30-year mortgage rates rise above 6%

I am not planning to buy a house but if I were, I would consider buying it soon.
Even though the housing market is still too hot, the long-term mortgage rate is still at a multi-decade low. So for homeowners instead of speculators, it's still a good time to lock in for loan.
30-year mortgage rates rise above 6% - The Boston Globe

Craigslist "Reduced" at 235

Currently there are 235 "Reduced" listings on Craigslist

Long Term Rates on Rise

The current 6-month high set for the 30-year mortgage rate is no surprise to me
USATODAY.com - 30-year mortgage rate highest since April
In fact, I have been short on this ETF iShares Lehman 20+ Year Treas Bond (TLT) for quite some time. And I suspect we are seeing just the beginning of a profound trend of rising long-term rates. A couple of good indicators include

• Fed has reintroduced the 30-year treasuries
• Long term financial committment required for recontructions from the natural disasters like Katrina. Besides the 34 billions of bonds issued since 1995 needs bailout, $60 billion in new debt also lacks government guarantee.
  

• Needs for improvements on other infrastructures

Bill Gross

Bill Gross in his PIMCO Bonds - IO October 2005: "Investment Outlook" describe the downturn in housing market to be "99% inevitable"
Let me state categorically that the above sequence is barely questionable, almost inevitable, 99% unavoidable, and in modern parlance - “slam-dunk.” In so saying, I hope I am not being unkind to those of you who think otherwise - I’m trying to do you a favor!

First Crack in Bubble?

First Crack in the Housing Bubble ... And Everyone Missed It
The median price of a home fell in July by a whopping 7.2%
I confirmed these figures from economagic.com and here is a 5 year chart generated from the same data.















There is a widely published number of $218,000, which is supposed to be the July median sale price of existing homes, and more importantly, that's a new record high and an increase from last year.

Do not know why the two sets of numbers are so different.

Housing Prices Slowing

New York Times is running a story on slowing housing prices
Slowing Is Seen in Housing Prices in Hot Markets

In Manhattan, the average sales price fell almost 13 percent.... The amount of time it took to sell a home was also up 30.4 percent over the same period.

For-sale listings have also swelled throughout California, according to the California Association of Realtors. In the San Francisco Bay area, they have increased 16 percent in the last year, Coldwell Banker Residential Brokerage said.

New York Post has a similar one
Real Estate in Bubble Trouble

In the Prudential Douglas Elliman report, which covers sales of all firms in New York City, the average price of a Manhattan apartment — including co-ops and condos — dropped 12.7 percent from $1.32 million in the second quarter to $1.15 million.

In the luxury apartment market — defined as the top 10 percent of transaction prices — the number plunged 26 percent from $5.2 million to $3.8 million in the three-month period.

How to Make Newborns Cry

For all of those who do not have a trust fund to inherit. This is how they make newborns cry these days

Kiyosaki Ponders Inevitable Bust

Author of "Rich Dad, Poor Dad", Robert Kiyosaki, thinks the bust in the current housing market is inevitable.

In his article, All Booms Bust: Making Myself Clear, he says
"Do I still expect a bust? The answer is "yes." In fact I am hoping for one so I can buy more real estate. "
His advice to other real-estate investors is
"Please don’t get caught in a flip that flops or use your house as an ATM machine, borrowing out the new found and inflated equity in your property."

Bankruptcy Rush

These are the news on the bankruptcy rush happening around the nation

BostonHerald.com - Business News: Bankruptcy rush blamed on change in law
"The number of people filing for Chapter 7 bankruptcy in Massachusetts during the three-month period ending June 30 jumped dramatically to 5,256, up 25.3 percent from the same period last year, according to data released yesterday by the Administrative Office of the U.S. Courts."

The Arizona Republic - State residents rush to file Chapter 7 before tougher law
Filings for Chapter 7 bankruptcy protection, which allows consumers and businesses to liquidate most debts, climbed 39.2 percent in August compared with filings in August 2004, according to data from the U.S. Bankruptcy Court District of Arizona.

ToledoBlade.com (Ohio) - Bankruptcy filings 2nd-highest ever
The 1,314 filings in August, up 48 percent from the same month a year ago, bring the year-to-date total to 9,011, enough to rank as the third highest year ever, with four months to go.

