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MichaelC

Think YOUR Market Is Tough?

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How does this help investors, especially LO investors over the next few years (months?) when the bubble goes "Pop"? What can we expect and what becomes our best strategy?

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Investors in general always have an easier time in a buyers market. Motivated sellers are certainly more prevalent when their property is sitting on the market, with no offers coming in.

Your strategy depends upon the property and your plans for that property. You can buy and hold as long as the rent will cover your payment.

Sandwich leases are a good choice, too. Take control of a property for three years or so, with little or even nothing out of pocket. Collect option money, collect monthly cash flow, and cash in on the back end if/when the t/b exercises their option.

And CA's are good, too. The homeowner is hearing nothing but gloom and doom, getting offers that are rock bottom. You come along and get them the best price possible, and offer them a way out of their problem. You won't have too many doors slammed in your face this way, I assure you.

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WOW !!! Mike this is just so amazing ...

Why ??? cause I just was mentioning this kind of stuff to Jon Rexford my partner here in palm beach county , About how this is TOO damm crazy , and that it's like , .."ok what strategy do we use now as investors to buy houses here ?? "

 

I mean damm IT just flat out sucks here ,

 

Also by the way, what Rich ( Sold ) said about the 95% thing, I was just wondering Rich , Have you seen any of my signs lately in town where they

say ......... WE BUY HOUSES @ 90 TO 95% OF APPRAISAL ...............

 

Cause it just seem like this whole thing of what Mike had posted and even what you said about that was getting kind of spooky SINCE I HAVE NOT BEEN TO THE BOARD LATELY And all of a sudden i come here and you guys are thinking and saying what i am . Oh yea well i guess thats cause of our market and like they

say......" fine mind's think a like " So I guess were all thinking the same around here when it comes to the South Fla Market

 

But man o Man it is crazy here and it's getting tough to do deal's

Anyway I just thought it was funny that i had not been around here on the board at least reading anything lately , and then when I do it was only to see if there was some magic answer I might get from Mike and the like's of you all for my S.Fla market , But come to find out the Head cheese around here is feeling the same way ..lol lol :lol:

 

Oh Well what's next Mike ,??? .......What and how do we make some money ??

 

By the way the signs that i put out lately are for trying to get an option to buy then sell it with owner financing with using our note buying program for the end buyers . So the pitch to the seller is basically that i can offer you 90% or so and close very quick cause I buy houses and sell them with owner financing . And if there motivated they'll sign our contract that has a special clause in it that states that they would release us and pay us a release fee and close direct with our 3rd party buyers . THIS DOES WORK IF YOU CAN GET THE SELLERS TO RESPOND SO FOR THOSE OF YOU OUT THERE IN THE EASIER MARKETS PER SAY , I CAN HELP YOU WITH THESE KIND OF DEALS . The biggest thing is that when getting the seller to agree you would sell it with owner financing so therefore the property would move quicker

 

Anyway if you want call or e-mail me to explain how we can work that program together in your area

 

Ed Fulmer

EdFulmer7@aol.com

561-577-1032

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Oh Well what's next Mike ,??? .......What and how do we make some money ??
That's always the million dollar question, isn't it? How do we make money?

This market we're in is so unbalanced presently, I can't imagine you're going to attract much attention offering 90% of appraised value. I mean, sellers are now conditioned to receive full price offers, (and in many cases, above asking price!), within days of hitting the market. With that kind of reality, why would a homeowner need to take a five to ten percent reduction?

The answer? A few things are working sporadically. Dig even harder to find that needle in the haystack, the motivated seller with a problem property.

Make full price offers using Pure Options, and then flip the Option to a third party. With our market the way it is, if you control the property first, someone is bound to pay you for it. And it's low risk for us.

Expand your area and look for deals where the market isn't so speculative.

Finally, take heart knowing that this can't last. Markets always correct. Don't know when, but south Florida will prove this to be quite true once again. Then we'll be in Phat City. B)

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We all must keep in mind that we are NOT simply looking for people who want to sell their house.

