Rowhouses in Foggy Bottom

900 block of 25th Street NW
Washington, DC

A Bailout for 'Homeowners' and / or Lenders?

There is growing talk of a federal bailout for homeowners drowning financially in debt. The Chicago Tribune reported that:

Amid a 12 percent jump in U.S. foreclosure filings in February, civil rights leader Rev. Jesse Jackson on Tuesday called on consumers struggling with subprime mortgages to take to the streets and urged the federal government to step in and help them secure their homes.

"What we must do now is begin to ask for some bailout of victims of this crisis," Jackson, president of Chicago-based Rainbow/PUSH Coalition, said at a news conference at the University of Chicago's"

Back on March 13th, Senator Christopher J. Dodd (D-Conn.) chairman of the Senate Banking, Housing and Urban Affairs Committee was:

"suggesting that the federal government could offer financial assistance to at-risk homeowners. He offered no specifics, telling reporters only that the government needs to provide at-risk homeowners "forbearance or something like that" to help them "work through" their debts. "For these consumers," Dodd said in a speech to the National League of Cities, "the American dream will become the American nightmare."

Since then, Senator Dodd has seemed to reatreat a bit from the bailout option. In general, a bailout option for homedebtors and / or lenders is still on the table.

What do readers think about the Federal government helping out struggling 'homeowners' and/ or lenders?

Bubble Economy Cartoon

Who's To Blame for the Housing Bubble Fiasco

One of the big questions is who is to blame for the housing bubble fiasco.

Here is my list [it is not in any particuar order]:

1. Greenspan & The Feds for the cheap money supply (low interest rates, for too long)
2. Parts of the Real Estate Industrial Complex for cheer leading the housing bubble (David Lereah, Gary Watts etc.)
   
3. Irresponsible & crooked lenders for lending to people who can't afford it.
4. Appraisers over inflating housing unit values.
   
5. Speculators & Flippers ( for being greedy and fueling this mania)
6. Some home buyers (non flippers & speculators) for buying beyond their means and being ill informed.
7. Parts of the Media for not informing the public about this issue sooner (finally they are communicating this)
8. Fannie Mae & Freddie Mac for bundling up risky loans
   
9. Asian Central Banks & others for buying all these risky bundled loans
10. Others ( yet to be determined, please discuss)

BubbleSphere Roundup

The US Census Bureau's new home sales number came out yesterday and they were ugly. In the main the housing news continues to support the conclusion that the housing market is still declining. Heck, we are less then two years from peak in most bubble markets. The housing market will continue to decline in most bubble markets for at least a couple of years.

A big welcome back to Marinite who operates the Marin Real Estate Bubble Blog. He stopped blogging after someone threatened him with an email saying "I swear if I ever find you your dead." It is a quality housing bubble blog that deserves recognition. Welcome back pal. :-)

There is a new Washington, DC area housing bubble blog called Greater Northern VA Housing Bubble Fallout. It is wonderful to have additional local bloggers in the Washington - Baltimore area. The blogger tacks foreclosures in Virginia. Happy Blogging!

And finally in Bakersfield, CA which is very bubblicious. Solid blog!

Bubble Meter Blog Mentioned in the Washington Post Express

Bubble Meter was quoted in today's (pdf) edition
of the Washington Post Express.

---------------------Washington Post Express Piece---------------------

"In most bubble markets prices will remain flat or fall slightly ..... This year's spring selling season will be very disappointing for sellers."

BUBBLEMETER.BLOGSPOT.COM HATES TO RAIN ON THE TRADITIONAL SPRING SELLING PARADE, BUT MARKET CONDITIONS, TO THE BLOGGER SEEM FAIRLY GRIM

--------------------------------------------------------------------------

Bubble Meter will continue seeking the truth about the housing market. Bubble Meter will continuing fighting the good fight!

