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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: regli who wrote (37326)	9/15/2005 8:55:20 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

from limoring on the FOOL - new poster on my board I am a Realtor and have been selling Real Estate for 23 years now...and have genuine concerns about the market and the so called bubble bursting. Here are the 2 big problems I see: 1) With rates having been so good I am seeing people buy homes like the auto industry sells cars...What payment would you be comfortable with ?Of course you cannot afford a $400 car payment but if they can get your payment to $199 a month will you do it ... now you are excited ...the problem is they finance you over 6 years and you are upside down and owe more than the car is worth before you leave the lot. Try to sell or trade the car in a year and youre financially crucified. I see people everyday buying a house because there is 100% financing and the payment fits just what they want...problem is ... THEY AREN'T LOOKING AT WHETHER THE HOUSE IS TRULY WORTH WHAT THEY ARE PAYING FOR IT...AND I AM SEEING HOUSES SELLING EVERYDAY AT PRICES THAT MAKE NO SENSE WHATSOEVER. As soon as rates go up just a little you are going to see the value of property dropping and folks that have to sell in a short time period not be able to sell their home for what they paid for it. 2) With all the special 100% financing programs and getting a home with practically no money at all ... buyers have very little invested in their home as far as risk goes. it's nice they were able to do this HOWEVER, by the same token when things get a little tight ,maybe they are out of work and it gets tough making the payment...its easy to walk away and let it all go because you have nothing invested to lose or fight for. Additionlly..the easy money 110% and 115% homeequity loans are going to destroy the maker and some lenders. I had a homeowner call me last week about selling their home...a very nice middle class couple with a kid in college. They had done a 115% equity refinance to pay for tuition and a new car and consolidate some bills. Things were getting a little tight. It was an easy house to price, there were 9 homes just like it that had sold for $220,00 to $225,000 over the last 6 months...the only problem they now owed $247,800 on their house !!! Should have seen their faces when they saw this. Their best move is to turn in the keys and walk away.! You would not believe how many situations there are just like this right now. I am truly very nervous about the future of housing...property is tremendously overvalued right now...slight increases in rates are going to start taking buyers out of the market...values are already starting to come down in many areas. There is no way I would purchase a home now at some of the prices I am seeing. ON A POSITIVE NOTE..If you have a lot of cash and liquid assets around...hang around...you are going to get some damn good buys and pick up some nice real estate over the next few years with foreclosures and mortgage companies paying the piper for the bad loans they have created with their "we want to help you" financing programs.

To: regli who wrote (37326)	9/15/2005 8:57:35 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

bird flue go.reuters.com Avian flu will mutate and become transmissible by humans and the world has no time to lose to stop it becoming a pandemic, the head of the U.N. World Health Organization said on Thursday. . . . "Human influenza is coming, we know that, and no government, no leaders can afford to be caught off-guard," Lee said. . . . Most of the people killed in Asia since 2003 caught the virus from infected birds. Health experts say the greatest worry is that the highly pathogenic strain of the disease known as H5N1 could mutate and become transmissible between people. Lee said H5N1 "will acquire this capability -- it's just an issue of timing." Countries far from heavily hit Southeast Asian states would not be safe because the disease was spreading through migratory wildfowl, Lee added.

To: regli who wrote (37326)	9/16/2005 12:16:01 AM
From: mishedlo	Respond to of 116555

But unlike Andrew, Katrina may end up largely sparing private insurers, says Howard Kunreuther, Wharton operations and information management professor and an expert on insurance. The first week's reports suggest that flooding from Lake Pontchartrain, after levees broke, caused much of New Orleans' destruction. Private insurance doesn't cover flood losses; the federal flood insurance program does. "If the damage to a property was caused by water, the industry won't have to pay a dime," he says. Of course, the havoc that a hurricane wreaks on real estate rarely fits neatly into one category. Often, a building will be flooded but also lose part of its roof on account of the wind, according to Kunreuther. That ambiguity may cause squabbles between the private sector and the government and between homeowners and their insurers. "There are going to be many lawsuits," Kunreuther predicts. "If it turns out that flood insurance doesn't cover an entire house, will the insurance company step up? The irony of all this is that a poorly built house, which lost its roof, is more likely to get that coverage than a well-built one that didn't lose its roof." Flood-caused losses are probably so large that they may outstrip the flood insurance program's ability to pay, Kunreuther suggests. If that happens, federal lawmakers will have to come forward with more funds. In addition, private insurers could feel the brunt of Katrina in their business interruption coverage since many firms, small and large, in New Orleans and along the Gulf Coast may be closed for months. knowledge.wharton.upenn.edu