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    • Wed Nov 5th 18:40 PM
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      Commented on:
      The Demographic and Economic Record Prior to the Housing Meltdown
      Greenspan did gradualism in 04 in part to permit carry trade in the mortgage security business , and in funding mortgage bankers, to unwind over time rather than all at once . Of course there would have been much less carry trade if he hadn't kept the short rate too low for too long, and there would have been fewer crappy ARM mortgages if short rates had been higher . So you would have had a lower bid for mortgage packages, and the rates on the mortgages would have been higher,\. That capital rationing could have stopped the bubble in 03 or o4, before the wild excess of 05 and 06 - the latter is what caused the catastrophe.
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    • Mon Oct 6th 18:37 PM
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      Cramer: Dow Could Drop Another 14%, Oil's Going to $50
      blaming the CRA...the last refuge of the Fox news RNC appartichik talking point spin machine. I guess everyone has to believe in something; and they believe they will have another

      Deregulation had its run and now its over. Welcome back to the stodgy net interest spread commercial banking business with simple, efficient highly standardized and commoditized financial products ; at least we can hope that we are not yet beyond the point of no return
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    • Fri Sep 26th 18:00 PM
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      How to Spend $700B and Actually Solve the Problem
      blaming the CRA for this ... The lamest of Fox talking point rationalizations, I'm sure intended to deflect attention from the abject failures in monetary ploicy, fiscal policy and prudential regulation by the Ayn Rand skim the cream clique of the Republican party

      shame , shame, shame
      View article »
    • Wed Sep 24th 17:37 PM
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      The Unfortunate State of the Current Housing Market
      There has been a clear volume rally over the spring and summer in several markets that had fallen hard....inland and coastal CA and to a lesser degree AZ. Inventory levels have fallen in many cases to below 5-6 months sales - or to a level that begins to indicate stabilization and even some potential for price increase

      Much of the rest of the US is months behind this cycial turn


      The questions - is this sales volume sustainable, will more inventory hit the market, or is this a sucker's rally?
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    • Mon Sep 15th 19:18 PM
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      Psychology Of A Pricing Bottom [Housing Tracker]
      Its an asset that generates housing services . You can get the same services by renting them from others. You can compare amortization of the value in lieu of rent. You incur the mortgage liability to get the right to the services

      Not unlike PPE in manufacturing - which generates widgets whether you won or lease the fixed assets.
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    • Tue Sep 2nd 19:43 PM
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      A Look At Local Housing Data [Housing Tracker]
      2002-03 values adjusted for inflation (maybe up 3-4% year) - maybe the end game except in markets with bad employment performance
      View article »
    • Tue Sep 2nd 19:39 PM
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      Commented on:
      On Being Rich
      irondoor91

      Don't repeat the class warfare supply side mythology of declining total tax revenue with increased marginal rates. Econometric studies have consistently refuted the contention. The facts don't support what you want to believe .
      View article »
    • Thu Aug 28th 19:50 PM
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      Commented on:
      California Home Sales: 43% Year Over Year Increase!
      Supply has radically shrink in better SCA markets over the past 2 quarters - from 12-15 months to as low as 3-4 months . Multiple offers are happing on better properites. Inventory has dried up altogether in a number of beach close areas I travel through.

      Remember the homeownership rate in CA remained among the bottom 5 in the country during the boom, never exceeding about 58%. There is pent up demand, it can afford current prices and it is acting now

      Builders are beginning to shop for lots again

      If you want to live in Banning, Hemet or Moreno Valley - hang in there and wait another year or two.


      The permabears have beaten themseleves on the head for so long with their incessant repetition of belief that they have become numb to the facts. They are the same kind of intellects as the permabulls - unable to accept facts that indicate change in conditions
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    • Tue Aug 26th 18:41 PM
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      Home Sales & True Inventory: No Good News
      The overall numbers are masking the reality of the truely local nature of real estate - in 05 and 06 the broad upside was overstated, and now in 08 the downside is overstated

      The volume of sales of distressed assets in exurbs is creating a bifurcated market -lots junk far way and less quality closer in . Junk is getting hammered while quality has declined somewhat. However, more junk has sold lately so overall medians have declined -- probably more than the price of quality has declined . No one with a good asset is selling unless they have to.