No Spring Bounce in The Bubble Markets

The spring is here. Many in the housing industry are preaching that the spring buying season will save the housing market from its continued decline. They are preaching and praying for a 'spring bounce.'

Spring is the busiest season for real estate. "Indeed, April through July outpace the balance of the year in sales, historic data at the National Association of Realtors indicates. So there'll surely be more home inventory and variety then. But you better move fast, because that's just what other home hunters are doing (Bankrate)."

Back in Janurary, David 'the Shill' Lereah, was predicting a spring bounce, warning buyers to buy now or have to deal with less inventory:

"Conditions for buyers have improved because sellers are flexible now and mortgage interest rates are near historic lows. The market promises to be more balanced between buyers and sellers by early spring, supporting future price growth"

Faithful cheerleader, Blanche Evans, editor of Realty Times, wrote "home prices and sales expected to rise again in the spring. (Realty Times, Nov 3, 2006)" Alexis McGee, president of ForeclosureS.com said:

“Although it’s impossible to know exactly when we hit the bottom on the price correction, I firmly believe that when the market heats up again this spring, we’ll look back at this winter season as our best buying opportunity in six years”

Clearly some in the housing industry are hoping spring will reverse the current sales and price declines occurring in most bubble markets. They predict that with the spring season a large amount of buyers will swoop in, raise demand, and bid up prices. This will not happen.

Last year, some in the housing industry were promoting the spring boom. Realty Times Editor, Blanche Evans wrote:

"What about housing? There's a lot of positive news that suggests that housing may have had its "rest." Spring might catapult housing into another record year."

As we now know, last spring's selling season was a bust and did not stem the tide of the housing decline. Mr. Lereah another housing cheerleader, who is predicting a strong spring season, has already called the bottom of the housing market four times.

This year we can expect a surge of inventory coming on the market as desperate sellers try again to sell housing units that have been delisted, foreclosures increase and recently built housing units are completed. In a research note titled: "Not So Fast" by Credit Suisse (hattip to Calculated Risk):

• Record new inventory could get worse: According to our channel checks, despite the soft markets, the pipeline for new communities remains full with an 11% median increase in community count expected for next year. In fact, 63% of respondents expect to increase the number of open projects. We are dubious that the increased supply won't heighten the need for incentives and aggressive pricing in the spring.

• Existing inventory could run up again in spring: With both real homeowners and forced investor sellers looking to the new year to test the market, we expect the pressure from resales to resurface in the first quarter.

Meanwhile, on the demand side the speculators will have a minimal impact as they have largely existed the market. The meltdown in the subprime mortgage industry has reduced the ability of marginal buyers to obtain mortgages. Thus lowering demand.

"Lennar CEO Stuart Miller said the spring selling season, when homebuilders usually get the bulk of their orders, failed to materialize, just two months after telling investors this year would be as good or better than 2006 (Bloomberg, March 26)" There will be no spring bounce to rescue currently overpriced houses.

The spring will bring out more buyers but also more sellers (then winter months). Inventory will increase significantly in most bubble markets. In most bubble markets prices will remain flat or fall slightly during the spring months. This year's spring selling season will be very disappointing for sellers expecting a spring bounce.

YoY Inventory Numbers in Northern Virginia

The amount of inventory for sale in Northern Virginia has increased as we move into the spring season. According to the VirginiaMLS:

<<

Inventory for March 21, 2007

>>

County Name	Available Listings	Total Listings
Alexandria City	701	977
Arlington County	670	1088
Fairfax City	105	145
Fairfax County	5131	6877
Falls Church City	44	62
Loudoun County	2863	3537
Manassas City	379	436
Manassas Park City	139	152
Prince William County	4031	4692
TOTAL LISTINGS	14063	17966

-----------------------------------------------------

<<

Inventory for March 21, 2006

>>

County Name	Available Listings	Total Listings
Alexandria City	780	1077
Arlington County	767	1152
Fairfax City	87	119
Fairfax County	5189	7248
Falls Church City	41	59
Loudoun County	3169	3906
Manassas City	242	333
Manassas Park City	109	145
Prince William County	3486	4397
TOTAL LISTINGS	13870	18436

Last year at this time the available inventory on the MLS in Northern Virginia was about the same as today. Last year the available inventory on the MLS was 13,870 vs. today's 14,063. This is basically the same (there is 1.3% more available inventory this year then last).

