increase in net national saving. This serves to underscore the imperative to restore fiscal discipline.”
The only way to increase the savings rate is to give investors better returns on their savings by raising short and long term rates. That short term rates have not impacted longer term rates as much is an anomaly according to some economists, however, the real impact of long term rates increasing has not yet reached the masses. Long term rates are relatively low in comparison to the 80’s and 90’s, but that is all about to change. The perceived and projected equilibriums in those three factors have been shattered by enough people in the know to cause a major shift in global investment flows.
Greenspan was trying to increase the national savings rate and has already succeeded in dampening down speculation by raising short term interest rates. The banking industry is still paying very low rates on savings such as short term deposits, and medium term certificates, which rationally have been lower than yields on government securities. This again is the tail end of the short term rate increases and banks are going to follow suit by raising their yields on such savings accounts just as the same events took place immediately prior to the Savings and Loan collapse.
What happens with the dollar and long-term bond yields as short term rates are ratcheted upward is that it maintains the illusion of equilibrium in the international cash markets, but in fact the balance of values swings toward higher long term rates, causing old existing bonds to plummet in value, thus forcing short term rates ever and ever higher in a spiral which eventually brings about the blood letting of trillions of dollars of inflated values out of the real estate markets.
If the adjustments do not go in an orderly fashion then the dollar will break its equilibrium support levels and fall rapidly, setting off a panic that will cause long-term interest rates to shoot up quickly. Thus for the past year and a half, when the discount rate was once as low as 1%, it is now expected to surpass 5% immediately after Greenspan’s retirement in January of 2006.
Such moves in interest rates have already set off a chain of reactions in the global economy, with British, Canadian, Australian, New Zealand, European and even Japanese central banks raising their rates, thus propping up their own respective stock markets, while adjusting existing bond prices to gradually drop and yields to rise, eventually leading real estate values in hot speculative markets to collapse, and consumer spending to slow down.
In the end, all of these things lead to a higher savings rate and gets the current account deficit in order, thereby paving the ground for the next boom - but it is going to be a very bloody process. And it will happen over the course of a decade which to some may seem a slow and painful process.
Greenspan and company have demonstrated that it is very difficult to perfectly manipulate and control the world’s financial markets. Despite the pressures put on China, their currency is still somewhat artificially pegged to the dollar. The Chinese will not be sitting idly by while their US dollar denominated assets gradually erode in value.
When the NASDAQ was at 5,000 the market roared, many praising Greenspan as a financial genius, but the years since then have proven how very difficult and unpredictable it is to try to bend the economy and the behavior of investors all over the world to your will through moving interest rates around and electronically crediting money into the internationally networked and linked global banking system.
When a market is manipulated there is always going to be some minority winners and a majority of many more losers. Those losers when they finally realize what’s up or down won’t just sit on their hands and stand by to continue getting walloped. They will adjust.
Those who invested in real estate will sell out and take their profits as quickly as they can, the sooner the better, but there comes a point when the number of sellers, marketing times, and supply exceed demand. We have crossed the Rubicon two months ago already. Economists and real estate pundits are just now getting around to scratching their heads and saying, “Hmm, maybe it is time to sell.” They have not quite realized it is really dump time if profits are to be saved for the next wave.
Foreign central banks will not sit on their dollar reserves if the dollar continues to decline in value and they will raise their own rates in response to international capital flows, and will dump the dollar. Ask Buffet and Soros, they have been in and out of short term swings in the dollar for the past 18 months. More than likely they will not reveal their true positions in the dollar, they are not required to do so, nor are the Central and Federal Reserve Banks.
Foreign Central Banks are adopting a more diversified strategy across many markets, rather than putting most all their eggs in the dollar basket. Geopolitical events have pummeled the reputation of the United States around the world, further causing a drop in dollar confidence levels.
We have already passed the most important inflection point in the economy and the stock market. The market has been slowly rising since the start of the Iraq war in 2003. It's been rising because of low long term interest rates, low taxes, and government stimulation of the economy through the addition of $2 trillion in debt in just the past 24 months.
All inclinations of Congress to pass balanced budgets and implement fiscal responsibility have been voted down. Smart Congressional leaders don’t want to take the blame for the impending implosion coming in the real estate markets and it is really a non partisan issue but will be mostly blamed on the Republicans for their handling of the national debt and increased military spending.
The DOW is quietly approaching new all time highs as bond investors gradually and slowly are getting out of long term bonds and putting them into dividend paying and appreciating stocks as a result of shifting tax policies and strategies implemented years ago.
Real estate stocks, builders, and REITs have made their climatic final rally, while the dollar is poised to break lower against all major foreign currencies early in 2006 and gold is preparing to launch wave three of its bull market, recently coming off of 18 year highs.
