Foreclosure, Have Americans Given up? How to fight back today

Jiggaboo Jones layin' it DOWN, son.

Pace of new home sales second slowest on record

   The AP article which is tied to the headline listed above begins with:

"New homes sold at the second-slowest pace on record in August, signaling that the housing market will remain a drag on the economy."

   I guess printing news stories that state the obvious are good because they remind everyone that the real estate market continues to be in a funk and that no one should get their speculative juices boiling yet. The return of manic real estate speculation isn't coming back for at least another decade. During the course of the next decade when price appreciation in real estate is kept in check, credit-worthy young families looking to buy their first home should be able to afford said home without breaking the bank. That's how it should be and perhaps the death of the real estate market is a good thing in that it allows people who want to buy a home and live in it (instead of flipping it), are able to raise their families in a house of their own.

10 Reasons To Buy a Home - WSJ

   Man, this one's a doozy from Brett Arends for the Wall Street Journal. And I quote:

"Brett Arends explains why owning a home is a good thing.
Enough with the doom and gloom about homeownership.
Sure, maybe there's more pain to come in the housing market. But when Time magazine starts running covers that declare "Owning a home may no longer make economic sense," it's time to say: Enough is enough. This is what "capitulation" looks like. Everyone has given up."
Link: http://finance.yahoo.com/real-estate/article/110685/10-reasons-to-buy-a-home?mod=realestate-buy

  Brett, you done got facked up again. Anyone who's seen True Romance knows that line. Yeah Brett, you're grasping at straws when you try to make a convincing argument that it's alright to buy a home right now. Pointing to a magazine cover as a contrary indicator stopped working during the crash of 2008-2009. Magazine cover after magazine cover decried the health of the market before the first crash in late 2008. You know what those contrarian magazine covers did? Nothing. The market continued crashing and crashed again in March of 2009.

   I'm going to go through Brett's ten reasons why it's good to buy a home now and smash them to pieces:

1. You can get a good deal
   Hey, I can get a good deal on a house. Let me take out a $380,000 mortgage from banks that won't approve my application because I don't have a job. Good one, Brett.

2. Mortgages are cheap
   Shut up. Get out of here!? Morgages are cheap? Holy shit, now I can run out and get myself a house.

3. You'll save on taxes
   This one is so stupid that I'm not going to bother humiliating him.

4. It'll be yours
   Will it still "be yours" after it's foreclosed on?

5. You'll get a better home
   This guy is a genius. By genius, I mean idiot.

6. It offers some inflation protection
   People aren't worried about inflation when they're on unemployment.

7. It's risk capital
   WTF is he smoking? No, I don't want any of it.

8. It's forced savings
   Um, what savings? "Hey Marge, let's put some money from the unemployment check into our savings instead of buying food for the kids."

9. There is a lot to choose from
   This guy has a knack for stating the obvious. I hope he's not getting paid for that article because he has to be writing for free. You know the phrase, "Beating a dead horse" right? I don't want to beat Brett anymore.

10. Sooner or later, the market will clear
   Thanks Brett. You're like Nostradamus with your pronouncement that the market will clear. Will it clear in time for people who just bought homes and lost their jobs to pay the mortgage?

   I will now read all of Brett's future articles in the WSJ with a jaundiced eye and a suspicion that he's got a screw or two loose. Those screws lost their threads and are spinning.

Mortgage lending down 1.5 pct as rates inch up

"Mortgage lending down 1.5 pct as rates inch up"

   That's an AP headline from today but the gist is disingenuous. Mortgage lending isn't down because rates are creeping higher, mortgage lending is down because a lot of people don't qualify for loans. Why are headlines from papers and news services so out of whack with reality? Is there some pitcher of Kool-Aid that I have to drink before I can read these headlines and accompanying stories and believe that the writers are being truthful? People are trying to refinance their mortgage loans to pay for everyday essentials like food, energy, and sundries. Refinancing a loan to free up some money every month is a godsend in these trying times when a lot of people are just trying to keep up with their bills. Once they fall behind, it's not easy to catch up.

The Seven Stages of Grief

   The real estate market in the United States is dead. Long live the real estate market. No really, just because the market is dead doesn't mean that all opportunities are gone. It just takes a lot more legwork, diligence, and savvy than the days when buyers snapped up anything and everything that was offered for sale. The days of shacks in California selling for $750,000 are over and will likely never reappear in our lifetimes.

   I'm going to begin our real estate venture with the Seven Stages of Grief and pinpoint where the nation collectively is at as of August 29, 2010.

1) Shock or Disbelief - The stock and debt market plunge of 2008-2009 was the trigger that opened up the shock stage. As markets around the world plunged and fear was everywhere, real estate froze and deals were broken. Banks walked away from loan obligations and capital dried up very quickly.

2) Denial - As markets continued to go on a tumultuous roller coaster ride from late 2008 to early 2009, home owners looking to sell and home buyers were looking for some solace. They would find none. In the space of one year, the booming real estate market had become dead man walking. Mega banks like Citibank and Bank of America were on the ropes and even JP Morgan looked vulnerable. No loans = no mortgages.

3) Bargaining - Home owners blinked and prices began to fall. Despite the discounts and incentives, buyers became scarce. At one point, some home owners were willing to include a brand new Lexus to buyers who closed on a deal. Home stagers enjoyed a revival in their business but the malaise would continue because no loans = no mortages.

4) Guilt - Remember that commercial at the height of the boom where the wife says to the husband, "I want that house" while the agent is on the phone and the hen-pecked hubby eventually accedes to her demands? Who's feeling more guilty now? The wife who got the family into a house they can't afford or the husband who relented and potentially ruined his family's finances and future?

5) Anger - Yes, there was anger and tears as the real estate market got demolished; the anger flared up when buyers lost houses to foreclosure. Home sellers aren't necessarily angry but more frustrated that they can't sell property and move on with their lives and plans.

6) Depression - I'm not sure that "depression" factors very large in buyers who have lost their houses. There's remorse and misgivings about buying a house that they couldn't afford but depression? Maybe, but I'd change this to "Regret" or "Remorse" for real estate. I believe that we are in this stage of the Seven Stages of Grief.

7) Acceptance and Hope - For some people who lost their homes, "acceptance" was forced upon them but home sellers have not accepted the crash yet. Many still think that a few years is all that we'll need to reach the heady highs of 2006-2007 again. That was when homes sold in 15 minutes after being listed and hundreds of people lined up for the right to buy into a new development. As I mentioned earlier, those days are over in our lifetimes. If you are 40-60 years of age now, you will never see those types of prices again in your lifetime. So, don't keep hope alive because housing prices are never rocketing into the stratosphere again for the next 30-40 years.