Cancelled: Pavillions at Takoma Condo Project

The Pavillions at Takoma, condo project is cancelled.
Located in Washington, DC

David Lereah Watch Tops Google Search

The David Lereah Watch Blog has made it to #1 on a Google search for 'David Lereah'. I'm thrilled. :-) David Lereah Watch is my other blog.

David Lereah Watch is #1 and #2. The third spot goes to Wikipedia. Finally, #4 is David Lereah's Bio on Realtor's Site. Take that David Lereah!

Cheery Economist: Florida Economy 'Strong', Jobs Will Service Debt

''The Florida economy has been so strong -- people have jobs. And as long as you hold on to a job that is reasonably well-paying, you're going to be in position to service your debt,'' says Gunnar Berglund, an economist at Moody’s Economy.com. ( CBS4 March 14)

Subprime Mortgage Meltdown

This blog has failed to pay enough attention to the ongoing subprime mortgage meltdown. The subprime mortgage meltdown is a big event in the ongoing housing market decline. Other bloggers / websites are doing a fantastic job covering the mortgage meltdown.

• Calculated Risk
• The Housing Bubble Blog
• Mortgage Implode-O-Meter
  
• Housing Panic
• Paper Money
  

P.S. David Lereah Calls The Bottom for At Least The Fourth Time

Bubble Meter Predictions Revisited

So how accurate were my early predictions. I'll let my readers decide. There will be a few examples from posts during the summer of 2005. On June 21st 2005, I wrote:

There are growing indications that there is a slowdown occurring now. It is quite likely that we will see an increasing amount of stagnation throughout the summer. By October, the price stagnation in many areas will become price declines. It will be clear by then that the price appreciation of the past is not happening. Selling will follow as investors speculators and others try and get a peak price. For the most part they won't be able to get the 'peak price' . Inevitably, they will start lowering prices. The bubble is nearing its end.

On a future recession, I wrote on December 19, 2006:

Additionally, an economic recession in very likely to occur in the US within the next 7 months

Example #3 involves homebuilders stocks On June 20th, 2005 I wrote:

Other homebuilders were also lower Monday along with the broader market. Lennar (NYSE:LEN - News) was down 2% to $61.89, and KB Home (NYSE:KBH - News) was falling almost 3% to $75.19. Toll Brothers (NYSE:TOL - News) was losing 3.5% to $100.91, and Hovnanian (NYSE:HOV - News) was slipping 0.7% to $65.73. Pulte (NYSE:PHM - News) was down 3% to $83.22.

The market is finally reacting to the growing indications that the bubble is about to burst. Keep yours eyes on these shares and watch them tumble even more. Remember there are about 15 million unoccupied housing units in this country.

So how accurate were my three predictions? What else can be found in this blog's archives?

Mica Condo Closeout

Don't forget it is "The Beggining of The End"?

Buy now or forever regret your decsion not to buy in this mediocre conversion!

Realtor Membership Drops Significantly

The number of Realtors (membership in the National Association of Realtors) in the United States fell again in February. At the end of February the membership stood at 1,316,060. During February, their membership fell 20,795 or 1.58%. It was the largest percentage decrease for the month of February since 1982.


As the housing market continues to decline the number of Realtors will continue to fall. In some of the bubblicious states the percentage lost in February (which is usually a weak month for Realtor membership) was really high:

• California: -9.21%
• New Jersey: -1.32%
• Colorado: -1.97%
• Massachusetts: -3.85%
• Florida: -.76%

Back on September 20th, 2006 I asked Is There a Realtor Bubble? Also see Monitoring The Realtor Bubble. You can view the Realtor's membership stats.