Long-term bond yields have been stable for six months despite the Fed's tightening cycle. One would expect bond yield’s to be rising. This is about to happen on a massive global scale and will not be controllable by the Fed. As Greenspan has noted in the not too distant past:
“This development contrasts with most experience, which suggests that, other things being equal, increasing short-term interest rates are normally accompanied by a rise in longer-term yields…. Some analysts have worried that the dip in forward real interest rates since June of 2003 may indicate that market participants have marked down their view of economic growth going forward, perhaps because of the rise in oil prices. But this interpretation does not mesh seamlessly with the rise in stock prices and the narrowing of credit spreads observed over the same interval…. For the moment, the broadly unanticipated behavior of world bond markets remains a conundrum. Bond price movements may be a short-term aberration, but it will be some time before we are able to better judge the forces underlying recent experience.”
It makes sense for bond yields to be so low when the inflation rate is around 3 ½%. Short term real rates have only recently been adjusted above that inflation rate, and the Fed is still playing catch up to the 10% annual increase in money supply over the past 24 months.
Bonds have been slowly making a giant, multiyear top where day-to-day action doesn't become transparent or self-evident to the short term traders, in the same way that bond yields took forever to come down in the early '80s. Mortgage rates will head back up to about 14% by the spring of 2014 or sooner, just as they did in 1984, mostly due to inflation fears. On average you will see long term rates rise a quarter point every quarter, if not faster.
After a 25-year bull market in bonds, the top just takes time, in the same way that after a 40-year bear market in bonds, the bottom took a long time to flesh out. In any case interest rates are going higher in this country, even as the economy slows down, because of what many expect to happen in the currency market ultimately.
Bonds have been in a secular bull market for over 18 years. It takes time for such markets to come to an end and change trend. The bond market is a 50,000 pound gorilla. How timely with the release of the new King Kong film in Hollywood. Money coming out of bonds is not so quietly going into gold, silver and other metals. Copper has especially appreciated more than any other metal in the last decade.
Major secular trends are in the process of changing the dollar and the bond market. The current environment has already passed a major inflection point.
The bond market has already begun a bear market, and bond yields will continue to rise over the next 5-10 years along with growing inflation, higher commodity prices and a falling dollar.
The dollar decline will continue, not so much because older bonds at lower rates will become worth less, but because the Fed will need to boost its pumping of money into the banking system to continue to make a market in the bonds being dumped back into the US capital markets by foreigners who have lost faith and thereby are reluctant to grant more credit to and in America. This inflationary spiral can only be arrested with a major correction in the real estate markets.
Old school real estate professionals will remember 2005 as the end of the boom, the year when the housing market let out some steam and began to fall back toward Earth. Some super-heated markets cooled as interest rates climbed, for-sale inventory grew and home-price increases moderated. But this was only the beginning of the end of a long cycle of inflation in the housing markets.
Grreenspan described “signs of froth" in the real estate market, where prices have in some instances risen to "unsustainable levels," adding that, "we certainly cannot rule out declines in home prices, especially in some local markets." His statements sent real estate industry groups scampering to shore up public confidence in the health of the market. But those were empty words and many real estate agents are now realizing that various markets are indeed showing signs of serious trouble.
Inventory of for-sales homes grew significantly in the last half of 2005 -supply of for-sale existing homes grew by almost 25% percent on a national basis. Downward price adjustments of 10 to 20% were not unheard of for those who had to sell for relocation or employment loss reasons. It was the trigger that set off the wave of resale houses coming on the market as home construction was also curtailed by continued increases in short term interest rate hikes by the Fed. Continued layoffs in the manufacturing sector, particularly in the automobile industry and other heavy industries created new pockets of unemployment, forcing many homeowners to sell rather than hang on to the next wave of appreciation.
The Realtor association's chief economist, David Lereah, said in a statement in late November 2005, "We are returning to more balanced markets between home buyers and sellers, one that places buyers on a more even footing. Housing activity has peaked and is coming down a bit, and we expect further cooling in the coming months."
He was trying to be modest and conservative without triggering any type of selling panic. The reality was that mortgage applications for new home purchases were already heading down by December a whopping 25% from year over year levels. The refinance boom had already ended months earlier with refinances down about 50% from previous year’s levels.
Lereah and several other industry economists had tried to predict a soft landing for the U.S. real estate market as opposed to a bursting bubble, though economists have also acknowledged that some local real estate markets could suffer more dramatic slips as the market turns. It was the same story over again, instead of the stock market; it was now real estate about to take its long awaited beating.
As for new homes, price increases were on a slower pace than in 2004. While the median price for new homes jumped from $195,000 to $221,000, or 13.3 percent, from 2003 to 2004, the median new-home price for all of 2005 was up about 1 percent compared to 2004.
New-home sales increased about 10.8 percent from 2003 to 2004, that rate of increase slowed to about 5 percent for all of 2005 compared to 2004. Clearly the boom was over.
During the first half of the 1990s, year-over-year house-price increases were more commonly in the range of 2 percent or less. What the markets are not expecting however is that drops in certain markets impact other markets by virtue of the Internet and rapid diffusion of information, thus further spreading the wave of resale homes coming on the market, particularly condos and single family homes around the country, eventually resulting in losses for Fannie Mae and Freddie Mac, the former pillars and stalwarts of the $3 trillion national mortgage industry.
