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Thursday, 12 May 2011 08:44

The Residential Real Estate Week in Review, or I Told You We're In A Real Estate Depression! The MSM is Just Catching Up

Anybody who has been following me since 2006 knows me to be a real estate bear. I was massively bullish from 2000 to 2005, after which I started selling off my investment assets. No, it wasn't perfect timing, luck or a gift from God. It's called a spreadsheet. Simply do the math and the truth will be self-evident! The Wall Street Journal and Bloomberg ran articles earlier this week on the home market tumbling further in the US: Home Market Takes a Tumble - WSJ.com.

I warned thoroughly of this occurrence throughout last year and this - see The Latest Case Shiller Index – Housing Continues Freefall In Aggressive Search For Equilibrium Monday, February 7th, 2011. The .gov bubble blowing accomplished the mission of taking observers eyes off of the fundamentals and macro environment and back into optimism central. To Bloomberg TV's credit, they gave me the opportunity to call it like it is.

Reggie Middleton on Bloomberg TV's Fast Forward

Bloomberg TV: "The risk/reward ratio in commercial real estate does not look good!"

Bloomberg TV & Reggie Middleton on the Flawed Case Shiller Index: "That's what they said in Japan about 12 years ago, look where they are now!"

I will be discussing much of the same on Max Keiser tomorrow. Part of the problem is that the foreclosure pipeline has been artificially clogged, causing a severe backlog that is not registering in the official numbers. Again, an issue that I went into depth in last year. Foreclosure activity decreased in April for the seventh straight month, bringing total foreclosure activity to a 40-month low, according to a new report from RealtyTrac. But the numbers are deceptive. When adjusted for reality, these numbers and this turn of events corroborate what I have dug up regarding the shadow inventory available to subscribers, (see the latest Shadow Inventory Analysis Spreadsheet online) in that although shadow inventory looks bleak, there is a massive wave of unseen inventory waiting in the banking rafters. This is online tool is a very, very under appreciated asset that I would expect to get much wider use in the near to medium term.

Bloomberg also reports Banks Said to Offer $5 Billion to Resolve State, U.S. Foreclosures Probe. This amount is a mere pittance, and even if they do push this through for their nth bailout, I don't think it will permanently squelch the various avenues for private litigation, then again I'm no lawyer. Even as a layman though, the litigious threat was quite obvious, reference :

  1. Less Than 24 Hours After My Warning Of Extensive Legal Risk In The Banking Industry, The Massachusetts Supreme Court Drops THE BOMB! Monday, January 10th, 2011

Bloomberg reports that Foreclosures Prompt Four U.S. Cities to Sue Banks for Mowing, Home Repairs. I discussed this in detail both on Boombustblog and on the Max Keiser show: Reggie Middleton On Max Keiser Discussing Tradable Fraud, Goldman’s Facebook Deal & Phantom Bank Earnings

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For more detail, reference I Warned That Banks Will Soon Be Forced To Walk Away From Homes… Guess What! Monday, January 17th, 2011. You would be shocked at the amount of so-called professionals and experts who told me this could never happen! I pushed further, with articles that expanded on the topic last year as well:

Now, in May, my proclamations from last year and the first quarter look prophetic. They are not, they are the result of objective analysis. Either way, In Case You Didn’t Get The Memo, The US Is In a Real Estate Depression That Is About To Get Much Worse.

In There’s Stinky Gas Inside Of This Mini-Housing Bubble, You Don’t Want To Be Around When It Pops! I illustrated the poor macro and fundamental conditions that made it impossible for a housing recovery to occur in the near term.

Nobody wants to admit it, but the 2008 never finished - The True Cause Of The 2008 Market Crash Looks Like Its About To Rear Its Ugly Head Again, With A Vengeance.

Why so glum? Well, because mortgage lending is still the biggest lending component in this country and the biggest lenders have YET to come clean on their trash. After calling the fall of Bear Stearns, Lehman Brothers, General Growth Properties, Countrywide, WaMu, Merrill Lynch, and a whole host of other "trash as collateral" financial institutions (see Who is Reggie Middleton!!!), one would think that I would get more airplay. If one truly believes housing is still falling (in other words, if one can count), then here's proof of more "hide the sausage" games being played: There’s Something Fishy at the House of Morgan Wednesday, April 27th, 2011

As a historical reminder, I suggest you go through this dense post detailing JPM's 3rd quarter performance from last year that was hailed as impressive in the media: JP Morgan’s 3rd Quarter Earnigns Analysis and a Chronological Reminder of Just How Wrong Brand Name Banks, Analysts, CEOs & Pundits Can Be When They Say XYZ Bank Can Never Go Out of Business!!! Sunday, October 17th, 2010

Last modified on Tuesday, 28 June 2011 09:52

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