[Money-matters] FW: [Money Matters Newsletter] Marc's take on our old favorite Real Estate. Update February 15, 2011

Wed Feb 16 03:25:09 UTC 2011

  _____  

From: Money Management Radio [mailto:marc at moneymanagementradio.com] 
Sent: Tuesday, February 15, 2011 7:23 PM
To: client
Subject: [Money Matters Newsletter] Marc's take on our old favorite Real
Estate. Update February 15, 2011

<http://moneymanagementradio.com/files/moneymn/shell/simplenews_header2.jpg>

Money Matters Newsletter: Marc's take on our old favorite Real Estate.
Update February 15, 2011

More on Housing: 

For 7 years now since I started Money Matters I have focused on real estate
as the crux of the 2008 crisis that was to come. When I forecasted housing
would crash by at least 40 % and that the banking system would implode, many
realtors, scholars, "investors", loudmouths, "know it alls", and everyone
one that had an opinion told me I was crazy. 

"They aint making any more real estate" I was told. "People will always want
to live here" said another, and "real estate always goes up" chimed a third.
Not versed in economics nor history they were, so I kept my opinion on
"their opinion" muted. 

Even the popular media and your Government said the following:

January 2005  "Creative financing can give poor- credit buyers the home of
their dreams".  Associated Press

March 2005   "There is a new paradigm in real estate in which prices will
rise indefinitely".  CBS News

June 2005  "Home Sweet Home"  cover page. Time Magazine

2005 thru 2007 and too many other quotes to list here but basically the FEDS
said:
 "We have never had decreasing home prices in the US and housing will not
affect the economy". Ben Bernanke - Federal Reserve Chairman

September 2006  "It seems the housing sector has bottomed out".  Market
Watch

October 2006  "The worst is over". Alan Greenspan- Federal Reserve Chairman

July 2007   "Subprime problems are contained" US investment banking
statement and Hank Paulson- Treasury Secretary

October 2009  "The home buyer credit has helped shore up the economy and
stabilized housing". Bloomberg   

Add to these over 100 "official" denials from Washington to the Federal
Reserve to realtor groups to award winning "economists' and analysts and you
would have to call my predictions crazy at the time.

Yet we all know what happened. CBS and ABC sends a TV film crew here to
little old Nevada City to interview this "nut" on a small community radio
station called KVMR.

Then as housing "slowed" its descent, and the home buyer credit boosted
sales, I was called a cashew once more by people "in the know". They told me
housing had stabilized. They "want in" now that prices have dropped. "Prices
have bottomed Marc!"

Through out the winter of 2009 I warned when the home credit expired housing
would plummet again in the summer. All those foreclosure "deals" people
bought at auctions in 2009 and 2010 wouldn't look so "good" when housing
cratered again. When July arrived with the expired credit, house sales fell
off the cliff with a record low followed by a second record low the
following month. 

And now again for months I have tolerated more folks telling me its "time to
buy!".

And so to all those people "knew better". I say:

Uh huh. 

There's an old saying: "Stick with who brought you to the dance".

So after all this, guess what's just out from real estate expert surveyor
Zillow.com.

According to their most recent quarterly survey, the percentage of US homes
underwater (homeowners owing more then their home is worth) has soared from
20 % in August 2010 to OVER 27 % today! 
Adding insult to injury, home prices according to the Case-Shiller index
continue to fall while foreclosures rose to a new ALL TIME RECORD!
(Associated Press February 10, 2011).

Says "Business Insider" in its recent article this week; 
"The US housing market is dying. As statistic after statistic continues to
roll in, the reality of what it happening is becoming very difficult to
deny".

Those that have told me housing is coming back are talking from hope, not
facts. 

Here are the facts;

Loans are harder to get now then in 2007 when housing was already starting
to fall.
Unemployment is twice as bad then it was 5 years ago.
House prices are falling making more homeowners under water and giving them
cause to default.
Higher foreclosure rates are making supplies even higher.
Banks are only actually foreclosing on a portion on their bad loans so they:
1)    Don't have to write the loss off if they keep the house in limbo and
let the deadbeat homeowner stay rent free.
2)    Keeping foreclosures to a minimum doesn't add as many houses to the
glut already on the market so the house pile up vacant to be sold sometime
later, diluting the supply for years to come. 

The Subprime "wave" of loans we first saw 07,08 and 09 was only the FIRST
wave of many more WAVES to come. Think Tsunami waves crashing into a beach
head. There are 5 more types of loan waves coming toward us that are about
to further implode this already devastated housing market.  