The cracks in the real estate firmament were signaled as early as Dec. 1, 2005 when Patrick Lawler, a chief economist, noted that "price momentum in the Pacific and New England states, in particular”, had pulled back, and there is "some deceleration ... in a number of the faster-appreciating markets." To those who understood the meaning of deceleration, it meant plummeting housing prices in markets that could no longer be propped up by low interest rates, easy credit terms, along with warm and fuzzy loan programs.
These programs were designed to push individuals that have much lower credit scores or problems making payments in the past to buy new houses. When you extend credit facilities to individuals that are already a credit risk, you simply have delayed the inevitable and asked for trouble. If they had problems keeping up with current payments, only the delusional bankers forced to maintain high sales statistics made them think they would be able to make their payments on their bigger mortgages even if it did erase their credit card debts and car payments and lower their monthly payments for the short term.
The sub prime market at the end of 2005 represented over 50% of new home purchases. Their credit records implied that these were unsophisticated buyers and often overpaid, further fuelling the home price spiral that led to the real estate bubble.
To keep the market going, several banks had started to market a new 40-year mortgage. The ploy was simple; one was made to believe that the payments were more affordable simply because they could be stretched by an additional 10 years.
Sooner or latter people began to wake up and question the need to tie a rope around their necks for approximately half of their life. The other factor in some of these mortgages, “negative amortization”, only made sense in a rapidly appreciating market.
As the market turned, further adding insult to injury was the compound accumulating deferred interest that ate away at dwindling equity values, eventually forcing many of the larger lenders such as Wells Fargo, Washington Mutual and Countrywide to accept short sales when homeowners were ready, willing and able to bail out of their mortgage debts.
To gain a greater market share into a rising tide of free and clear homes owned by older retired persons, the invention of the reverse mortgage became the new capitalist tool to go after little old ladies or empty nested widows whose homes were their only major asset.
Aside from the price gouging and overcharges that were rampant industry wide and were punitively punished by some courts in some jurisdictions, these programs gained favor with the uneducated elder population who became sold on selling their wealth to the bankers.
These were loans where the lender paid the homeowner in exchange for a part of the equity in the house. The costs associated with this type of financing ran as high as 6% of the value of the loan. These types of mortgages were mostly for retired individuals, and what better market to target. These were the individuals that usually had very decent levels of equity in their houses. They were made to look very attractive, because the borrowers only needed to be at least age 62 and there were no income requirements. It was a subsidy plan which basically took back the artificial equity that had been created by the bankers for so many decades.
In addition, they were tax-free and it did not cut the size of their social security or Medicaid benefits. This type of financing only delayed the inevitable. When one had to take on additional credit to make payments or just to be able to survive, the end was already very near. The actuaries hired by the banks knew this very well. As the older generation was sold on this program, at the national level, higher bond prices caused the government to borrow even more money just to keep the financial pyramid scheme intact.
The retired and elderly were the last group that was forced to take on additional new debt. They were the unchartered water and last unconquered territory of the bankers. They had worked hard all their lives and just wanted to be able to sit down and enjoy their Golden years. But increasingly the heavy chains of the colossal masses of credit crunching career corporate financial counselors found a way to imprison them just as they have completely imprisoned most of the younger generation.
Real estate taxes had gone up significantly over the previous decades, also fueling city and county coffers with much needed cash after so much deficit spending and issuance of municipal and tax exempt government bonds; so much so that it was having an impact on housing purchases. Many potential new homebuyers were thinking twice before buying new homes because of increased property taxes.
As the herd grew in proportion to the beliefs that real estate was the last bastion of safe investing, most everyone thought that real estate was a good investment and prices would just keep going up. But herds have limited if not very short term memory losses. They rarely look into the rear view mirror to see where the economy has come from, let alone are they able to predict the future unless they are keen on true economic theory and practice.
The average American consumer, despite all the talk of their better educations, have no idea or real understanding of how interest rates affect the real estate market, or how illiquid the market can become once prices start to plunge, which they have. Many of these people are basing 90% of their decisions on faulty information and illusions that real estate prices are only going to go up in the future.
Retired folks who have actually managed to pay off their homes fully or are close to paying them off have been more recently tricked into taking money out of their homes. People who could barely meet their monthly payment obligations were being enticed into buying new homes with programs that did not verify their ability to make the monthly payments. Some even bought on the impulse that they would be able to sell at a profit and buy a better house with the cash and capital gains. It is already too late for that.
There were programs that would help individuals with the down payment. When you target the groups in both extremes of the spectrum, it is usually indicative of a long-term top. As the real estate market crash envelops the nation, it will not be a pleasant sight; all you have to do is look to Argentina for a recent real life example. Almost overnight billions of dollars worth of properties that were worth trillions dropped in price and could not be sold for half their original value a month earlier.
