Housing Doom Housing Bubble Blog

Mr. Twist and I were trying to invision what could possibly bring about a soft landing at this point.  I found this soft landing theory on the Toll Brothers Message Board - I’m not quite certain if they are serious or not:
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This from the "Too Little, Too Late Department":

In December of 2005, the Federal Financial Regulatory Agencies  requested comments for their proposed guidance on nontraditional mortgage products.  (Also known as exotic, toxic or poison loans these days.) They indicated their concern:
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The helium has not yet entirely leaked out of the party baloons at 3900 Wisconsin Avenue, NW. Fannie Mae won a tremendous victory when the DoJ stopped its criminal investigation against the company. Their stock immediately surged something like five percent on the news last Thursday and held steady as a rock through all the carnage to the sub-prime lenders in the two trading days since. This company lives and dies by political risk, and that risk is at a multi-year low this week.

Nevertheless, I worry. They are in a real business after all, and some nasty stuff is swirling around in that business. I can’t get over a passage from an article I referenced in my 31Jul06 post. It was a five and a half year old piece, among other things reporting on congressional testimony by then Fannie CFO Tim Howard. Tim discussed Fannie’s risk management modeling, and in the context of today’s world, what he said was interesting indeed.

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Have you ever thought, "Boy I’d love to call Twist, or Debi the Doomsayer, or whatever you call her, and give her a piece of my mind?"  Well here’s your chance.

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WHO’S BEEN SWIMMING NAKED?

One fine evening earlier this month I was sitting in Tim’s [1] at Penhorn with my old friend D____ after a stroll through his lovely Dartmouth neighborhood. I was just biting into my double-chocolate when he said, "John, you’ve been telling me for years that the GSEs exist to support mortgages to people of modest means that banks wouldn’t otherwise touch. Now you’re telling me in part V that these ‘private label’ lenders are buying huge amounts of loans that don’t even meet Fannie’s standards. Should I be scared?" After some hemming and hawing and a few more sips of my single-single, the best response I could come up with was, "uh, yes."

Over the last couple of weeks it has become obvious that we weren’t the only ones worrying. This episode focuses on how industry players are changing their attitude toward lesser quality debt and bracing themselves for the coming crisis. They see massive amounts of paper wealth draining away from homeowners as falling house prices vaporize equity over the next few years. Many parts of the real estate industry are now repositioning themselves so they won’t get sucked down the drain too.

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Hello BubbleHeads,

We are testing out a new HTML editor (FCKeditor, for those who are interested) with this site.  This site is powered using WordPress; however, there are a number of things the built in editor lacks.  This upgrade will allow for a variety of new presentation options.

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Yes Nurse? Mr. Lereah is here? Ask him to come in and lie down on the couch, will you?

Mr. Lereah- Thank you for coming in today. I heard from Keith at Housingpanic, who indicated that you have been making a lot of progress toward your recovery. He said that I should see your Powerpoint presentation on Realtor.com discussing- can you bring yourself to use the word yet? -the housing bubble.

You know that admitting you have a problem is the first step to recovery, and I think we can safely say that you are beginning to take some baby steps here.

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Housingdoomers-

For the past several months- my laptop and I have not been separated. My posts have not only originated from their usual home in the Phoenix East Valley- but from hotel rooms around the West as I’ve traveled.

As you read this however, Mr. Twist and I have packed up the little twists, and have headed to the mountains of Eastern Arizona. The laptop is resting on my desk at home- while I spend a couple of glorious days without any kind of housing in sight at all. (Unless you count the tent.) There’s no electricity, no internet, and with luck, the cell phone won’t work either.

In my absence all the heavy lifting will be left in John’s capable hands- and I hate to have him write the post too. (He’s still polishing Monday’s Safety Net That Never Was) I’m hoping Doomers will put up links, comments, opinions, suggestions. Here’s your chance to speak your mind.

Thanks Doomers- you’re the best.

Debi AKA Twist

A tip o’ the cap to twist and a reader for getting me started on this one.

Well, they sure didn’t hide [1] their light under a bushel on Thursday. As I am writing, there are more than 200 stories on how Fannie Mae’s legal problems with the US Justice Department are over, although perhaps not those at the SEC.[2] Furthermore, most formal investigations into their accounting scandal are being wound up. Typical of the celebratory mood was this quote from Thursday’s Washington Post [3].

‘The whole story with Fannie Mae now is progress, progress progress,’ said Ed Groshans, an analyst at Fox-Pitt, Kelton in New York. ‘The DOJ (Department of Justice) is closed, the SEC is closed, and OFHEO is pretty much closed. All the major institutions looking into Fannie Mae have pretty much closed their formal investigations.’”

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According to this morning’s Las Vegas Review Journal, home sales weren’t looking so hot in Las Vegas this July.

New home sales in July dropped 41 percent from the same month a year ago and existing home sales fell 35.1 percent as the market continues its downward slide after two years of record-breaking sales and price appreciation.

The 1,808 new home closings were the fewest since April 2003 and slightly more than half of the 3,474 closings in the previous month, local research firm SalesTraq reported Wednesday. "I was kind of shocked when I saw 1,800 new home sales," SalesTraq President Larry Murphy said. "I started downloading the file and I knew it was a small file."

Murphy has challenged the housing bubble theorists every year by citing increasing prices in Las Vegas, but now admits he "underestimated the slowdown."

The article goes on to quote Housingdoom’s Las Vegas- See No Bubble, Hear No Bubble, Speak No Bubble post of July 29th.

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