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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: piggington who wrote (35923)	7/13/2005 7:14:30 PM
From: russwinter	Respond to of 110194

To: piggington who wrote (35923)	7/13/2005 7:16:44 PM
From: russwinter	Read Replies (2) \| Respond to of 110194

I have a different take on it. First, as you well know, there is a very large group of subprime buyers who are in over their heads who bought with teaser or aggressive ARMs rates in late 03-late 04. Those teaser rates are coming off monthly. idorfman.com It's like a tidal wave, we are seeing the first sneaker wave, and they are still down on the beach. I have little doubt that many, if not most of the folks in the front half of that buying spree, who have some appreciation have already extracted equity for XMAS, energy bills, "emergencies", consumption, and higher house payments. Thus they are still stretched, even more so, because the vehicles they used like piggy back loans tied to prime, are seeing higher rates about every six weeks. Also look at the Libor and CMT rates these toxics are tied to, from my earlier Housing go Pop article: wallstreetexaminer.com Today we have a 4.02 1 Libor and a 3.60 1 CMT. The second mid-late 04 crowd still have some more teaser time left, but don't have the appreciation and equity to cushion them. I think the situation is building and getting more serious every month that goes by. Next we have the 2/28 and 3/27 IO subprime crowd, and when those start to reset and regular amortize through late 05 and heavy into 06 and 07, we will hear some horror stories. Look at this part of the tidal wave, it ain't pretty and it will hit hard and furiously. Add two years to those bulges you start seeing especially in 4q, 03, and on into 04. idorfman.com Not everybody will wait around. I talk to people I know who own homes at "old prices" too, and some are tempted to just get out, they sense the Bubble. Then there are the speculators, who I actually think are the ones responsible for the new listings that are piling up. They are more alert to the market, and will act quickly if they think the appreciation game is over. That's why places like Las Vegas are looking so dicey and bloated. And probably most importantly, the lenders are going to get cold sweats,and huker down. Again it's psychology. There is increasing evidence of price stalls, plus the media loves the Bubble story, and that shifts the psychology. On extraction and purchases, I'm convinced that 6% thirty years will really hamper it. The 4% Libor rate is a line in the sand too. We are there, this is last week's and next week's is already baked: biz.yahoo.com and I'd watch for the MBAA numbers to start really dropping off here. Finally, who is left to buy, especially relative to supply? And loans in the last three weeks are up a major notch. What's changed that would suddenly motivate buyers to take a 5.50 5/25 ARM on a higher priced property, when they could have used 4.5 or 4.75 last fall?

To: piggington who wrote (35923)	7/13/2005 8:10:50 PM
From: Broken_Clock	Read Replies (1) \| Respond to of 110194

Ever heard of supply and demand? -g- Increasing inventory with stagnating sales is the forerunner of price drops in the real estate market. End of Story. Got fork?

To: piggington who wrote (35923)	7/14/2005 1:31:35 AM
From: John Vosilla	Read Replies (1) \| Respond to of 110194

Professor, where I live in Southern Florida the new high end condos that were CO'd 6-12 months ago are still perhaps 80% vacant as best I can tell. Yet few appear for sale or even for rent. I bet there are a ton of speculators holding either to get around 1 year no flip clauses or riding the appreciation wave on a new never lived in unit that would fetch a big premium. It is very possible that inventory levels could spike up rather dramatically in areas with a ton of speculators creating the catalyst many here are expecting.