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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Dave who wrote (928)	10/22/2001 10:41:56 PM
From: bill	Read Replies (1) \| Respond to of 306849

Real estate is a lagging indicator. First the economy tanks, then the layoffs start, people try to carry the mortgage by cutting back other expenses, then they miss a payment, make a payment, miss a coupleof payments, realize they can't make the payments, try to refinance, finally throw in the towel and put the house on the market to try and get some of their capital back. This takes time. People with big mortgages don't get anything back. If it gets bad enough (as it did in 87), the banks, credit unions, mortgage companies will start offerng properties at big discounts. They don't want the expense of carrying properties. Upkeep, maintenance, insurance, negative cash flow. They don't want to be in the rental business. There is that period of time, though, when people are still trying to hang on, waiting for the economy to turn around, waiting for a job to appear. If the recession lasts past a certain point, then the whole thing starts to crumble. When things were really hit bottom a friend of mine who is a mortgage broker started buying up everything he could afford. Rode out the tail end of the recession and then flipped the houses. Made a bundle. It's an ugly business but profitable. The trick is to get the timing right. If Q4 is really ugly but Q1 2002 turns up, then it shouldn't be so bad. A lot of people will be able to ride it out. If it goes into Q2 of 2002 then cash will be king. You're right, of course, the spiralling prices of the last couple of years (especially driven by tech salaries and profits) has set a lot of people up to lose their homes. Even waterfront.

To: Dave who wrote (928)	10/24/2001 9:27:23 PM
From: David Jones	Read Replies (1) \| Respond to of 306849

Sharpen your pencils. Although these kinds of reports can be self serving. There's bits of truth to pick out if you know what your looking at. imo dave list.realestate.yahoo.com Wednesday October 24 6:44 PM ET Housing rebound due in 2002 Inman News Features Real estate economists, gathered at the National Housing Center, expect the nation’s housing industry to hold up fairly well through a general decline in economic growth during the final two quarters of this year. David Seiders, chief economist of the National Association of Home Builders, offered a relatively upbeat short-term outlook for housing, despite the climate of uncertainty. It has been "extraordinarily difficult" to assess the state of the economy in the aftermath of Sept. 11 and "there has never been this degree of uncertainty on where the economy stands," he said. Seiders predicted the nation’s gross domestic product will decline 1 percent in this year’s third quarter and 2 percent in this year’s fourth quarter. The unemployment rate is expected to rise from 4.9 percent to 5.8 percent in the second quarter of 2002. Single-family housing starts in the fourth quarter of this year are expected to trail the previous quarter by 10 percent. Seiders said the "short, relatively mild" downturn should be followed by "quite strong" growth during the second half of next year. David Berson, chief economist of Fannie Mae, cited surveys by the University of Michigan showing that consumer sentiment has rallied from post-Sept. 11 lows to levels not nearly as deep as they were in previous recessions. Berson predicted moderation in home price gains over the next year, but said it is extremely unlikely that home prices will turn down nationally because new home inventories are at near-historic lows. David Lereah, chief economist for the National Association of Realtors, said foot traffic of prospective home buyers was down about 10 percent immediately following Sept. 11, but now is off only about 5 percent. He said housing activity next year should return quickly to levels prior to the downturn.