Wednesday, December 09, 2009

30 months Too Late

By my estimate $2.5T in MEW is unsupported by reasonable asset valuation. In total somewhere between $7T and $9T in phantom equity is exposed in any retracement to the mean. An orderly retreat will allow inflation to eat away much of this. A decline in the dollar may result in a disproportionate amount of pain to be taken by foreign investors. No matter how the pain is spread, there will be consumer pain. Likewise because of govt spending policies that resemble the proverbial cricket in summer we can expect massive deficits and even larger tax inceases. - Aug 6, 2006

And what does the MSM say?:
U.S. Homeowners Lost $5.9 Trillion Since 2006 Peak
By Dan Levy

Dec. 9 (Bloomberg) -- U.S. homeowners have lost about $5.9 trillion in value since the housing market’s peak in March 2006 as mounting foreclosures and the recession weighed on prices, according to

Almost half a trillion dollars was wiped out this year through November as housing headed for a third straight annual decline. New foreclosures and higher mortgage rates in 2010 may hinder a rebound, the property data service said today in a statement.

1 comment:

NoVa Sideliner said...

Nice fat loss there. Nice prediction, too, Dawg.

Paralleling that, I noticed yesterday that an investsment property one of my co-workers wanted to go in on back in 2006 had just changed hands. It was basically an old teardown in a commercial part of town, half acre and half of that flood prone.

Someone else bought it ('cuz I told my pal it was too high) for $150k with little down but an 8.9% ARM. Last month, BofA took it back in foreclosure, and now I see a local investor group snarfed it up for $62k. That's almost a 60% haircut from the earlier price.