Housing Doom

Knowing What Ain’t True / Hussman

http://www.hussmanfunds.com/wmc/wmc070827.htm

Homebuilders vs the Nasdaq: From One Bubble to the Next / Chart Bespoke

http://bespokeinvest.typepad.com/bespoke/2007/08/homebuilders-vs.html

wcvarones,

While I agree with the idea in pricipal, execution will be bad. I would argue that it will hit middle america hardest. Older communities would be spared mostly and people who have these houses already will get slammed.

Better yet, provide tax credits to make all houses more energy efficient. Afterall, most of these new McMansions are more efficient than equal sized victorian mansions just due to the newer technologies. Many communities are looking at green building codes as well. But if we are going down this road why not tax far flung suburbs for their longer commutes? Robert Cote I am sure will disagree.

Its one thing to sit back and look at the bs numbers on housing. For the past ten months I have compiled statistics on four areas of Phoenix. BUT THEN, I drive the neighborhoods and GO IN THE HOMES. After being trained as an appraiser at ASU and having sold over 2,000 homes, I have an idea of the local market. Yes, this forum has a good idea of where this thing is heading. It isn’t because of a doomer mentality. Its due to realism. I have to hand it to Twist. She makes a statement and backs it up with hard numbers.

We all know that there are many, many vacant homes. In the end the lenders, and ultimately the investors, will be left with HUGE losses. No investor will want to make his money available for real estate mortgages. Its simply going to dry up. For a long time, homes will simply have NO value.

As

SteveC-

I agree there’s no replacement for good field work.

I also like to go out and see what’s going on. I drive around the Gilbert, Chandler, QC area every couple of weeks to keep an eye on inventory, especially new home inventory. [I'll do other areas as well, but not as often.]

There are developments where I will see a couple of blocks of empty finished houses sitting there week, after week, after week. If I go into the sales office though and ask about spec homes, sales agents will admit to only having a few- and tell me how great sales have been- THEIR builder is faring better than the other builders, so they aren’t faring as badly.

Thank you for your insight- I try to get around, but obviously this is a much better forum when we can compile our info from all over.

Funny you mention that, twist. Nothing like a day of model home hopping to entertain the wife for free. Most of the agents I’ve run into at the new subdivisions aren’t showing all of their cards. Although, it’s pretty clear through even a cursory inspection of the community that there is a lot inventory in most places. I will concede that there are a few communities selling, and of course the ones that have just opened haven’t had time to load up on specs that must be sold urgently.

Still, I have run across a couple of agents who’ve actually said, “Well, those incentives aren’t set in stone. It couldn’t hurt to make an offer and see what happens…” The fact that any of them even suggest that speaks volumes, to me anyway.

Jan-Martin (comment #12) -

I think I’m going to be sick …

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Doomers -

I want everyone to read this paragraph from an ABCP story very, very carefully. Thanks to V for supplying the link.

“A Bird’s-Eye View of the Credit Conundrum”, anonymous, Minyanville, August 28, 2007.

First, having been there at the beginning, the genesis of the asset-backed commercial conduits was regulatory capital arbitrage. Through the conduits’ convoluted structures, banks were able to “lend” huge amounts off-balance sheet and collect fees on no-capital-required lines of credit. No one - and I mean no one - ever expected these conduits to move from off-balance sheet back on-balance sheet and I don’t think the market yet understands the earnings, capital and liquidity impact of this migration. If you figure you need anywhere from 6-8% capital per dollar of loans, then a move of $1.0 trln from off-balance sheet to on requires $60-80 bln in additional equity capital. I don’t know about you, but I don’t see this kind of free capital sitting around.

By the way, I have similarly lurid nightmares about Fannie’s QSPEs.

ATA Truck Tonnage Index was down 3.7 percent from a year earlier

Bank of England Loaned 1.6 Billion Pounds at 6.75%

http://www.bloomberg.com/apps/news?pid=20601087&sid=aLN6ivYqxObA&refer=home