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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Gary Shilling’s Bearishness Doesn’t Seem Nutty

The recession will now turn deeper and the Federal Reserve is worried about deflation.

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The Days of “Buy and Hold” Are Over, says John Mauldin

The economy is still the pits yet stocks are on a tear. What’s an investor to do in these confusing times?John Mauldin, president of Millennium Wave Advisors, admits the average investor doesn’t “have as many good choices” as in the past.Contrary to what “experts” have told the public for years, now is not the time for buy and hold, Mauldin says. “You can be a trader. You can ride the wave, I’ve got no problem with that but I don’t think you want to buy something and hold it for five years.”That’s because he thinks another correction is coming in the not so distant future.Mauldin, who writes the Thoughts from the Frontline e-letter, does think there’s money to be made in real estate. With prices so depressed in many markets, he says buying property on the cheap and renting it “is a prescription for making money.”

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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

One In Three Chance You’ll Soon Owe More Than Your House Is Worth: Tech Ticker, Yahoo! Finance

One In Three Chance You’ll Soon Owe More Than Your House Is WorthPosted Aug 20, 2009 11:15am EDT by Henry BlodgetRelated: xhb, tol, len, kbh, dhi, phmForeclosure rates in the U.S. remain near record highs. More than 13% of American homeowners with a mortgage are either behind on their payments or in foreclosure. The latest report from the Mortgage Bankers Association, released today, shows the percentage of loans that entered the foreclosure process dipped slightly to 1.36%, down from an all-time high of 1.37% in the first quarter.However, that number may soon rise again as mortgage delinquency rates continued to climb in the second quarter.That news is no surprise to Karen Weaver of Deutsche Bank. She startled everyone a few weeks ago when she predicted that, by 2011, nearly half of American mortgage holders would be underwater (meaning that they’ll owe more on their mortgages than their houses were worth).Half of mortgage holders means about one-third of American households. Put another way, Weaver forecasts 25 million mortgage holders will be under water by 2011, up from an estimated 14 million currently.Aside from the mega-bummer of owing the bank more than your house is worth, underwater mortgages exacerbate another problem: foreclosures. In previous housing busts, being underwater led to a greater likelihood of default, and Weaver believes this the foreclosure problem will be much worse this time around.In a recent report, Weaver analyzed all the various kinds of mortgages in the US and estimated that 48% of them would be underwater by 2011. This includes “prime” borrowers, of whom a startling 41% will be underwater.

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