 

We are looking for people who NEED to sell their house.....right NOW! That's where the deals are.

 

Death

Divorce

Bankruptcy

Relocation

Foreclosure

etc

etc

etc

 

Those people NEED to sell and NEED us to contact them with a solution.

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From what some people are touting, they believe it is a world wide currency bubble as opposed to just a RE bubble. Understanding the US Fiat money system and the old fashion gold standard can help shed some light on the subject.

 

http://www.usagold.com/gildedopinion/Greenspan.html -- by Alan Greenspan

 

http://www.usagold.com/gildedopinion/greenspan-gold.html -- Congressional Testimony between Alan Greenspan and Dr Ron Paul (1997 - 2004)

 

To make it even more eerie, the RE bubble seems to exist in the majority of the world markets.

 

Finally a really interesting article to highlight the situation at hand...

 

  Rediscovering Gold in the 21st Century

Craig R. Smith

Substance Over Symbolism: The Folding, Spindling & Mutilating of America's Money System

 

 

Imagine for a moment that you have the ability to create any amount of money, without ever having to produce anything.

 

Is there anyone or anything you couldn't buy? Probably not.

 

Sound impossible? It should be, but it isn't. Just ask your local Federal Reserve banker - they do it every day.

 

The folding, spindling and mutilating of America's monetary system became legitimized in 1913, when the Federal Reserve was formed. Long ago bankers discovered a nasty little secret referred to as "fractional-reserve banking" which is fueled by credit and debt creation out of thin air.

 

The modern American monetary system is the result of an incestuous relationship between the federal government and the private banking cartel, deceptively called The Federal Reserve System (a.k.a. "The Fed").

 

But don't expect the mainstream press or prominent political figures to ever discuss this relationship publicly. Sadly, few Americans understand the process, or even challenge the Fed's attempt to manipulate the money system.

 

In the two centuries prior to the creation of the Fed, unredeemable paper currencies were judged as unethical and immoral. As of 1792, they were deemed unconstitutional as well.

 

The fundamental misconception today is that America's paper or electronic currency, denominated in Federal Reserve Notes, is that a dollar actually has any intrinsic value.

 

In the words of former Fed economist John Exter, "Today’s U.S. dollar is nothing more than an IOU-nothing." Paper money retains only the symbol, or form, of its original substance - gold and silver.

 

Let’s now examine the untold story of how and why the U.S. dollar was transformed from substance (gold) to symbolism (debt) - and what you can do to recover the substance while you still have time.

 

As difficult as it is for honest, hard-working Americans to fathom, the lifeblood of the American political and economic system is legal plunder. The 19th-century economist Frederic Bastiat summed up the tendency of central governments to embrace economic plunder in this way:

 

"There are two ways to acquire the niceties of life: to produce them or to plunder them. When plunder becomes a way of life for a group of men living to- gether in society, they create for themselves in the course of time, a legal system that authorizes it and a moral code that glorifies it."

 

The gradual devaluation of U.S. currency during the 20th century reflects a more subtle transformation - too many Americans have abandoned the morality and economics of our Founding Fathers.

 

Today's warped and degenerate political system represents a marked departure from the statesmanship of a bygone era. Economics likewise has degenerated into a convoluted science orchestrated to conceal a colossal fraud perpetrated on an unsuspecting public.

 

In short, "We the People" allowed the Federal Reserve, with the full cooperation of the federal government, to replace the "Puritan work ethic" with a "pagan plunder plan" and now the chickens are starting to flock home to roost.

 

To achieve this massive wealth distribution plan required a shift in public values from hard work and responsibility, to hardly working and gambling. This dramatic change has occurred gradually over the past two or three generations.

 

The result or fruit of this shift can be seen in the monetary realm. We abandoned true money (commodity - gold or silver) in favor of false money (fiat - paper, electronic). Here's how it happened, in a nutshell.

 

All true money must be derived from a commodity, or at least have a substance to back it up, or it will gradually become fraudulent, or fiat money.

 

Historically, the most common substance used as a medium of exchange and a store of value has been gold or silver coins of a standard weight and fineness.