Invest in Real Estate

You can now be an investor in real estate with no money. How ingenious!!
InvestRealEstate.com Rolls Out Zero-Down Investor Loans
"Along with zero-down mortgages on second homes and investment properties, investors whose credit scores are high enough can qualify for loans with no income, asset or job verification. Charter Funding also offers 1.325% Super Cash Flow loans to investors who desire the lowest possible monthly payment."

God Provides Zero-Down Loans

Columbus Dispatch is running a story
Loophole fuels zero-down mortgages
"Homebuilders across the country, including Dominion Homes, have found a way around a federal law barring sellers from giving money directly to buyers for a down payment.

They route the money through charities such as the Nehemiah Corp. of America, a faith-based group in California."

"In 2002, HUD updated an earlier study of 2,261 Nehemiah-assisted mortgages in Indianapolis, Las Vegas, and Sacramento and Stockton, Calif. Researchers documented a 19.4 percent default rate among those loans.

Customers who bought a house without Nehemiah’s help had a default rate of half that level."

San Diego Slowing Down!!

“S.D. blazes new trail in housing slowdown”
signonsandiego.com: http://tinyurl.com/afg6n

“S.D. blazes new trail in housing slowdown”
signonsandiego.com: http://tinyurl.com/afg6n

The market is giving Teresa Generas the jitters, causing her to pray for somebody to buy her 1931 Mission Revival bungalow, which has been on the market more than six months.

“It’s getting a little bit scary right now,” she said. “I’m not a person of means. I’m a retired nurse and a widow and I don’t have millions to call upon.”

Generas, 64, moved to a condo in Tierrasanta last spring and put a $1.1 million asking price on her 1,879-square-foot, three-bedroom home in Kensington. Since then, it’s been in and out of escrow three times and is listed at $950,000 to $975,000. Her son Tony is house-sitting and helping cover her two mortgage payments, which total $6,000 a month. But she’s not ready to accept lowball offers.

“I just refuse to believe that there’s been that much of a dip,” she said.

Lowering the price more doesn’t interest her. “I think people who can afford this house wouldn’t care that much anyway,” she said.

…Karen Peterson, last year’s president of the realty association, said sellers shouldn’t panic and buyers should not hesitate if they find what they want. “I think we’re still adjusting,” Peterson said. “Last year was such a hot market.”

She said that in a few cases buyers are outbidding each other. Areas where prices are down saw rapid increases earlier. But the big bugaboo remains the anticipation that the proverbial real estate “bubble” will burst.

“People think prices are going to go down and the statistics keep telling us they’re not,” Peterson said. “They need to buy. We have an excellent inventory, excellent interest rates. What are they waiting for?”

Saudis to retrieve $360 billion abroad

You would have heard the news by now. $360 billion is roughly half of the forex reserve of China. The real question if why the Saudis are doing this and what impact it will have on global economy.
Saudis to retrieve $360 billion abroad:- - World News - Webindia123.com

San Diego slowing down?

Paul Krugman: Living in a bubble - Editorials & Commentary - International Herald Tribune: "after a rise in house prices that dwarfs the boom of the 1980s. The number of single-family houses and condos on the market has doubled over the past year. 'Homes that a year or two ago sold virtually overnight - in many cases triggering bidding wars - are on the market for weeks,' reports The Los Angeles Times."

Camping Out for New Condos

This reminds me of the crazy scene of people "flipping" line positions to pick condo units in Hong Kong before the crash in 1998 which brought overall property down by 60%.
Condo crazy at the heart of a boom | csmonitor.com

Bubble Comparison

It certainly looks like the road block is not too far away


















Wall Street's Fate Caught Up With Housing - Forbes.com

Meritocracy in America | Ever higher society, ever harder to ascend | Economist.com

Meritocracy in America | Ever higher society, ever harder to ascend | Economist.com: "Skull and Bones"

Kiplinger Names 13 Riskiest Markets

PMI's Housing Risk Study suggests 13 riskiest markets to have a price fall in next two years

1. Boston (53%)
2. San Francisco (40%)
3. Sacramento (40%)
4. Providence (39%)
5. L.A. (32%)
   

In come the waves

"The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops"
- Economist, "In come the waves"