As Rich pointed out SD continues (8% y-o-y)with a steep downward trend with no end in sight (accelerating in my opinion).
For the knife catching crowd out there among us who have no patience (myself included) here is some truth; “The last time prices fell so much, it took more than eight years for home prices to return to their peak level.” according to case shiller data. and prices are still falling!
The most unbelievable part is the Goldman Sachs report:
“analysts at Goldman Sachs figured that prices in California are about 35% to 40% overvalued, compared with past relationships between home prices and income growth. The median sales price of a home in California was $589,000 in August, Goldman said, but should be around $375,000, they said.”
—-This report could have been useful a few years ago.
This report follows a GS net profit for Q3 07 on shorting housing. “Goldman said in its earnings commentary that “significant losses” on subprime loans and securities were more than offset by gains on short mortgage positions.” GS Q3 of 07 Near record PROFIT.
—Wow, those GS fellows sure are smart considering every other major bank and investing bank reported huge losses over the same period, its like they knew something was gonna happen.
GS annual report indicates that the majority of its income during 2005 and 2006 Came from its MBS and CDO business.
Its clear that GS’s involvement as the dominant player in the securitization of MBS’s and CDO’s played a significant role in the availability of mortgages thus directly ‘enabling’ the insane inflation of the housing bubble. GS not only generated profits from securitizing mortgages and selling them to unsuspecting investors down the pipe, it has has profited immensely from it at every crossroads; somehow knowing that those securities, builders, lenders, and anything to do with housing would inevitably collapse. And shorting at just the right time, overcoming their losses and making them profitable for the quarter.
Now the report on housing ‘Affordability’ or inaffordability which ever way you look at it is a few years too late. That they have the capabilities to generate such a detailed report only to do so after the fact? hmm. I have always held the belief that the true metric that needs to be accounted, quantified, measured, or otherwise discussed in this housing debacle is AFFORDABILITY. Once housing becomes affordable for the people who live here you have hit the elusive bottom.
Oh yeah and by the way the architect of GS’s profitable MBS/CDO run is none other than our illustrious Treasury secretary HP. Credibility, in the markets or financial systems at ANY level; realtors, brokers, bankers, and the government deemed as savior…all a joke.
Alchemists rejoice!!! do away with any gold standard of any kind and you can print money to your hearts content. Why this has not earned someone a Nobel prize in combined Chemistry/Economics/world Peace prize is beyond me(maybe because the prize is a measly million dollars) if you could literally turn straw into gold like Rumpelstiltskin, you could do much better than that (Try Trillions). Remember there is a catch; your first born. Much like the fairytale I fear our children will pay for the irresponsible self serving decisions we make today.
Is GS, banks, govt, the FED manipulating the financial system? Maybe not overtly, but that does not mean it could not be done.. The above stated is not irrefutable proof. It is however a little too convenient for me to accept as just someone being really good at their job. You be the judge.
Then again I’m just a whacked out conspiracy theorist who only sees housing, food, energy, healthcare, education. . . Hyperinflation. During an interview When asked by Jon Stewart of the Daily show if the Federal Reserve (which its neither federal nor is it a reserve (Ironical I would say)) “So we’re not a free market then- there is an invisible, there is a “benevolent” hand that touches us…Greenspan responded: Absolutely, you are quite correct.” So much for free markets.
I for one have none (credibility in the financial system that is), I don’t invest in housing, securities, commodities, bonds, . . . I invest directly in my children.
PS: Remember folks when you feel like life is dragging you down don’t worry, give a whistle!
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