 

The U.S. Coinage Act of 1792 specifically defined a dollar as "one twentieth of an ounce of gold (25.8 grains of 90 percent fine) or a silver coin containing one ounce of silver (421.5 grains of 90 percent fine)." The Founding Fathers specifically prohibited the federal government from issuing Bills of Credit, (paper money) in the U.S. Constitution.

 

Congress shall have Power to coin money and regulate the value thereof ... No State shall make any Thing but gold and silver Coin a Tender in Payment of Debts.

-Art.1 Sec. 8 & 10

 

America's system of constitutional, commodity-based money functioned well in our nation for 125 years, from 1792 to 1913. Then "We the People" made a big mistake - we allowed a privately owned corporation called the Federal Reserve to begin creating paper money instead of gold and silver coins as the Constitution requires.

 

The Federal Reserve's monetary manipulation began with a promise to create paper money that could always be redeemed for commodity money - gold or silver coin. This 100 percent redeemable money is referred to as fiduciary or trust money.

 

The creation of fiduciary money assumes that the promise of payment in substance by the issuer is redeemable at some future point. Trust money was used as a medium of exchange even though it consisted largely of an intrinsically valueless substance - paper.

 

Since the U.S. government was prohibited by constitutional law from issuing this trust money, the Fed - a private corporation - was created to soften and manipulate the economic down-cycles in 1913. The price we have paid is surrendering our substance money (gold) for trust money (credit/debt). In my view, central bankers took the mine... and we got the shaft. Why do I say that?

 

History has proven time and again that neither bankers nor governments possess the discipline needed to limit the amount of credit (or paper money) to equal the true supply of gold and silver coins. So the supply of paper money (credit/debt) must continually rise.

 

The result is always disastrous in the long term because the economy suffers through cycles of inflation, deflation, artificial growth, recession and depression. Because U.S. citizens did not protest the use of trust money, our economic system then began to degenerate into untrustworthy or fiat money.

 

Fiat paper money abandons any promise whatsoever to redeem the paper currency in any physical commodity. This third step in the decline of our currency is considered by many historians and economists as the beginning of the end, monetarily.

 

Dr. Franz Pick, the noted Austrian economist, aptly stated the link between a nation and its money,

 

"The destiny of a currency is, and always will be, the destiny of a nation."

 

Under the fractional-reserve banking rules, a bank must always issue more units of fiat money than can ever be redeemed (typically at an 8:1 ratio). Fractional-reserve banking is inherently a fraudulent system. But by 1933 FDR forced Americans off the gold standard and onto the treadmill of credit fueled by fractional-reserve banking.

 

Here is an example that may help you grasp why fractional banking is flawed. Imagine that you live on a small island with just one other inhabitant - a fractional-reserve banker. On the island there is only $1,000 in circulation total. Let’s say you decide that you want to start a fishing business, and visit your banker for a loan. The banker agrees to loan you $1,000 but must charge you $50 interest. That mean you will owe $1050. But wait, there is only $1,000 in circulation. Where will the other $50 come from? It must be created by the banker or you could never fully pay the loan back. This is the origin of inflation and devalues every other dollar in circulation.

 

Therein lies the faulty foundation of fractional banking - it must constantly inflate the amount of currency which in turn decreases the value of all the money in circulation. The consequences are many, but most harmful is the crushing of the middle class via long-term monetary inflation. If (when) the public finally discerns that the Emperor (Fed) has no clothes, I expect hyper-inflation and a flight back to substance money in a New York second.

 

Lenin pondered this modern flaw in the Capitalist system stating,

 

"The best way to destroy the Capitalist system is to debauch the currency. The process of inflation is so insidious that not one in a million can properly diagnose it, until it is too late."

 

The Federal Reserve and the federal government are banking on Lenin’s conclusion - that the public will not become aware of this insidious process… until it is too late.

 

Karl Marx also knew that centralized money control was critical to control the masses.

