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Strategies & Market Trends : Value Investing

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To: Kenneth Kirk who wrote (27579)	8/3/2007 5:32:10 PM
From: Dale Baker	Read Replies (2) of 78817

my understanding is that the real estate market is still reasonably solid, so I can't see how this panic, with people running from any investment which has "mortgage" or "real estate" in its name, makes any sense. The real estate market only works when buyers can sell their existing homes and/or get financing for newer homes (or first homes). Right now, the buyers are already drying up due to overbuilding and a price bubble, and the lending side of the operation is choking because the people who buy the loans that make lending possible stopped buying those loans. And when the loan buying stops, the people left holding the loans have no idea what they are worth in the credit markets. Which leads to the panic, chaos and confusion we saw on Wall Street the last few days. It's all very far from reasonably solid until the various securities reprice and find real buyers, allowing the money flow and buying flow to resume. It won't affect all areas but nationally, it has scared the living crap out of the money guys in New York. Already some mortgage companies have raised rates and standards, and cut out the iffy toxic loans. That alone will impact home sales going forward.

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