Many years later, individuals were still struggling to sell houses for 1/3 of their former values. The high-end real estate market had virtually come to a halt. There are no mortgages in Argentina; everything is dealt with on a cash basis. Some owners of a 5 million dollar mansion were still having problems trying to get anything over $500k for their place.
Imagine what would it would be like if we had no mortgages in the US. Real property values would actually be worth less than 1% of their current “market” prices. There would be no leverage factor, no returns on investment from leveraging assets, and no inflation factors creating artificial values being propped up annually by monopolists at Fannie Mae and Freddie Mac.
Real estate agents in slowing markets have said that sellers are in some cases unrealistic about the value of their homes and the continuing rate of price appreciation, and this has led to high listing prices, fewer offers and longer time on market. Some buyers, they say, are getting priced out of the market by rising prices and interest rates.
There are some lessons from the history of the Florida Real Estate Craze during 1926 when the amount the market declined from peak to bottom was as much as 80% in some instances. This was before a national mortgage market was developed by fiat and endorsed by Congress through quasi government organizations that have come to dominate the real estate landscape in America.
Land that could be bought for $800,000 could, within a year, be resold for $4 million before crashing back down to pre-boom levels. The prices were so inflated that to buy a condo-style property in 1926, you would've had to pay the same as you would now have to pay for a luxury home in the guard-gated communities in Miami around $6 million, without adjusting for inflation!
In the 1920s, the United States of America was chugging along like the British Empire of the 1700s, and it was only natural that people were beginning to believe such prosperity was infinite. But it wasn't the stock market that was the recipient of a bubble. It was the real estate market.
In 1920, Florida became the popular US destination/residence for people who didn’t like the cold. Much like California in the 1990’s, the population was growing steadily and housing couldn't match the demand, causing prices to double and triple in some cases, which was not exactly unjustified at that point.
History shows that news of anything doubling and tripling in price always attracts speculators. Once speculative investors began pumping huge amounts of money into the real estate market it took off. Shortly thereafter everyone in Florida was either a real estate investor or a real estate agent, much like California is today.
Unfortunately, the rules are the same whether you pay too much for a stock or for a piece of land: you have to make that much more to claim a profit. This did happen for awhile, and land prices quadrupled in less than a year. Eventually, however, there were no “greater fools” to buy the disgustingly overpriced land, and prices began to adjust ever so subtly at first until reality sunk in.
Speculators realized there were limits to the boom, and not knowing when in reality it would end, began to sell their properties to solidify their profits while they could. They began to cut their prices and as they did, the rest of the market, much like the herds that brought them into the run up, realized they were heading for a cliff and suddenly everyone wanted to avoid falling off.
Then everybody simultaneously saw the writing on the wall, and panic selling ensued. With thousands of sellers and very few buyers, prices came down with a sickening thud, twitched a bit, and then crawled down even lower. This problem is compounded even further when mortgages are involved.
As property prices drop 10, 20, 30 or as much as 50%, at least 75% of current homeowners are completely wiped out in terms of 90% of their net worth. Some homeowners who took advantage of 100% financing are already under water and owe more than they could get for their homes if they were forced to sell, much like buying a new car off the lot.
Peter Casey, a past president of the Massachusetts Association of Realtors and president and CEO for Prudential Wilmot Whitney Real Estate in Weston, Mass., said, "The market is beginning to normalize, inventory is coming into balance. It's not a frightening market."
What is frightening is the myopia of the past by almost all real estate agents in America. They usually don’t realize they are wrong until it is too late, and by then, the smarter clientele has already moved on to higher ground, greater returns and the next investment fad, way ahead of the herds ready to thunder out of the softening real estate markets.
The Japan real estate bubble was one of the most spectacular in history. At the peak, one square foot of downtown Tokyo land was worth over 1 million dollars. The bubble burst in the early 1990s, about three years after the stock market crashed and still hasn't recovered fully almost 15 years later.
Only recently did the Japanese stock market hit new 15 year highs. Commercial property was the hardest hit with some buildings losing over 80% of value. On average Japanese commercial property was down over 60% from the peak and residential was down over 40%. Extraordinarily low interest rates and massive money creation was not enough to save Japanese real estate, neither will the same prescription work in the US as some are beginning to realize.
After Greenspan retires, he may become a pariah of the real estate markets, as his policies were what set in motion the popping of the bubble, which for all intents and purposes was both created by him and undone by him. His legacy of green spans the entire gamut of financial and economic history. Boom and bust all in 18 years of service to the American public. It is what is happening after he leaves office that many Americans may not fully attribute to his works, again referring to short term memory loss of the herd mentality.
Sellers in Casey’s market area still "have an inflated vision of what their home is worth," he said, though they will undoubtedly adjust to the changing market. "Eventually sellers will catch on," he said. Some of them will not catch on soon enough and be quite hurt by it.
Paul Sears, a broker-owner at Sears Real Estate in Springfield, Mass., said that properties in his market area were taking about twice as long to sell, on average, than in the prior year, though sales are still high. Time to sell from listing dates will eventually extend to over a year as higher priced homes above the $400,000 price range begin to hit the markets in droves. If sales are still high, there are still greater fools out there willing to keep the game going.