 

"Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly." -5th Plank, Communist Manifesto, by Karl Marx (1848)

 

The facts are that popular delusion and public confidence are the only two forces that uphold our present fiat money system. The financial house of cards created by our massive personal, corporate and government debt is now more vulnerable than ever. The government knows it and the Fed knows it - they even admit it in print:

 

"All the paper money issued today is Federal Reserve Notes. The real backing for the nation’s money is faith in the strength, soundness and stability of the U.S.economy." -Hats the Fed. Reserve Wears, Federal Reserve Bank of Phil., p. 4

 

One can only deduce that the Fed believes that as America’s faith and confidence goes, so goes the economy. It is interesting that the root meaning of the word credit (credaria) is "to believe." It is true, we now have a monetary system purely based on faith - faith in a system that betrays us and our children.

 

Over the last decade the government has even established a formal "Consumer Confidence Index" as a means of monitoring and manipulating the public confidence in the economy and money system. This index has been moving downward in 2001, reflecting a loss of confidence in the Fed... and our money system.

 

Starting in 1990, Federal Reserve Notes have two subtle additions: a metallic strip embedded in the bill and special micro-print around the President's bust. The official reason is to thwart counterfeiters and monitor anyone attempting to leave the U.S. with a suitcase full of cash through the use of special airport detectors.

 

This sounds reasonable enough, right? After all, counterfeit Fed notes are popping up all over the world. They're calling it economic terrorism. The Fed cannot allow competition in the money counterfeiting business to encroach on its domestic policy of issuing unconstitutional fiat (read: counterfeit) money.

 

The next major step is to convince Americans to convert entirely to a totally intangible, electronic money system - with no "cash" at all.

 

It took the last decade to prepare us, but I expect over the next decade the government and banks will accomplish it because it offers convenience - the new passion of American culture.

 

So, where do we go from fiat money? To what I call virtual money - that is, pure credit transactions reduced to blips on computer screens. This new form of money gives the government total economic control over the populace - a goal many have long desired. Financial privacy is also forfeited in the process.

 

Should all of this give you grave concern, or a sleepy nod? It depends on how much you value your privacy, sovereignty, freedom, liberty and that of the next generation - all of which are God-given rights under the U.S. Constitution.

 

The steady decline in the value of buying power throughout the past 80 years is a crime in my book. In fact, a 1900-dollar is worth less than 3 cents today due to inflation.

 

What can be done? How can we recover an honest foundation for economic stability - even if our government won't? One person at a time. The good news is that we still have options and rights.

 

Gold and silver coinage has been used as a medium of exchange and store of value throughout all recorded history. From Abraham in the Old Testament to your great grandfather - they all knew that real money represented true freedom and liberty. They also knew that freedom was not free, it often required waging a battle - which was anything but convenient.

 

Gold and silver coins represent true economic value because they have integrity by design and content. Prior to 1933, U.S. gold coins were the visible evidence of an honest money system. The denomination and value of the coin corresponded with the weight and fineness of the substance - gold. "A just weight and measure," as the Bible demands.

 

All of this changed overnight when FDR recalled the gold in 1933, making gold ownership illegal and allowing the Federal Reserve to issue fiduciary money, redeemable only in silver, not gold. This trust money was minted until 1965.

 

Since then America has functioned on debt, credit and fiat money. "Funny money," as G. Gordon Liddy once told me during a radio interview. The truth is that the systematic crushing of the middle class family due to long-term inflation is anything but funny.

 

In 1934 the government removed gold from circulation and in 1965 they removed silver. Notice that until 1964, U.S. silver coins still represented the economic mandate of just weights and measures. The amazing thing is how few opposed the Fed, perhaps because Americans still trusted the federal government.

 

Today we readily accept symbolic money instead of substance money with no thought. Our post-1965 copper/nickel tokens circulated today demonstrate a serious departure from our heritage of honest money and represent a gutted economic ethic.

 

Did you know that even our "copper" pennies are not even made out of copper anymore? Go ahead, scratch a penny with a nail - nothing but pop-metal. A pure copper penny is worth about 3 cents today.

