[peterb]

Having witnessed the S&L crash and the down cycle in RE in the early 1990’s, I would call this “much worse” without a doubt. Foreclosures topped-out in SD County at around 700 a month after years of downward pressure. We’re now near 2,000 a month in about 1 or so years. And it seems to be growing with more in the pipeline. Almost anyone who bought from 2004 on is now upside down. That’s a lot of transactions. Throw in refinance as well and you’ve got many people who owe more than their home is worth. Unemployment growing and wages totally stagnating for the last 8 years.
And this is systemic, not just CA. Many parts of the country are going through this and now it appears that RE bubbles are bursting in countries around Europre and Asia.
I think that any rise over 1% more would be the final nail in the coffin of RE. So it would be hard for it to rise. I suspect that the new loan world will be one of at least 20% down and extensive documentation on income as well as much more conservative DTI ratios. This of course may have a similar, albeit, less effect as raising rates in that it will take a lot of potential buyers out of the market, while mitigating more of the risk.

[peterb]

Having witnessed the S&L crash and the down cycle in RE in the early 1990’s, I would call this “much worse” without a doubt. Foreclosures topped-out in SD County at around 700 a month after years of downward pressure. We’re now near 2,000 a month in about 1 or so years. And it seems to be growing with more in the pipeline. Almost anyone who bought from 2004 on is now upside down. That’s a lot of transactions. Throw in refinance as well and you’ve got many people who owe more than their home is worth. Unemployment growing and wages totally stagnating for the last 8 years.
And this is systemic, not just CA. Many parts of the country are going through this and now it appears that RE bubbles are bursting in countries around Europre and Asia.
I think that any rise over 1% more would be the final nail in the coffin of RE. So it would be hard for it to rise. I suspect that the new loan world will be one of at least 20% down and extensive documentation on income as well as much more conservative DTI ratios. This of course may have a similar, albeit, less effect as raising rates in that it will take a lot of potential buyers out of the market, while mitigating more of the risk.

[peterb]

Having witnessed the S&L crash and the down cycle in RE in the early 1990’s, I would call this “much worse” without a doubt. Foreclosures topped-out in SD County at around 700 a month after years of downward pressure. We’re now near 2,000 a month in about 1 or so years. And it seems to be growing with more in the pipeline. Almost anyone who bought from 2004 on is now upside down. That’s a lot of transactions. Throw in refinance as well and you’ve got many people who owe more than their home is worth. Unemployment growing and wages totally stagnating for the last 8 years.
And this is systemic, not just CA. Many parts of the country are going through this and now it appears that RE bubbles are bursting in countries around Europre and Asia.
I think that any rise over 1% more would be the final nail in the coffin of RE. So it would be hard for it to rise. I suspect that the new loan world will be one of at least 20% down and extensive documentation on income as well as much more conservative DTI ratios. This of course may have a similar, albeit, less effect as raising rates in that it will take a lot of potential buyers out of the market, while mitigating more of the risk.

[peterb]

Having witnessed the S&L crash and the down cycle in RE in the early 1990’s, I would call this “much worse” without a doubt. Foreclosures topped-out in SD County at around 700 a month after years of downward pressure. We’re now near 2,000 a month in about 1 or so years. And it seems to be growing with more in the pipeline. Almost anyone who bought from 2004 on is now upside down. That’s a lot of transactions. Throw in refinance as well and you’ve got many people who owe more than their home is worth. Unemployment growing and wages totally stagnating for the last 8 years.
And this is systemic, not just CA. Many parts of the country are going through this and now it appears that RE bubbles are bursting in countries around Europre and Asia.
I think that any rise over 1% more would be the final nail in the coffin of RE. So it would be hard for it to rise. I suspect that the new loan world will be one of at least 20% down and extensive documentation on income as well as much more conservative DTI ratios. This of course may have a similar, albeit, less effect as raising rates in that it will take a lot of potential buyers out of the market, while mitigating more of the risk.

[peterb]

Having witnessed the S&L crash and the down cycle in RE in the early 1990’s, I would call this “much worse” without a doubt. Foreclosures topped-out in SD County at around 700 a month after years of downward pressure. We’re now near 2,000 a month in about 1 or so years. And it seems to be growing with more in the pipeline. Almost anyone who bought from 2004 on is now upside down. That’s a lot of transactions. Throw in refinance as well and you’ve got many people who owe more than their home is worth. Unemployment growing and wages totally stagnating for the last 8 years.
And this is systemic, not just CA. Many parts of the country are going through this and now it appears that RE bubbles are bursting in countries around Europre and Asia.
I think that any rise over 1% more would be the final nail in the coffin of RE. So it would be hard for it to rise. I suspect that the new loan world will be one of at least 20% down and extensive documentation on income as well as much more conservative DTI ratios. This of course may have a similar, albeit, less effect as raising rates in that it will take a lot of potential buyers out of the market, while mitigating more of the risk.

[peterb]

For all those out there that think we’re near a bottom, give a read to Mr Mortgage’s latest post. Looks like Good Ol Cramer’s calling for a bottom.

http://mrmortgage.ml-implode.com/

Note: When I first saw Cramer on Bubblevision back in 2000, he was a “guest” on their shows and he told it like it was. But people liked his personality. Then he became one of them when he got his own show. Way of the world.

[peterb]

For all those out there that think we’re near a bottom, give a read to Mr Mortgage’s latest post. Looks like Good Ol Cramer’s calling for a bottom.

http://mrmortgage.ml-implode.com/

Note: When I first saw Cramer on Bubblevision back in 2000, he was a “guest” on their shows and he told it like it was. But people liked his personality. Then he became one of them when he got his own show. Way of the world.