      In a number of better markets, or those that fell first, inventory is down to 4-7 months sales - or equilibrium or better. Multiple offers on better properties ( the few on sale amid the dross) are not unheard of in these markets. In contrast, the far flung exurbs, areas of high volume 05-07production, and later cycle declining markets are seeing bigger inventory overhang.

      All this is reestablishing a bigger value spread between quality and junk - real estate fundamentals come back in fashion



      This set of circumstances is forcing prices
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    • Fri Aug 22nd 18:39 PM
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      Commented on:
      Is Housing Starting to Form a Bottom? NAHB HMI, Permit and Housing Starts Update
      There has never been a V shaped recovery in housing. A bottom forms in price, volumes pick up, inventory gets absorbed and then prices improve
      View article »
    • Thu Aug 21st 18:23 PM
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      Desire for Safety Has Made the Financial World Risky
      but they DID take too much risk, not only in the mis percived risk level of the investment, but in how they structured and levered the investments.

      On its face an ABS or CMO isnt a bad investement, and is susceptible to legitimate risk assemsent based on its cash flows and credit charactersics. Most analysis didn't understand the fundamental housing market cycle, and understated risk - which led to too low risk premia. THEN as revealed by the market perfromance making mis rated ABS into misrated and intrisically levered CDO, CDOsquared, CDO to the fouth power etc. and then carrying those instruments on a fully levered balance sheet multiplies the risk.

      They were wrong about risk levels and risk premia, and they paid for underpriced risk with excess leverage
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    • Tue Aug 19th 17:40 PM
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      SoCal Real Estate - Sales Up, But Prices Are Still Down
      Volume is moving because price have come down.

      Inventory is almost at stabilized levels ( 6-8 month supply) in many of the better sub markets. You hear anecdotal stories that the (few) good assets that hit the market ( i.e. not batted foreclosures in bad areas) have gotten multiple offers . Builders are beginning to shop for losts


      Putting it another way if you take 2003 nominal prices and deflate them, or if you factor in income growth since 2003 against current nominal prices, you get ratios within the range of historical experience for S CA

      Fence sitters may get shut out
      View article »
    • Tue Aug 19th 17:38 PM
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      Commented on:
      SoCal Real Estate - Sales Up, But Prices Are Still Down
      Volume is moving because price have come down.INventeory is almast at stabilzed levels ( 6-8 month supply) in many of the better sub markets. You hear anecodoatal stories that the (few) good assets that hit the marekt ( i.e. not batted foreclosures in bad areas) have gotten multiple offers


      Putting it anther way if you take 2003 nominal prices and deflate them, or if you factor in income growth since 2003 aganins current prices, you get ratios within the range of historical

      Fence sitters may get shut out
      View article »
    • Tue Jul 29th 19:29 PM
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      Commented on:
      Stock vs. Bond Valuations
      you should add a colored band for "periods of terror" ie credit crunches -- when people flee to treasuries and the normal spread behavior does not apply

      For example....now
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    • Mon Jul 28th 13:38 PM
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      Housing: No Bottom Yet in Sight
      The legitmate portion (93 to 1999/ 2001, take your pick) of the last housing recovery was driven by both normal cyclical factors and the effects of the 90s tech and manufacturing booms.
      The latter drove eimployment and incomes. Plus , with the US fiscal policy during the 90s leading to lower interest rates financing stayed cheap.

      We know what happened next - the Fed inflated the end of the boom into the illegitmate portion of the cycle (2001-04) through very lax regulatory and monetary policy.

      Hard to imagine a repeat of the new industry fundamental economic performamance with the benign interest rate and fiscal policy environment of the 90s. No one is going to repeat the massive 90s PC roll out followed by the internet boom.

      So something else will have to drive recovery- if there is one
      View article »