| Here is some of the most recent data on the current | | | | take on the housing situation. |
| U.S. housing market. | | | | Despite the good news on rising home sales, there are |
| The National Association of Realtors proudly reported | | | | at least three reasons why a significant rebound in the |
| that existing home sales climbed for a third straight | | | | housing market is just not in the cards. |
| month. It was at a pace faster than most economic | | | | 1. A huge glut of houses still remains on the market. |
| experts had predicted. | | | | In fact, almost 10% of houses built in the past decade |
| According to the U.S. Commerce Department, new | | | | are sitting vacant. This compares to the historical |
| home sales increased by 11% in June over the | | | | average of 2.2%. There are 10 months of housing |
| previous month, the biggest increase in 8 years. | | | | inventory listed for sale compared to the historical |
| New and existing home sales in June reached their | | | | average of less than 4 months. |
| highest level in eight months. | | | | In addition, banks are sitting on close to 600,000 |
| New home construction is up 37% from its low this | | | | foreclosed houses that have not been placed on the |
| past winter. | | | | market. |
| Many corporate professionals are searching for a | | | | There are simply too many houses that are too big |
| way out of corporate America. | | | | that are located in the wrong places. Big houses were |
| A few years ago, I experienced a similar situation. I | | | | a status symbol in the real estate bubble years. But |
| was close to retirement age but couldn't afford to | | | | not any more. |
| retire. | | | | According to Deutsche Bank, the number of U.S. |
| I was completely burned out in my corporate job. I had | | | | mortgages that exceed the true value of the home will |
| a successful corporate career. I had been a Chief | | | | increase to 48% by 2011. Prime and jumbo mortgages |
| Financial Officer for over 20 years. But I was tired of | | | | are major concerns. By 2011, 41% of prime borrowers |
| the stress in my job. I was tired of working for | | | | will be underwater up from 16% at the beginning of the |
| someone else. I was tired of working 50-80 hours a | | | | year. The bank projects that 46% of jumbo borrowers |
| week. I was tired of the long commute. I wanted out of | | | | will be underwater by 2011. |
| Corporate America! | | | | Jumbo mortgages are those loans that exceed |
| Fortunately I developed a job backup plan. An online, | | | | $417,000. These mortgages have the fastest growing |
| work from home business was a perfect fit for me. I | | | | default rate in the industry. First American CoreLogic |
| was able to get training without leaving my job. | | | | reports this rate at 7.4% - 3 times the rate at the |
| Eventually I was able to retire from my job. | | | | beginning of 2008. |
| You may have other reasons for wanting out of your | | | | The latest government reporting indicates that the |
| job. Most companies are struggling financially. Few are | | | | national inventory of homes, with a selling price of over |
| seeing revenue growth. They are staying alive by | | | | $750,000, is rising. The Obama administration has done |
| cutting costs. Many are cutting payroll costs. Many | | | | much to help the middle class homeowner with home |
| good employees are feeling job insecurity. | | | | buyer credits and mortgage modifications. |
| Many corporate professionals want to spend more | | | | But it has turned its back on larger mortgages. None of |
| time with their children. When my two children were | | | | these programs apply to jumbo loans. |
| growing up, I had a difficult time getting away from | | | | 2. Many more home loans are scheduled for interest |
| work to see a school play or some other school | | | | rate resets over the next few years. |
| activity. I missed a good part of their "growing up" | | | | The first batch of problem loans was subprime |
| years that I will never be able to replace. | | | | mortgages. Almost 80% of those loans were written |
| You may want to take an afternoon off from work | | | | down over the last few months - a total of $1.47 trillion. |
| and go to the park or beach with your family. I was | | | | We now face $2.5 trillion in Alt-A loan resets. These |
| never able to do that when I had a job. | | | | resets begin in the middle of 2011 and don't peak until |
| You may want more vacation time. Getting only 2 | | | | the first of 2013. A small increase in mortgage rates in |
| weeks or so with your family isn't very much. In fact, | | | | the next couple of years will lead to a massive |
| it's pretty pathetic when you consider you must be at | | | | increase in defaults and resulting foreclosures. |
| work all the other weeks of the year. | | | | Resets in adjustable rate mortgages will also be a |
| Last week, my wife and I decided to drive up to North | | | | major problem in the next few years. |
| Carolina to my cousin's horse farm. I took my cell | | | | 3. Foreclosures will remain a problem. |
| phone and laptop intending to do some work. But for | | | | In addition to the coming loan resets, other factors will |
| the most part, I spent the time just taking it easy - | | | | lead to a continuing wave of foreclosures. |
| hiking in the mountains, helping my cousin tend the | | | | Unemployment rates will remain at a high level. |
| horses, and just having a good time. | | | | According to the Mortgage Bankers Association, |
| Many corporate professionals are paying very close | | | | "Looking forward, it does not appear the level of |
| attention to economic news. This knowledge is very | | | | mortgage defaults will begin to fall until after the |
| helpful in determining a course of action and making | | | | employment situation begins to improve." They go on |
| personal finance decisions. | | | | to say that, "It is unlikely we will see much of an |
| I enjoy studying and analyzing the United States and | | | | improvement (in foreclosure rates) until after that." |
| global economy. I write articles expressing my opinion | | | | "Walking away" from a house that is underwater has |
| on its status and where we are headed. Many times | | | | become fairly common. |
| my viewpoint differs from mainstream media and the | | | | It's true that housing prices have become "more |
| Obama administration. Most of the time, I am right. | | | | reasonable." But most likely, housing prices will become |
| You may not agree with some of the things I write. I | | | | unreasonably cheap before they hit a bottom. |
| encourage you to respond with any questions or | | | | All of these factors will put downward pressure on |
| comments. | | | | home prices and sales. The PMI Group projects that |
| So do the latest numbers on the current U.S. housing | | | | there is a 75% chance that most metropolitan areas |
| market indicate that we are at a bottom? Here is my | | | | will continue to see home price declines into 2011. |