Another fine collection of links from Reno Ignoramus (RI). I keep bugging him to become a guest contributor on the blog… I even offered to buy him his very own man-in-a-paper-bag stock photo to use whenever he posts (to protect his identity, of course) but he just won’t do it. Too bad, because some of his very best commentary never makes it online.
Ailing Housing Infects Economy
Take the First Reasonable Offer and Count Yourself Lucky
Can the Economy Survive the Housing Bust?
Now is the Time to Buy or Sell, Right?
Housing Slump Hits Lumber Industry
Winning and Losing with Real Estate
Housing Bubble or Credit Bubble?
NVMojo
I thought this story was interesting as it relates to the mortgage crisis we are looking at:
Friday, November 10, 2006
Well. The elections are over, and the outcome had no detectable impact on the financial markets. Far more important than the switch in congressional control is President Bush’s transfer of national security policy from Neo-Con hands to Daddy’s bailout team — grounds for optimism for the world ahead. However, we’re not interested in the world, we’re interested in money; not the House but housing, and the bond market much prefers pessimism to optimism.
There were no noteworthy economic data released this week, but the bond market and mortgages improved by a chart-pattern whisker. News of healthy payrolls blew up the bond market last week, threatening a return to the 4.83 percent September high for the 10-year T-note and mortgages to 6.5 percent … but it didn’t happen. The 10-year this morning is 4.58 percent, back where it was before the payroll news, mortgages poised for another run at the 6.00 percent barrier.
To break through to the fives we need some bad news, and the center of that hopeful expectation among bond ghouls is still a collapse of the housing bubble.
I continue to disbelieve the existence of a housing bubble in the financial market sense, a market due for a 20 percent-30 percent price decline. The post-boom housing experience will be ugly in some markets, but not enough to knock the economy into recession. A recession from some other cause (a consumer or employment collapse, a Fed forced to overtighten into inflation) would certainly make housing worse, but not the other way around.
With one exception: a mortgage-credit spiral.
Housing markets are the slowest-roller of all. The last buyers in the party get burned by a routine and minor retreat in price in the year after the peak, but then prices just go flat, sometimes for decades. The bubble zones appear to be entering that flat phase now. The effect on GDP is thus far minor, mostly caused by the decline in mortgage equity withdrawal, sawing about 1 percent off of GDP — a reduction in stimulus, not a braking force.
more…
http://www.mortgage101.com/partner-scripts/inman.asp?ID=58945