Richard Suttmeier: Home Prices Could Fall Another 50%

Home Short Sales Bring Real Estate Prices Down

The housing market continues to deteriorate.

Thursday’s report on May pending home sales was down 30% from the prior month and nearly 16% vs. a year ago.

The market weakness spans the country. Sales in the Northeast, Midwest and South fell more than 30%, the bright spot, the West, only fell 21%.The news comes after last week’s record low new home sales in May, which plummeted nearly 33%. Experts say the expiration of the new homebuyer tax credit is to blame for the sudden market softness.

Unfortunately, the market could get worse and prices could fall further, says Richard Suttmeier of ValuEngine.com. High unemployment and struggling community banks are two main causes. Saddled with bad housing and construction loans, local banks will continue to restrict lending.Plus, the failure of the Obama administration’s mortgage modification program means a steady flow of short sales. “People are going to be surprised when they see there have been short sales,” which negatively impact appraisals in the local community, says Suttmeier.How low can prices go?Using the S&P/Case-Shiller index as his guide, Suttmeier suggests homes across the country could lose half their value. “If it gets back, like stocks, back to the 1999-2000 levels, that’s another 50% down in home prices,” he says.

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Richard Suttmeier says, “Forget the Double-Dip,” We Won’t Kick the Recession Until We Start Creating Jobs”

The stock market continued its sell-off Thursday as investors await Friday’s June unemployment report. The consensus estimate among economists is for a loss of at least 100,000 jobs and the unemployment rate to inch up to 9.8%.The jobs data we have already received this week also doesn’t suggest positive news. This week’s initial jobless claims were worse than expected, growing by 13,000 to 472,000. The four-week moving average is now 466,500. That’s well above normal levels, even during a recession. “350,00 is the recessionary threshold,” says ValuEngine.com’s Richard Suttmeier.The private sector is still not creating enough jobs to make a dent. Wednesday’s ADP report counted a disappointing 13,000 new jobs in the private sector in June. Remember, the government’s data only showed 41,000 new private sector jobs in May.The poor job market is proof the economy remains in a prolonged recession, says Suttmeier, noting that in December 2007, when the recession began, the unemployment rate was below 5%. “Forget the double dip, we’re not out of the first dip, based on that statistic alone.”There is one shred of silver lining, at least when it comes to stocks, Suttmeier tells Aaron in this clip. “The market reaction to the negative side has already occurred this week, so you may get a relief rally,” even if the jobs data is weak.

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Robert Shiller, Market Boom “Can’t Be Trusted”

The strength of the recovery in the housing market has surprised a lot of people, including Yale Professor Robert Shiller.”This is historic,” Shiller says of the recent snapback in the Case-Shiller Index. “It’s V-shaped. We’ve never seen it before. That makes it hard to know from statistical basis what it portends.”Are we on track for a repeat of irrational exuberance?With the stock market up more than 50% since March and the Standard & Poor’s Case/Shiller Index on the rise for the last three months, it’s a worry, says Yale Professor Robert Shiller. “Somehow we got into this really speculative mentality and I don’t think we’re out of it yet.”

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Commercial Real Estate Market – Next Shoe to Drop

Great Dpression Homless Man

Great Depression Homless Man

NYC Commercial Real Estate Wreckage

Here’s the scary thing about the commercial real estate situation:   It’s not even starting to get better, actually — Things are still getting worse faster says Moody’s.

The Moody’s Delinquency Tracker (DQT) measured a 41 basis point increase in the month of September. The DQT now stands at 3.64%. This represents a 310 basis points increase over the same time last year. The DQT is now nearly 350 basis points higher than the low of 0.22% reached in July 2007.

September had the largest monthly basis point change in the history of the tracker. The 41 basis point increase is slightly larger than the increases in May and June earlier this year. The tracker resumed its large monthly growth after a lower than average change in August.

The average rise in delinquency in the past six months is 34 basis points. This compares to a three basis point average increase for the same six month period in 2008 (April through September). In 2009 the delinquency rate has risen 269 basis points, nearly tripling since the beginning of the year.

The PBS NewsHour took a look at the bearish obsession du jour, the commercial real estate market.  Real estate analyst Bob White took them around to show some of the ugliest cases out there in New York City.

http://www.businessinsider.com/a-guided-tour-of-nyc-commercial-real-estate-wreckage-video-2009-10

Moody’s Delinquency Tracker - Commercial Real Estate

Moody’s Delinquency Tracker - Commercial Real Estate

Marc Faber Is “Highly Confident” the Future Will Be Very Bleak: See Video on Tech Ticker – Yahoo! Finance

“The future will be a total disaster, with a collapse of our capitalistic system as we know it today, wars, massive government debt defaults and the impoverishment of large segments of Western society,” Marc Faber writes in the September issue of The Gloom, Boom & Doom Report.A statement like that pretty much speaks for itself, but it’s a bit more complicated than appears on first blush.Faber has been bullish — especially on commodities and emerging market stocks — for some time now and believes the current global recovery trade will last another two-to-three years, as discussed in more detail in a forthcoming clip. But he has major long-term concerns about the dollar’s long-term viability given rising U.S. deficits, massive unfunded mandates and the fact “we have a money-printer at the Fed.”This combination will eventually lead to runaway inflation, wholesale debasement of the dollar, and a major lowering of living standards for most Americans and many Europeans as well, says Faber, who is “highly confident” in this grim prediction.

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Marc Faber – Emerging Market Economies Will Challenge and Surpass the West

Marc Faber has an informal rule never to spend more than 10 days in a country before rushing to the next one. In addition to lots of frequent-flyer miles, this gives him the chance to see firsthand how lots of the world is doing.So how’s it doing?Better than the U.S., says Faber, the editor of the The Gloom, Boom & Doom Report.In the U.S. we have a “structural unemployment” problem. We have a debt problem. We have an economy-propped-up-by-frantic-government-spending problem. And, by in large, while the rich get richer, the middle class does not benefit, especially during the boom days earlier this decade.The rest of the world has problems, too, of course, Faber says, but they’re not as bad as ours. He’s observed businesses in emerging markets in Asia are less vulnerable to market fluctuations because they tend to be cash rich, and therefore less reliant on debt and leverage. He also says there’s a hunger and competition, in countries like China and India, that’s missing in the U.S.So go ahead and enjoy the “v-shaped” recovery while it lasts, says Faber, who has already fled to Hong Kong.

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Buffett Says, We Are Doomed – We’re Going to Be Crushed Under A Mountain of Debt

A highly influential American has finally hit the panic button about the tremendous mountain of debt the country is piling up.Last year, Warren Buffett says, we were justified in using any means necessary to stave off another Great Depression. Now that the economy is beginning to recover, however, we need to curtail our out-of-control spending, or we’ll destroy the value of the dollar and many Americans’ life savings.Some not-so-fun facts from Buffett’s editorial today in the New York Times: * Congress is now spending 185% of what it takes in * Our deficit is a post WWII record of 13% of GDP * Our debt is growing by 1% a month * We are borrowing $1.8 trillion a year$1.8 trillion is a lot of money. Even if the Chinese lend us $400 billion a year and Americans save a remarkable $500 billion and lend it to the government, we’ll still need another $900 billion.So, where’s it going to come from? Most likely the printing press. And, ultimately, Buffett says, that will destroy the value of the dollar.

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