 

Our money system today is symbolism, pure and simple, without any valuable substance to it. For this reason alone I feel that every American should diversify a portion of their fiat money into real money - gold and silver coins. As an added bonus, many historic U.S. gold and silver coins have maintained an above-average track record since the late 1960s.

 

The nature of our present economic and monetary environment requires decisive action - if not for ourselves, for our children and their sake. As R.E. McMaster Jr. puts it, this is "no time for slaves."

 

Today, monetary myth is so widespread that it appears that nothing short of a financial meltdown will rattle Americans enough to face reality. Is that what it will take? I hope not, but I fear so.

 

Remember 1979? The Carter deficits, double-digit inflation and feverish activity in precious metals? Most of us will never forget that year. Something similar or worse may await America - and the time to plan for it is now.

 

Prominent free market economists like R.E. McMaster, Jr., John Pugsley, Dr. Edwin Vieira, Lew Rockwell, Dennis Peacocke, Bill Bonner, Richard Russell, Mark Skousen, Frank Venerosa and many others agree that we’ll face a monetary and dollar crisis soon - based on the huge debt bubble amassed during the 20th century.

 

U.S. non-financial corporate debt has reached a staggering 46 percent of GDP - its highest level ever. Consumer installment debt is up to 21.7 percent of disposable income - also the highest level ever.

 

In early 2001 the average household has a credit card balance of $7,200 - an amount that would take 30 years to pay off if you made only the minimum payments. Savings rates recently hit zero.

 

Debt and credit has become America’s drug of choice. "Buy now - pay later" has become the new mantra of the last 40 years, but at a heavy price to our money system, our communities and our families.

 

The modern disintegration of the family, rising divorce rates and bankruptcy are just a few of the visible casualties that can be traced back to debt and credit abuse.

 

I suggest we admit that debt is America’s greatest drug problem today and follow the steps of any good rehab center - to start living within our means. This may require going "cold turkey" for some.

 

The only alternative (as with drugs and alcohol) is to gradually increase the dosage to continue the ‘debt high.’ This is what Alan Greenspan & Co. is banking on to keep the economy from going into a full-blown recession in the near future.

 

I suggest that you "just say no" to all drugs - especially debt - or else face the possibility of becoming a bankruptcy statistic in the great debt wash-out we are heading for unless we change direction.

 

Sadly, few are prepared to face this potential debt crisis with a financial house that is built on anything more than paper and electrons.

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Markets always correct. Don't know when, but south Florida will prove this to be quite true once again. Then we'll be in Phat City.

Jan 14, 2006 2:46pm

 

How long does it take the foreclosure process in your area? remember this post?

 

In my market it is 3-4 month, my mail marketing campaign will start 1 Nov. I found a useful sight (but I will reseach to see if I can get a better price) that will separate by zip code, own/rent, how long they have owned, active credit card users, market value of their house…. amongst several other options. I figure this will be a very targeted marketing plan and it is in areas with 10-15 percent appreciation and just below mean income levels (oh wait that was one of the demographic you could pick).

 

I want them to see my name and number before the depression sets in because there will be some good equity with these houses. I am going old school on these sub2 and slo. I could care less what the appreciation is (just kidding). I plan on getting some nice equity (buy right) and they will cash flow well.

 

With interest rates projected to go up at the end of summer (projected to go up at least 1 pt) it may also slow the market. I really see the new cc bill affecting the market as well.

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I think you're right, Tony. That new credit card legislation hasn't been getting much press, but it's a big story, and it will impact many households. With so many Americans so overextended, this may prove to be the straw that breaks the camel's back. Combined with even a slight rise in interest rates, those many folks who have adjustable mortgages are going to need help.

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I think you're right, Tony.  That new credit card legislation hasn't been getting much press, but it's a big story, and it will impact many households.  With so many Americans so overextended, this may prove to be the straw that breaks the camel's back.  Combined with even a slight rise in interest rates, those many folks who have adjustable mortgages are going to need help.

 

What new credit card legislation? I know there is one forcing people to go to credit card counselors as a requirement before filing for bankrupcy.