' Alt- A" loans are moderate risk loans that have their maximum default
window now thru 2012. (A lot of these loans had 5 year teaser rates which
now are resetting).

Prime loans are good borrowers but now these folks are "strategically
defaulting" due to crashing home prices. (underwater loans).

Jumbo loans were needed during the last part of the boom to pay for the
higher home prices. Jumbos are high balance loans typically totalling 500K
or more. More jumbos were needed toward the END of the boom, meaning they
will be the last to reset. (2011 thru 2014 and beyond).

ARM (Adjustable rate mortgages) loans ran throughout the boom and they are
resetting as they have been for 3 years now:   fast, furious and ongoing.

Commercial real estate typically has longer leases. This "wave" encompasses
literally trillions of dollars worth of value and as the economy falters,
more businesses go under leaving vacant buildings. Just look around your
town and see the ever growing "for lease' signs.

Strategic defaults will accelerate as house values fall further. These
people can afford to pay their mortgage but elect not to as the house is
worth less then what they owe. As house prices continue down (as they are
now) more people will elect to take this way out and stop paying, adding
insult AND injury to an already dire home market.

Historic precedent dictates money never returns to the asset bubble meaning
once a bubble pops, money flees to "another asset". Money will not return to
housing historically for another 8 to 17 years. (money hasn't returned to
DOTCOM in 11 years !)

When bubbles pop, historic precedent says prices will return to and FALL
BELOW the starting point as the pendulum swings back to over correct. Since
the housing bubble started roughly about 2002 or so, house price must
eventually return to levels BELOW those of 2002, and probably more in line
with prices on or about the mid 1990's meaning we have a lot farther to go..
down.

With all these "problems" facing the housing market, you would be hard
pressed to convince ME housing is coming back anytime soon, and as I warned
last year to potential home buyer: WAIT. 
I told them  "If you buy now, the $8,000 credit you got will be all but
eaten up in falling home value" , and WHA LA. 

As I told you. House price continue down. And as I warned my real estate
friends, stockpile your money. Don't buy any rentals. Money will get harder
to come by and prices have farther to go.

Now I will say it again. The ONLY thing I can see that would make house
prices rebound is if Starbucks coffee goes to 6 bucks. If the FEDS print
enough money, even houses will finally catch a bid reflecting only
inflation, but for now, its DOWN, DOWN DOWN.  

And if you think the FEDS can bail us out again, remember that deficits are
beginning to be scorned, bailouts frowned upon. Yes, they COULD and I think
THEY WILL initiate another home bailout with the final solution being
reducing home mortgage balances carte blanch, but that bailout will be hard
to pass and I don't want to base my families future on what somebody else
might or might not do. 

For all my real estate friends out there, I am not trashing your business,
but on the contrary, warning you to stash your cash and save your money.
Lower prices mean more sales eventually but don't believe what your
association (The National Association of Realtors) tells you. Remember they
had to fire your last economist David Lereah because he called it wrong so
many times. They replaced him with Lawrence Yun, and he seems to be drinking
off the same cup David did. 

Stick with those who GOT IT RIGHT. 

My prediction? 

Down and down. Foreclosures and short sales for years. Lower prices and
distressed properties everywhere. Stubborn sellers and even more stubborn
buyers. Hard to get loans and under value appraisals. Many fall through
escrows and even more heartache. Dire but the facts dictate no other
outcome.

Those thinking otherwise are driving on hope only, and fumes at that.

All for now,
Marc 

Money Matters Airs This Thursday at noon PST on KVMR FM. 

Have dinner with me at my Margarita Dinner. Email me. Cost is minimal for
you and one other! Or come alone and save even more! 
  _____  