An ocean away, in Hilo, Hawaii, some of the local buyers are getting priced out of the market, said Russell Arikawa, a Realtor at Ginoza Realty. "Low inventory and high prices are eliminating a lot of local buyers. They're struggling, searching, searching," he said. A correction in Hawaii of 50 to 60% would be what brings buyers back into reality. Hawaii is another Japan waiting to happen.
Arikawa's wife, Carol S. Ginoza-Arikawa, principal broker and owner of Ginoza Realty, said many of the buyers are from California and other Hawaiian Islands. The market is "slowing down a little bit," she said. Another sign that the market consciousness of the masses is not limited to the mainland as the 100th monkey syndrome has proven scientifically.
In California, Realtor Joanne Dover of East Bay Real Estate Network, in the San Francisco Bay Area, said, homes that are priced right continue to sell quickly, but some sellers are slow to realize that prices are moderating. "The market is still good," though some of the higher-end homes are taking longer to sell, she also said.
The right price in a falling market is usually whatever you can get, and as the holiday season comes to a close, many investors and owners of real property are going to need to make some tough decisions. Hang on for the ride of their lives in terms of equity fluctuation, or get out while you still can.
Some of us can still remember the early 70’s when Boeing laid off thousands of workers and a sign on a south Seattle billboard stated, “Would the last person leaving Seattle please turn out the lights”.
Robert Campbell, a real estate adviser and author of a real estate investment book, "Timing the Real Estate Market," has a much more dire view of the California real estate market. "I believe the California housing market is a bubble that is nearing its final hours," he wrote in a Nov. 14 real estate advisory for Southern California investors. "It could be a rerun of the stock market bubble in the 1990s," he said, adding, "I believe a 40 percent price correction is likely" in California.
His words are being echoed by many real estate professionals in California, particularly those speculators who have already gotten out of the market into other investments. Hard money investors are still doing a good business with all that equity buildup, but conventional lenders are finding it hard pressed to find as many qualified buyers ready, willing and able to pony up millions of dollars for over priced properties as this market softens. Telemarketers are being laid off because do not call lists are making it difficult for them to provide qualified leads.
"As the California housing mania ends and the concept of risk returns to its rightful place, there is going to be a rush for the exit doors," Campbell wrote.
The condo market is coming out of the clouds in some parts of the country that saw feverish construction and investor activity over the past few years and experts have cautioned that some parts of the country are at risk of building too many condo units too fast for the market to absorb.
Many multi-family property owners in Southern California are finding it difficult to sustain rents and justify very low cap rates to lenders who are demanding debt coverage ratios of at least 1 to 1 and still cannot make the numbers work for potential buyers.
Instead, some realtors are trying to market their multi family unit listings as potential condo conversions, which if properly concluded would make more sense, but the timing seems to be off for most of these risky real estate investment proposals, as the lead time for a conversion can be as long as two years to bring a property to market.
The Mortgage Bankers Association, in a September report, "Housing and Mortgage Markets: An Analysis," for example, cautioned that, "historically condos have experienced a greater level of price volatility" than the general housing market.
The report also stated, "The ability of apartment owners and developers to quickly bring a large number of condo units onto the market is a risk factor in certain markets. A sudden ramp-up in supply could lead to a decline in prices."
Real estate has been the hottest asset class over the past five years. Some locales have seen prices double in two or three years and news of investors flipping condos brings back images of the frenzied days of Internet IPOs in the late 1990s.
With the latest rise in mortgage rates there's been an unmistakable shift in sentiment. Recent data from the research firm ISI shows that the dollar value of unsold homes in the U.S. has now surpassed $500 billion, up an unprecedented 33 percent from a year ago. That statistic alone should wake up the national real estate investment community, but it still has not quite sunk in.
As the dollar value of unsold homes on the market surpasses $1 trillion during the next twelve months, the real impact of the words in this article will have finally sunk in to those reading and have a vested interest in their clients getting out as quickly as possible.
As those who know what is really going on want to sell, which already spells big trouble for the housing market, now is an especially good time to ask: How does real estate fit into my long-term portfolio? It only fits in if you are patient and wait for the downturn cycle to near its bottom. That will be several years from now at the very least. That is when you take your cash and pick up the remains left behind by the bad lending practices of the past decade.

It's no secret that housing prices have soared in recent years. The main reason: The remarkable drop in interest rates. But those rates are now gone, at least for the time being, and are not likely to return any time soon with a new Fed Chairman coming on board in less than a month.
Particularly important for the housing market is the real rate. This is the interest rate minus the rate of inflation. The real rate is important for the housing market because the two move in opposite directions.
The yield on Treasury Inflation-Protected Securities (TIPS) provides a measure of real rates. It's currently just 2 percent -- about half its 2000 level. This drop in real rates over the past five years means that the after-inflation cost of long-term borrowing has plunged by about 50 percent.
