S&P Pushes Back Timing on "Bottom" of Housing Market — 2011

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The chief economist at S&P, echoing the same conclusions by virtually all experts, now places the timing of the bottom of the housing market as “sometimes” in 2011. My opinion is the same as it was before — they are being too optimistic and applying old formulas to new problems. To be sure there will be life in some markets around the country where the demographics had not been targeted (yet) by  Wall Street in their scheme of the GRAND ILLUSION called SECURITIZATION. But overall, with the job outlook bleak and wages still declining, there just isn’t any reason to expect the national housing market to improve. On the other hand I’m sure that Wall Street will come up with ways to make money on THAT too.

Most people see another 10% drop in housing prices before we really hit bottom, and most of us don’t see any real improvement, although after the bottom is hit, the market is usually oversold and there is a little bounce effect to correct the market pricing.

With inventories of new and old housing units at all time peaks (enough to supply housing units for years without construction), rising interest rates, elimination of pensions (see stories about Alabama, with retirees going to work at Wall-mart because the pension money is gone, thanks to bogus mortgage bonds), a virtual guarantee of municipal bond defaults starting in July, 2011, Wall Street announcing that their earnings are going to take a hit (that is over 40% of our economy now according to the metrics now used), and a glance over at Japan where the 4th quarter is now guaranteed to show a contraction, there just isn’t any news of anything substantive that will wet the appetites of anyone holding money to do anything except protect the money they have from devaluation.

All of this is abundantly obvious as an increasing number of people who would never have dreamed of walking away from a debt, are joining the ranks of those using the strategy of strategic default — just stop paying. They stay in the home as long as possible and then they hit the road with some money in their pockets from not paying anyone, least of all the parties claiming they are in default. Some are litigating, some are not. But the phenomenon is rising rapidly. The stigma of foreclosure is considered an even trade off or better when it comes down to having some money in your pocket and walking away from the debt that can never be justified by the value of the asset because the whole thing was a lie to begin with.

If the lawsuits keep producing results like we expect here, then eventually we are going to see signs of acceptance that the obligation is NOT secured and that the note is NOT a correct description of the obligation. This will shift the bargaining power completely away from the banks, and re-start house-hunting, but at much lower prices.

Posted in bubble, Corruption, Eviction, securities fraud |