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I think you're right, Tony.  That new credit card legislation hasn't been getting much press, but it's a big story, and it will impact many households.  With so many Americans so overextended, this may prove to be the straw that breaks the camel's back.  Combined with even a slight rise in interest rates, those many folks who have adjustable mortgages are going to need help.

 

What new credit card legislation? I know there is one forcing people to go to credit card counselors as a requirement before filing for bankrupcy.

Congress passed a bill requiring the credit card companies to raise the minimum amount to be paid each month, from the current 2%, to 4%. Doubling the minimum amount due each month. That's going to hurt a lot of people.

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I think you're right, Tony.  That new credit card legislation hasn't been getting much press, but it's a big story, and it will impact many households.  With so many Americans so overextended, this may prove to be the straw that breaks the camel's back.  Combined with even a slight rise in interest rates, those many folks who have adjustable mortgages are going to need help. 

 

 

What new credit card legislation? I know there is one forcing people to go to credit card counselors as a requirement before filing for bankrupcy.

Congress passed a bill requiring the credit card companies to raise the minimum amount to be paid each month, from the current 2%, to 4%. Doubling the minimum amount due each month. That's going to hurt a lot of people.

 

I already had a sense of urgency to prepare for the depression because of the dollar crises. But now that urgency just went up 10 fold. When does the bill take effect?

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Here are a few links with some info on this subject: one, two, and three. And if you still hunger for more info, Google "credit card minimum payment", or something similar, and you'll find more articles and stories than you could ever hope to read.

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How are you adapting to your market, Michael?

Are you mainly having to stick to CAs?

Even CA's are tough in this market.

 

 

So how are you adapting to that market? I am in a heck of a sellers market as well. I am even more discouraged now to hear that even the author of "The Naked Investor" is having a hard time. What hope is there for the rest of us?

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I didn't mean to discourage you, or anyone. And I don't see where I said I'm "having a hard time". Indeed, as investors, a buyers market is much easier to wheel and deal in. If a homeowner hasn't received a call in two weeks, and then you appear, it only makes sense that they would be more willing to listen and deal than if there were a line of potential buyers at their door.

My point being that there are times, such as now, that we need to adapt our approach and expectations, or become extinct like the T-Rex.

Super heated market? No one is going to drop their price 20% because you asked politely. What to do? I'm afraid you'll have to pay close to full price or more. Now, doing this you can either buy and hold in anticipation of appreciation. You can turn around and sell it for more still, (Remember, we're talking about an overheated market. Someone is willing to pay you more than you just paid.) You can work CA's. And you can try Pure Options. You can also expand your market to areas that aren't so extreme, until your local market cools.

And remember, as fellow member Sold! pointed out in this thread, motivated sellers exist in all markets. We just have to work harder to find them at times.

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Alan Greenspan comments in his testimony a few days ago to congress on the housing bubble and the overextended credit. The future for many americans looks very gloomy.

 

According to estimates prepared by the Federal Reserve Board staff, a significant portion of the sharp decline in the ten-year forward one-year rate over the past year appears to have resulted from a fall in term premiums. Such estimates are subject to considerable uncertainty. Nevertheless, they suggest that risk takers have been encouraged by a perceived increase in economic stability to reach out to more distant time horizons. These actions have been accompanied by significant declines in measures of expected volatility in equity and credit markets inferred from prices of stock and bond options and narrow credit risk premiums. History cautions that long periods of relative stability often engender unrealistic expectations of its permanence and, at times, may lead to financial excess and economic stress.

 

 

Such perceptions, many observers believe, are contributing to the boom in home prices and creating some associated risks. And, certainly, the exceptionally low interest rates on ten-year Treasury notes, and hence on home mortgages, have been a major factor in the recent surge of homebuilding, home turnover, and particularly in the steep climb in home prices. Whether home prices on average for the nation as a whole are overvalued relative to underlying determinants is difficult to ascertain, but there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels. Among other indicators, the significant rise in purchases of homes for investment since 2001 seems to have charged some regional markets with speculative fervor.