[peterb]

For all those out there that think we’re near a bottom, give a read to Mr Mortgage’s latest post. Looks like Good Ol Cramer’s calling for a bottom.

http://mrmortgage.ml-implode.com/

Note: When I first saw Cramer on Bubblevision back in 2000, he was a “guest” on their shows and he told it like it was. But people liked his personality. Then he became one of them when he got his own show. Way of the world.

[peterb]

For all those out there that think we’re near a bottom, give a read to Mr Mortgage’s latest post. Looks like Good Ol Cramer’s calling for a bottom.

http://mrmortgage.ml-implode.com/

Note: When I first saw Cramer on Bubblevision back in 2000, he was a “guest” on their shows and he told it like it was. But people liked his personality. Then he became one of them when he got his own show. Way of the world.

[peterb]

For all those out there that think we’re near a bottom, give a read to Mr Mortgage’s latest post. Looks like Good Ol Cramer’s calling for a bottom.

http://mrmortgage.ml-implode.com/

Note: When I first saw Cramer on Bubblevision back in 2000, he was a “guest” on their shows and he told it like it was. But people liked his personality. Then he became one of them when he got his own show. Way of the world.

[peterb]

There seems to be a lot evidence mounting that the Fed’s attempt at reflation is not working and that the market is overwhelming it with deflationary pressure. I tend to agree. And we’re going into a global recession.
It looks a lot like demand destruction all around. Having said this, certain sectors of commodities are hard to reduce and/or subsitute. Like oil and food.( I noticed lately that both Rogers and Faber have been talking about food.) The CRB did extremely well in the 1970’s. We had inflation and a recession then. Stagflation. The CRB cranked up from 1971 to 1975 went sideways for a year and then went strongly up again to 1980.
I also agree that there’s a lot of cash looking for a home right now and Commodities may be the only logical choice when some of the noise dies down. Certainly, nothing else looks even remotely as bullish.
Thus, I am begining to think it’s a timing issue to get back into commodities at this point. They’ll do well in a recession and better in inflation. I hope!!

[peterb]

There seems to be a lot evidence mounting that the Fed’s attempt at reflation is not working and that the market is overwhelming it with deflationary pressure. I tend to agree. And we’re going into a global recession.
It looks a lot like demand destruction all around. Having said this, certain sectors of commodities are hard to reduce and/or subsitute. Like oil and food.( I noticed lately that both Rogers and Faber have been talking about food.) The CRB did extremely well in the 1970’s. We had inflation and a recession then. Stagflation. The CRB cranked up from 1971 to 1975 went sideways for a year and then went strongly up again to 1980.
I also agree that there’s a lot of cash looking for a home right now and Commodities may be the only logical choice when some of the noise dies down. Certainly, nothing else looks even remotely as bullish.
Thus, I am begining to think it’s a timing issue to get back into commodities at this point. They’ll do well in a recession and better in inflation. I hope!!

[peterb]

There seems to be a lot evidence mounting that the Fed’s attempt at reflation is not working and that the market is overwhelming it with deflationary pressure. I tend to agree. And we’re going into a global recession.
It looks a lot like demand destruction all around. Having said this, certain sectors of commodities are hard to reduce and/or subsitute. Like oil and food.( I noticed lately that both Rogers and Faber have been talking about food.) The CRB did extremely well in the 1970’s. We had inflation and a recession then. Stagflation. The CRB cranked up from 1971 to 1975 went sideways for a year and then went strongly up again to 1980.
I also agree that there’s a lot of cash looking for a home right now and Commodities may be the only logical choice when some of the noise dies down. Certainly, nothing else looks even remotely as bullish.
Thus, I am begining to think it’s a timing issue to get back into commodities at this point. They’ll do well in a recession and better in inflation. I hope!!

[peterb]

There seems to be a lot evidence mounting that the Fed’s attempt at reflation is not working and that the market is overwhelming it with deflationary pressure. I tend to agree. And we’re going into a global recession.
It looks a lot like demand destruction all around. Having said this, certain sectors of commodities are hard to reduce and/or subsitute. Like oil and food.( I noticed lately that both Rogers and Faber have been talking about food.) The CRB did extremely well in the 1970’s. We had inflation and a recession then. Stagflation. The CRB cranked up from 1971 to 1975 went sideways for a year and then went strongly up again to 1980.
I also agree that there’s a lot of cash looking for a home right now and Commodities may be the only logical choice when some of the noise dies down. Certainly, nothing else looks even remotely as bullish.
Thus, I am begining to think it’s a timing issue to get back into commodities at this point. They’ll do well in a recession and better in inflation. I hope!!

[peterb]

There seems to be a lot evidence mounting that the Fed’s attempt at reflation is not working and that the market is overwhelming it with deflationary pressure. I tend to agree. And we’re going into a global recession.
It looks a lot like demand destruction all around. Having said this, certain sectors of commodities are hard to reduce and/or subsitute. Like oil and food.( I noticed lately that both Rogers and Faber have been talking about food.) The CRB did extremely well in the 1970’s. We had inflation and a recession then. Stagflation. The CRB cranked up from 1971 to 1975 went sideways for a year and then went strongly up again to 1980.
I also agree that there’s a lot of cash looking for a home right now and Commodities may be the only logical choice when some of the noise dies down. Certainly, nothing else looks even remotely as bullish.
Thus, I am begining to think it’s a timing issue to get back into commodities at this point. They’ll do well in a recession and better in inflation. I hope!!

[Author]

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