Do Not Reply to newsletter messages directly. 
Direct all questions or comments to Moneymatters at kvmr.org. 
All comments or questions must be less then 3 sentences in length and must
not contain any links or articles. 
You can access past updates at: http://www.moneymanagementradio.com 
Disclaimer: 
The views expressed here are opinions only. This update does not represent
KFOK, KZFR or KVMR FM radios in anyway and should not be construed as an
extension of either station. It is a private email subscription and is
produced by Marc Cuniberti and does not reflect the views or opinions of the
stations, their management, underwriters or members. All issues regarding
this email should be sent to Marc Cuniberti and/or his agents. 
This article is strictly for informational purposes only. It is not a
solicitation to make any exchange, buy or sell any precious metal products,
commodities, securities, stocks, warrants, options or other financial
instruments. Marc Cuniberti, author of this article, does not accept
culpability for losses and/or damages arising from the use of this
publication or any information contained herein. You are responsible for
your investing. Perform due diligence on any firm you plan to send money to.
Mr. Cuniberti makes no claim as to the validity or soundness of any firm or
institution mentioned herein or on any of his publications or shows.
Investing involves risk. You can lose money. Please order up the prospectus
on any and all securities you may be planning to buy and do your own
research before investing. Mr. Cuniberti may or may not hold the securities
listed. Some companies mentioned or exhibiting advertisements or banners on
Money Management Radio material may offer a consideration for their
advertising space and/or referrals from such promotions. 
If you wish to send Mr. Cuniberti an email, please keep your emails to less
then 3 sentences and do not ask about specific holdings you may hold nor ask
him to comment on YOUR specific situation. You may submit general market
questions or concerns. He answers EVERY email sent to him within the
confines of these rules. Someone will respond to your email regardless of
what it contains so you will know we received it. We care about your
participation in Money Management Radio and Money Matters. 
If you like what you hear on Money Matters, check out what else is happening
on your community radio station, KVMR, on Facebook.com. You'll be kept up to
date on special programming, events, discussion opportunities, and lots
more. Go to Facebook and type KVMR in the search bar. You can become a fan
of MONEY MATTERS on Facebook by going to:
<http://www.facebook.com/profile.php?ref=name&id=1602502823#/pages/Money>
<http://www.facebook.com/profile.php?ref=name&id=1602502823#/pages/Money>
http://www.facebook.com/profile.php?ref=name&id=1602502823#/pages/Money 
Produced and Hosted by Marc Cuniberti 
Web Site: http://www.moneymanagementradio.com
Money Management Radio and Money Matters is the sole property of Marc
Cuniberti and all rights are reserved.
"Money Matters" and "Your Money Matters" is aired throughout Northern
California and the State Capitol. 
Marc and Money Matters has been featured on NBC and ABC television and on
various news programs and documentaries.
Northern California's # 1 "alternative" economic show.
"Know the Truth and the Truth Shall Set You Free" John 8:32
Carried on bandwidths: 89.5 105.1 95.1 103.7 90.1 FM Radios throughout
Northern California and the State Capitol.
Worldwide on the web at KVMR, <http://WWW.KVMR.ORG>  KZFR <http://kzfr.org/>
and on KFOK <http://KFOK.org>  FM RADIOS 
Where I buy some of my gold and silver: What I call "Possession Gold". 
Blanchard and Company, Inc.
P.O. Box 61740
New Orleans, La 70161-1740
Direct toll free number: (888) 727-7537
Rick Baugnon

I have probably purchased the most ounces of gold and silver from Blanchard.
Not only do they sell regular coins and bars, they are the only contact on
this e-letter that also can provide you with graded coins and collectible
coins. Although I usually recommend only standard coins, I do own
collectibles as they may help against a confiscation scenario and we need to
be prepared for everything. Please call Rick Baugnon and tell them you are a
Money Matters Listener and he will give you special consideration and he
knows my preferences. Use his direct line above. Rick and I have discussed
Money Matters needs and he knows what to provide.

Monex Deposit David Feldberg x 2216
4910 Birch St., Newport Beach Ca 92660
1 (800) 949 4653 (GOLD) ext 2216 You may refer to Marc Cuniberti and Money
Matters and David will know what Marc recommends. 
Take delivery and store in a safe place. You may have 25 % of this amount in
silver and the remaining 75% in gold. I usually buy only generic 1 ounce
rounds or ounce bars, no collectibles. You may buy any 99 % pure gold or
silver assets but pay no more then a few percentage points over spot. Again,
buy NO Collectibles, No Margin account, No Commodity accounts. Take delivery
of standard coins only. 
I usually buy Gold Eagles, Buffalos, Kruggerands, Silver Maples. Gold Pandas
Generic Rounds. Peace Dollars or Morgans. 
Follow Marc and Money Matters on Facebook
<http://www.facebook.com/topic.php?uid=225256048565&topic=11908#/pages/Money
-Matters/225256048565> . 

__________ Information from ESET NOD32 Antivirus, version of virus signature
database 5878 (20110215) __________

The message was checked by ESET NOD32 Antivirus.

http://www.eset.com
-- Footer will be appended here
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://mailman.jtan.com/pipermail/money-matters-l/attachments/20110215/3694440b/attachment-0001.html 