BubbleSphere Roundup

The mortgage market is undergoing significant changes as lenders are going bankrupt and lending standards are tightening. This is a major story that should be watched!

Frankly Realty has come up with a Frankly Real Estate Client Bill of Rights. Among the bill of rights: no dual agency, no admin fees, 20 Photos & Custom Domain Name Website Per Listing.

D.R Horton's (homebuilder) Donald J. Tomnitz recently said that "I don't want to be too sophisticated here, but 2007 is going to suck, all 12 months of the calendar year," Wow!
Ouch! Blunt!

[Getting Graphic] Spikes Pack A Punch. Images of Schiller's Home Price Index since 88 in various metro areas. Well worth the visit.

Also, recently I've enjoyed reading these blog:

• Bubble Markets Inventory Tracking
• Paper Money
• New Jersey Real Estate Report
• Pacific Beach Bubble

That's all folks. :-)

Lereah Blames Declining Sales on 'Weather Disruptions'

The National Association of Realtors (NAR) released their pending home sales report for January 2007. Nationally the seasonally adjusted index was down 8.9% as compared to January 2006. Hat tip to Paper Money. The pending sales index showed decline in all 4 regions of the county.

• The Northeast region was down 1.3% as compared to January 2006.
• The West region was down 7.0% as compared to January 2006.
• The Midwest region was down 10.8% as compared to January 2006.
• The South region was down 11.8% as compared to January 2006

The manipulative David 'Paid Shill' Lereah blames the declining sales on the weather.

"We are seeing temporary near-term weather disruptions in much of the country, but there is an underlying pattern of stabilization in the housing market, … As a result of these weather disruptions, it may take a couple months for the picture to fully clarify, but a modest recovery is likely. Housing remains a great long-term investment. The rapid shift in January to frigid air in much of the country had a cooling affect on home shopping that went beyond normal seasonal factors, … Weather disruptions have continued since.”

Lereah is pathetic in trying to blame it on the weather. In fact, I went to NOAA's website and found the following maps showing weather conditions for January.

January 2007 Precipitation in US: Overall about normal

January 2007 Temperature in US: Overall about normal

These weather maps shows temperature and precipitation conditions in the US in January. Overall, for the country the temperature conditions were about normal (with the east coast and Midwest experiencing above normal temps, and the southwest experiencing below normal) and the precipitation was about normal.

Where is Mr. Lereah's evidence for the claim the weather significantly impacted sales? Mr. Lereah is wrongly blaming the weather for the continuing decline of housing sales. Mr. Lereah is getting more desperate as his half truths, spin and deception are further exposed.

Mortgage Center of America in Noerthern Virginia

Lereah Lashes Out at Me and My Other Blog

In an interview with Fortune Magazine, Mr. Lereah, attacked me and my other blog, David Lereah Watch, after being asked about it.

Fortune: You've been accused by the blog David Lereah Watch of being too bullish. What's it like to have an online antagonist?

Lereah: At first I was kind of laughing. And now, it's enough already. This is a 26-year old that could not afford a townhouse and blamed it on the boom. And then he said, Who's talking about the boom and my name kept coming up. So I became Satan to him.

The worst was that my mother read one of those things, and she almost started crying. And I had to say, Mom, you have to have thick skin. I'm going to be in the public and make statements about real estate, and if someone doesn't like what I'm saying, they have every right to say something opposing me.

Now should they go so far as to call me Satan? I don't understand where that's coming from. That's just weird.

No, Mr. Lereah is not Satan. Mr. Lereah exaggerates things. I never called him Satan. I never said he was evil. This blog is actually pretty tame when it comes to crtitizing Mr. Lereah. Check the archives.

Secondly, I was interested in buying a condo or a townhouse [as noted in the WSJ story].