These declining rates can justify big increases in home prices. In fact, the average price of U.S. single-family homes has jumped from $160,000 in 1999 to $265,000 today, a whopping 66 percent increase.
The real problem is that in certain markets, like Southern California, the bubble has gotten so out of hand that the average price in the San Fernando Valley alone is closer to $700,000, which 97% of Angelinos cannot afford, even those who already own their own homes free and clear.
When 97% of the people in a market cannot afford to buy, the market has peaked and is already heading the other way, and that dwindling spiral is usually marked by patience for those who know the bottom lies somewhere south of $500,000.
Does all this mean that the roof will come crashing down on the housing market? Absolutely! It’s happened before and it is happening as you read this article. There is the domino effect on the mortgage industry that ripples through the national economy. Those factors have not been taken into consideration by many realtors and economists alike.
While many fear rising rates will trigger a disaster for the real estate market, some see a housing market with a firm, concrete foundation. Some believe interest rates are near their peak and that any further rise in long-term rates will be modest. But such sentiments are biased in favor of keeping the status quo. The rates have already been raised. Their impact is just now being felt in the market place. The time lag involved has just begun to sink in.
Much of the lending that has been done in the past three years has contributed to the problem more than anything. No income, no asset loans, no verifications of income or ability to pay, stated income loans where the borrower and the mortgage broker can pick numbers out of thin air, put them on an application and borrow millions of dollars without lenders even blinking an eye are all factors that have triggered the price collapses.
And although historically low interest rates largely explain the jump in housing prices, other favorable developments also played a role. Changes in the tax code in 1998, in a best-case scenario, allow up to $500,000 of capital gains to be exempt from federal tax if realized from owner-occupied homes.
This exemption gave real estate a tax advantage over other asset classes. Rising household incomes and a competitive mortgage market have also boosted housing prices. The recent proposal to enact a bill to eliminate mortgage interest deductions without replacing them with any sort of tax credit might as well put the nail on the coffin of the entire mortgage industry, the construction trades, and the housing sector. That is why the national association of home builders is so adamantly opposed to its passage.
But this doesn't mean that recent gains will continue apace. In fact, prices very well may fall in markets where price speculation has been the most intense, such as parts of California and the Northeast. Such softening has already occurred in countries where the housing market was particularly strong and the central bank raised rates to prevent overheating. Australia, New Zealand and Britain have all seen their housing markets being cooled off by the effects of raising short term interest rates. Long term rates are just now beginning to catch up in those markets. The same will happen here in the United States.
For example, over the past couple of years the Bank of England has raised short-term rates from 3.5 percent to 4.75 percent, and the Reserve Bank of Australia raised rates to 5.5 percent. Both countries succeeded in cooling down their super-hot housing markets, and prices have leveled off. It's logical to expect the same to happen now that the Fed has raised rates from an extraordinarily low 1 percent in early 2003 to over 4.75 percent today.
Given this, investors may wonder if they should buy rental property. In many cases, the answer is "no." The cost of financing, taxes, and upkeep is often greater than the incoming rent, creating what real estate investors call "negative carrying costs." These costs can only be justified if there is enough appreciation to offset these costs. Thus if it now does not make sense to buy rental property, does it make sense to sell it?
And that's a problem. If you don’t sell it within the next year, you might wind up owning it for another ten. Then again, if the mortgage interest deduction is taken away on owner occupied housing, but remains on investment property, this could spur more investment, however it is more likely that Congress will not pass such an act without giving homeowners some credits. In any event, Congress will need to raise taxes to pay for the war and that impact has yet to be factored into the real estate equation by many economists who see the housing market as an untapped source of government revenues.
Historically the majority of real estate's return does not come from capital appreciation, but from "implied rent," which is the amount one would otherwise spend on rent for the same home. This surprises most investors, because capital gains have overwhelmed rental income in the past decade. But investors must realize this was a highly unusual period that will not continue in the future.
The mortgage interest deduction has been a subsidy on the housing industry for more than five decades. That subsidy may in the near future be taken away as Congressional leaders realize that it is not in the best interests of the consumer to remain perpetually indebted and indentured servants to a financial system which does not play fair to all players alike, regardless of social standing.
If you're comfortable in the home you're living in, keep it. And, if you have a second one, keep that too -- as long as you're not holding it solely for future capital gains, and your income level remains the same or increases in the near future. If you are running house payments greater than 50% of your income, it may make sense to sell now and get out while you still can, find something cheaper, or rent for a while. It all boils down to taking your money off the table a the right time and making sure you do it soon enough before its too late and your property deflates as congress tries to wrestle with a badly run war that will bring another 150,000 retired veterans into the market.
Furthermore, much of the real estate held in real estate investment trusts (REITs) that trade on the major stock exchanges still offer nominally good yields, albeit they are sinking with each jump in interest rates. Their average dividend yields are between 4 percent and 5 percent, a rate that matches or exceeds what you can get on government bonds. So even if REITs don't rise in price, you're getting a decent yield on your money. But this is also a risky proposition since rates have shot up over the past year and a half, the long term effects on REITs has not really been felt as of yet.
