Calamity’s Sentence Runs On Forever
We Have Attained the End of the Beginning of the Global Financial Crisis. See it here Summarized in 50 Variables Contained Inside One Long Sentence Which Never Ever Ends.
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In the beginning man created the housing bubble when dishonest banks loaned money to unqualified home owners whose jointly illegal activities were ignored by a sleeping financial press and an incompetent regulatory army who both failed to awaken the FBI and SEC and other financial-crime prosecutors from pursuing criminal charges including those against Wall Street bankers who knowingly sold bad assets with grossly erroneous ratings to highly leveraged investors (including themselves) who had all gorged to the hilt on the FED’s cheap money leveraging their losses and destroying their entire equity accounts which bankrupted our major financial institutions who were saved by bailouts but not before triggering a global financial crisis during which all lenders on all continents lost all faith in each other because they all knew about their own garbage mortgage holdings bundled into black-box securities whose staggering losses panicked banks again due to the known unknown of massive pools of unregulated derivatives which pay off in the event of a financial default and whose opacity re-double-spooked investors thereby multiplying a crowded stampede into high-quality high-liquidity assets and setting the pattern thereby for what we can expect to be an endless loop of panic lasting a decade or two as terror is continually re-discovered by global markets now concentrated on European banks who made overleveraged housing investments many in housing bubbles much more crazy-Ponzi than that of America’s 120-year-power-ball bubble and further exacerbated by bankers depending upon the ultra safety of sovereign-debt requiring that old magical no-money-down equity investment for their loans to European governments of which many or all are now strangulating themselves after having accumulated 60-plus years of socialist labor laws and entitlement obligations but now those asphyxiating restrictions and promises are revealed as unworkable and un-payable when new borrowing must end and is unaffordable but still the Europeans while they are pathetic and bankrupt they have not achieved the scale of otherworldliness which is The Great & Terrible Japanese Zombie where probably a decade ago the hard-working island people passed from broke bankrupt castoffs to an immortality of strange insolvent phantasms as the aftermath of a gargantuan real estate crash circa 1990 was met not with punishing bankruptcy and brutal failure and tears of blood in the streets but with zero interest rates and un-failed banks and twenty years of the-best-coked-up Keynesian stimulus money can buy after which they now have achieved beautiful trains and walk to work on perfect sidewalks but are debilitating-ly compromised by macroeconomic cardiac arrest one-percent growth and a government debt approximately 2.5 times greater than what a country borrows to wage full-scale-all-out-total world war and now they have a payback period it’s something like 50 years or 100 years a multi-generation mortgage and Japan proves that fiscal stimulus and zeroed-out rates in post-bubble countries doesn’t work but also that extend-and-pretend can allow for decades of make-believe by putting off catastrophe a very very long time and overall don’t you think given this catalogue of the state-of-the-world how can anybody comprehend the variables in our Pandora’s box or otherwise predict the future except to believe that surely it is reasonable that panic will return and less-liquid and riskier assets like stocks will fall off a cliff and dive straight down in a perfectly parallel and symmetrical downfall mirroring that distant past in what started in the United States at the beginning of the beginning of the financial crisis six years ago now what was considered a pause in the explosion of home prices which has segued to a reality show a “Real Life for Homeowners” who have finally accepted a depression in property values that they never imagined when at the very beginning man created the housing bubble (Please return to the beginning of Calamity’s Sentence.) …
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Thank you for carrying the story to Business Insider, Reuters and Real Clear Markets.
Key Charts To See Before You Buy or Sell Your Home
Shadow inventory has declined 200,000 units in the last year and by fifteen percent from the peak but still totals 1.7 million units.
Current visible inventory (not shadow) of listed properties is 3.72 million which is excessive by approximately 770,000 units. The highest excess inventory in the crash was 1.6 million units in July 2007.
CoreLogic estimates pending supply (“shadow inventory”) for April by calculating the number of distressed properties not currently listed for sale that are seriously delinquent (790,000 units), in foreclosure (440,000 units) or real estate owned by lenders (440,000 units). Please see chart below of shadow-inventory supply. Click image for full-screen view.
The shadow inventory’s size is a barometer of housing-market health because foreclosed homes sell for an average discount of approximately 20% and falling values discourage buying.
The shadow inventory peaked in January 2010 at 2 million units. The total shadow and visible inventory was 5.7 million units in April 2011, down from 6.2 million units a year ago.
Negative-equity mortgages are another add-on to the shadow-distressed category. There are 2 million not-delinquent negative-equity mortgages that are more than 50 percent or $150,000 “upside down.” HousingStory.net recently estimated that high negative-equity mortgages are six times more likely to default.
The recent reduction in stress in residential real estate is based on mortgage delinquencies falling to 8.32 percent in the first quarter, down from a record 10.06 percent in 2010’s first quarter (May report of the Mortgage Bankers Association). Please see the chart below of mortgage delinquencies.
Foreclosures and short sales, in which the lender agrees to a sale for less than the balance of the mortgage, accounted for 31 percent of existing-home sales in May.
Perhaps the scariest and strangest aspect of the shadow-inventory world is that the foreclosure process has gotten drawn out to the extreme. The gargantuan level of ineffectiveness in the prosecution of foreclosures can be seen by LPS’s recent estimate that for every sale of a repossessed home there are 50 more homes in foreclosure.
“At current sell-through rates, it would actually take us almost 12 years to work through that inventory,” said Rick Sharga, senior vice president of RealtyTrac, in an interview with Bloomberg Television. “It won’t be that bad, but that just kind of gives you an idea of the scale of the problem.”
May Home Sales Hit Bottom 10 Percent
Sales fell 15 percent in May from the year earlier to a seasonally adjusted annual rate of 4.81 million. Inventory increased to a 9.3-month supply. The sales pace is in the bottom 10% of readings in the 12 years of data. (Please see the chart below. Click to enlarge.)
Actual existing homes inventory fell one percent to 3.72 million units the National Association of Realtors (NAR) reported today. The excess is equal to 770,000 units although total inventory has fallen 841,000 units from the peak in July 2007. The 9.3 months supply compares to an average of 6.5 months.
Prices fell 4.6% in the last year with the national median price now at $166,500. Distressed sales are 31% of the total. Thirty percent of buyers pay all cash versus the normal all-cash rate of 10%. Investors are 19% of buyers.
Lawrence Yun, chief economist at NAR, blamed the slow sales pace on tight lending standards.
“Actually standards are fairly reasonable for qualified buyers,” said Bill McBride at Calculated Risk. “Of course many qualified buyers bought last year – using the ill-considered homebuyer tax credit – and that pulled demand forward. The housing market is still paying the price for that policy mistake.”
