Not to appear rude, but what you are saying not only flies in the face of both anecdotal and actual data on the real estate market, but it ignores the bigger macroeconomic picture.
Have you been following the news coming out of Wall Street and the financial markets regarding Bear Stearns and Merrill Lynch and the beating they are taking related to their sale of subprime mortgage backed securities? This has now spread to UBS, Deutsche Bank and Goldman Sachs.
These are not Countrywide or New American type outfits schlepping cheap subprime paper. These are blue chip investment houses and they are getting creamed. Bear Stearns is conservatively estimating it’s losses at $3.2B and that is only the beginning. Merrill Lynch had a fire sale and dumped nearly $700MM in bad paper in a four day period to limit their exposure. And it will only get worse from here. This is a very similar situation to what happened in 1998 with Long Term Capital Management (another group of no-miss kinda guys).
Default rates in the Alt.A market (between subprime and prime) are also up considerably as well. Notices of Default, Notices of Trustee Sale and Foreclosure are up, in some instances over 150% on a year-over-year basis.
To say that this is nothing other than a brief flattening of the market is to buy into the “Baghdad Bob” prognostications of Yun and Lereah, both widely discredited and rightfully so.
It is gonna be ugly and we are a LONG way from bottom. I predict we won’t see bottom for another 18 months.