If you're thinking of downsizing or selling your home, now might be the best time to do so, especially if it will generate tax-free capital gains. And if you're waiting to purchase real estate as an investment, wait a little longer. Save your money and try to stagger your rate of return as the banks raise the interest they are going to have to pay their depositors in the short and long term. The recent increases in the number of unsold units for sale mean that a buyer's market is already at hand. No need to jump in until the signals indicate that prices have bottomed out, and they are still months if not years away from doing that.
Because late mortgage payments went up in the third quarter of 2005 compared to the second quarter, blown up 10 basis points by Hurricane Katrina, the ripple effects of this still have not crossed the manifest destiny to the Western shores of the United States. But the psychological impact has and savvy investors are standing by, waiting for the right opportunity to jump back into the market.
At the end of the third quarter of 2005, the seasonally adjusted delinquency rate for mortgage loans on single-family residential properties hit 4.44 percent, reflecting the impact of Katrina, the Mortgage Bankers Association’s 2005 second-quarter national delinquency survey reported. These numbers will probably increase even further in the fourth quarter. The numbers mean that over $50 billion in mortgages are currently delinquent, and this is expected to rise to over $150 billion during the next three years.
If not for Katrina, late payments would have dropped to 4.21 percent from the previous quarter, according to Doug Duncan, the association's chief economist. In fact, delinquencies, or late payments, for all loan types were lower in the U.S. once the hurricane effects are eliminated, the MBA said.
"Louisiana went from a 6.7 percent delinquency rate to a 26.4 percent delinquency rate" after Katrina, the highest in any state since the MBA survey began in 1979, said Jay Brinkmann the MBA's vice president of research and economics.
"The storm hit August 29. Mortgage payments were due August 31. When people were evacuating for a hurricane they did not stop to drop their mortgage checks in the mail. The result was that by Sept. 30 there were delinquencies," Brinkmann said.
Duncan had predicted the uptick in delinquency rates thanks to Katrina and other storms in the association's September delinquency survey. This quarter's results cover approximately 40.7 million loans, the association said. Total outstanding mortgage debt held by institutional investors in America is hovering close to $9 trillion.
The percentage of mortgages that started the foreclosure process rose to 0.41 percent, from 0.39 percent in the second quarter, the MBA said. That means that approximately $10 billion in home loans are currently in default, not counting private mortgages, or home equity lines of credit.
While Katrina and other storms have impacted delinquencies and foreclosures, Duncan noted that in the second quarter, the overall U.S. economy grew at almost 4.3 percent in annualized real terms, adding 147,000 payroll jobs per month.
"The leading cause of delinquencies is job loss," the chief economist said. Job losses in the mortgage industry itself may impact the housing market further as the housing bubble continues to pop.
Duncan predicted that the year will finish as a strong growth year and 2006 will also show strong economic growth. "Housing will remain strong with a modest decline of 3 to 4 percent in house sales," the chief economist said. Those estimates are highly conservative. In certain markets, particularly in California, New York, Florida, and Seattle, declines of 30 to 40% are predicted for the year 2006, according to sources outside the industry.
Late payments for adjustable-rate loans is up 7 basis points, from 2.23 percent to 2.3 percent, compared to this time last year, while the percentage among prime fixed rate mortgage loans decreased four basis points. Still, the increase in late payments for ARMs is only modest, the MBA affirmed.
"While we haven't attempted to sort it out statistically, just the aging of ARM loans that were put in place a couple of years ago might have generated the increase we've seen," said Brinkmann in response to a question about the merely modest increase. The MBA is trying to keep increases and their impacts on future business as modest as possible in order to avoid negatively impacting an already dwindling industry trend.
"The reason delinquencies haven't gone further – some of the loans are still young and we've had economic growth. We will see about 4 percent GDP (Gross Domestic Product) growth and addition of jobs. Household income strength is substantial and people have in general made good decisions about loan products. At the end of the day, the most important factor is job growth," said Brinkmann.
There are two shifts taking place in the housing market currently, Duncan said.
"One is a cyclical change. As interest rates move through a cycle and the yield curve changes shape, that either advantages or disadvantages certain loan products depending on whether spreads are wide or narrow," Duncan said.
The other change is that new loan products, such as adjustable-rate mortgages, which either didn't exist before or didn't see widespread use, have been added to the mix, Duncan said.
"In the longer term you will never see the same market share of 30-year fixed mortgages than you have in the past, because now households have more products they can switch to," Duncan said.
The MBA has conducted the National Delinquency Survey on a quarterly basis since 1953. The survey covers more than 38 million loans, representing more than 80 percent of all first-lien residential mortgage loans in the United States.
On the other hand, Wells Fargo economists expect steady economic growth next year, despite a slowdown in house-price increases, and rising oil prices and Fed rate increases.
