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To: Cogito Ergo Sum who wrote (72048)	2/3/2009 10:57:23 AM
From: Keith Feral	Read Replies (1) \| Respond to of 118717

Well, I'll go out there on a limb and say that housing will be the first market to recover. I would say the improvements in existing homes sales and pending home sales are finally beginning to suggest the market is finally responding to the lower price of homes. The velocity in housing is a critical measure of liquidity for the overall economy. The entire mortgage market simply collapsed in the first 6 months of 2007. Every mortgage REIT was bust by August of 2007. The entire securitization market disappeared. The banks got smashed in 2008 as they were forced to delever which finally created some opportunities for home buyers to reemerge towards the end of the year. As for this year, we are getting ready to turn the corner on the Spring housing cycle which is the strongest part of the year. By summer, one could almost begin to think that housing inventories will be at critically low levels if they keep dropping from 3.7 million units. As long as the pending home sales keep the inventory levels from rising this Spring, we could finally escape the firesale in the mortgage markets that started in 2006. I think a little more patience is in order til the market digests the ugly employment repors that come out tomorrow.