 

The apparent froth in housing markets appears to have interacted with evolving practices in mortgage markets. The increase in the prevalence of interest-only loans and the introduction of more-exotic forms of adjustable-rate mortgages are developments of particular concern. To be sure, these financing vehicles have their appropriate uses. But some households may be employing these instruments to purchase homes that would otherwise be unaffordable, and consequently their use could be adding to pressures in the housing market. Moreover, these contracts may leave some mortgagors vulnerable to adverse events. It is important that lenders fully appreciate the risk that some households may have trouble meeting monthly payments as interest rates and the macroeconomic climate change.

 

The U.S. economy has weathered such episodes before without experiencing significant declines in the national average level of home prices. Nevertheless, we certainly cannot rule out declines in home prices, especially in some local markets. If declines were to occur, they likely would be accompanied by some economic stress, though the macroeconomic implications need not be substantial. Nationwide banking and widespread securitization of mortgages make financial intermediation less likely to be impaired than it was in some previous episodes of regional house-price correction. Moreover, a decline in the national housing price level would need to be substantial to trigger a significant rise in foreclosures, because the vast majority of homeowners have built up substantial equity in their homes despite large mortgage-market-financed withdrawals of home equity in recent years.

 

Historically, it has been rising real long-term interest rates that have restrained the pace of residential building and have suppressed existing home sales, high levels of which have been the major contributor to the home equity extraction that arguably has financed a noticeable share of personal consumption expenditures and home modernization outlays.

 

The trend of mortgage rates, or long-term interest rates more generally, is likely to be influenced importantly by the worldwide evolution of intended saving and intended investment. We at the Federal Reserve will be closely monitoring the path of this global development few, if any, have previously experienced. As I indicated earlier, the capital investment climate in the United States appears to be improving following significant headwinds since late 2000, as is that in Japan. Capital investment in Europe, however, remains tepid. A broad worldwide expansion of capital investment not offset by a rising worldwide propensity to save would presumably move real long-term interest rates higher. Moreover, with term premiums at historical lows, further downward pressure on long-term rates from this source is unlikely. 

 

For complete transcript read here..

http://www.federalreserve.gov/boarddocs/hh...y/testimony.htm

 

And finally, more signs that the market is starting to peak out . Excerpt from the beige book!

For those who do not know what the beige book is..

Commonly known as the Beige Book, this report is published eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector. An overall summary of the twelve district reports is prepared by a designated Federal Reserve Bank on a rotating basis.
Construction and Real Estate

Residential real estate activity remained robust overall but showed a few signs of cooling in some Districts. Boston reported that residential real estate markets were still strong. However, housing activity and home price appreciation in Massachusetts moved from "hot" to "normal," and housing inventories in the District as a whole became somewhat less tight. Housing activity was described as robust in the New York District, but housing inflation slowed in New Jersey and the condo market in Manhattan was less frenzied than in the spring. In the Richmond, Atlanta, and San Francisco Districts, housing activity remained strong but eased in a few markets that had been especially hot--Washington, D.C., several Florida markets, and parts of southern California. Dallas also described housing demand as strong but noted that the supply of new homes was sufficient to keep housing inflation from exceeding overall inflation. Housing activity was brisk in the Chicago District and solid in the Kansas City and Minneapolis Districts, although homebuilding edged down in the Kansas City District. The weakest report came from the Cleveland District, where homebuilders have faced slightly softer conditions since early spring and new home prices have been flat.

 

Commercial real estate activity improved in most Districts. Cleveland said commercial builders were experiencing steady improvement and higher backlogs of orders. In the Atlanta District, new construction projects moved forward, and office vacancy rates trended downward but were still high. Contacts in the Chicago District described commercial activity as busier than normal, although activity was slower in Michigan. Commercial real estate activity was described as strong in the Richmond District and as improving in the Minneapolis, Kansas City, and San Francisco Districts. Dallas reported that speculative office construction increased, apartment construction remained high, and hotel markets were hot. Some of the increased real estate demand in the Dallas District was attributed to outside investors attracted by the area's lower real estate prices.

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