Wells Fargo senior economist Scott Anderson said, "a housing price slowdown, in part triggered by the Federal Reserve's policy actions, will become more pronounced as the year 2006 progresses, placing consumer spending, credit-quality, and job creation at some risk. The challenges are mounting for U.S. consumers, restricting their ability to spend." Anderson also said that, "real earnings are being squeezed by the spike in inflation, job growth will remain subdued and energy prices elevated, home equity borrowing and wealth creation from the housing market will dry up."
The key words here are, “dry up”, meaning evaporate into thin air, become non-existent, lose all value. The boom is over!
Anderson said rising mortgage rates will finally begin to weigh more heavily on housing demand, while rising inventories, slowing sales, and fading builder confidence suggests that housing supply isn't as tight as it once was. The main risk for the economy next year is the extent to which the housing market downturn could dampen consumer spending, credit quality and job creation.
Wells Fargo is the nation’s third largest mortgage loan originator and lender, behind Washington Mutual and Countrywide. In 2004, these three lenders generated over $1 trillion in mortgage loans combined, almost a third of the market. In 2005, their numbers will be half that amount and by 2006, those numbers will probably be halved again.
Home equity extraction has single-handedly offset the negative economic effect of a doubling in oil prices in less than two years, but this is not likely to be repeated in 2006, Anderson noted.
Meanwhile, Jim Paulsen, chief investment strategist at Wells Capital Management, said, "Consumers are stepping aside and manufacturing and other business sectors are stepping in. The U.S. business sector is looking very healthy, and this will help alleviate the slight slowdown in consumer spending and housing.
I believe we're in the early stages of what will be considered a 'manufacturing renaissance period' in the next several years that's tied to steady trade improvements. We're also seeing renewed strength in the stock market, and foreign economic growth is accelerating, which further positions the U.S. economy for a more sustainable recovery."
The Fed is expected to "win the war on inflation at the expense of modestly slower GDP growth next year," Wells Fargo economists reported. Anderson said he expects the Fed to increase the funds rate to 4.75 percent by March 2006 and will hold that rate steady throughout the rest of the year. He said consumer and bond market inflation expectations have dropped by about a half of a percentage point since the recent hurricane-induced energy-price spike.
According to Anderson, a consumer-spending binge has triggered a swell in consumer debt burdens, and a record trade deficit. Anderson forecasts a 3.1 percent growth rate in consumer spending next year, down from 3.6 percent in 2005. In all likelihood, as the real estate bust takes hold, bank lending will shift back into financing more manufacturing and production for exports to offset the declines in business in the housing sectors.
For some investors, the news is good. Paulsen said stock prices will likely rise to higher levels and he sees good profit trends, investment liquidity and relatively attractive valuations. However, he said bond yields still have a long way to go to reach the peak of their cycle -- we will likely see a 10-year Treasury yield at 6 percent next year, according to the consensus at Wells Fargo.
Other economists agree that foreign economic growth is accelerating, with several foreign markets in the midst of a boom, and the U.S. economy has a good chance of catching up, but not before the bust clears out the inflated values of the recent decade long run up.
The current Chinese exchange rate policy, though designed to stimulate capital investment in the country, is undervalued and has the potential to create a "worldwide production glut" which could disrupt the global economy according to another Wells Fargo economist. "This is already a problem in the automobile industry and may become a serious problem for other industries."
China’s growing appetite for foreign oil imports has also contributed to the rising costs of oil, and their oil consumption is expected to exceed that of the United States within the next decade.

Some analysts and peak oil experts have predicted $380 a barrel oil prices by 2011, less than six years from now. Oil prices tend to impact inflation, followed by rising interest rates which in turn impact the bond and real estate markets. Oil prices have doubled in the past five years as have most real estate prices.
By December 20th, 2005, it was being reported that real estate foreclosure activity had edged up in California, New Jersey and in the Las Vegas area of Nevada at the end of the third quarter, according to data from a Fair Oaks, Calif.-based real estate information publisher and investment advisor.
"We saw increases in defaults month to month at the end of the third quarter in eight of 13 northern California counties that we cover...and in four of five southern California counties," Alexis McGee.
McGee cited a steady rise in mortgage interest rates, flattening of home-price-appreciation levels and the increased use of high risk loans for expensive homes as factors putting homeowners at risk of possible foreclosure.
She added, "We're seeing flat appreciation in San Francisco, and even a slight decline in prices. In Orange County, prices dropped $4,000 in October, for the second consecutive month. Defaults at the end of the third quarter reached 1,000 versus 582 in the third quarter of 2004. That's almost a 42 percent increase."
Meanwhile, new foreclosure filings in Clark County, Nev., increased to 1,743 in the third quarter from 1,498 in the second quarter. New filings of foreclosure cases in New Jersey started to creep up to 3,668 at the end of the third quarter from 3,228 in the second quarter.
Clearly, the end of the boom has arrived and the entire US economy is going to be deeply impacted as soon as the new Fed Chairman steps into the shoes of a man who orchestrated what appears to be the biggest boom and bust cycle in the history of the world.

And there I was - wondering how all those burger-joint workers were affording the $600k homes. Silly me.