Racism Alive in the USA Today - Shocking Footage!

Racism, so ugly.

Foreclosure activity up across most US metro areas

   From an AP article today:

LOS ANGELES (AP) -- The foreclosure crisis intensified across a majority of large U.S. metropolitan areas this summer, with Chicago and Seattle -- cities outside of the states that have shouldered the worst of the housing downturn -- seeing a sharp increase in foreclosure warnings.

California, Nevada, Florida and Arizona remain the nation's foreclosure hotbeds, accounting for 19 of the top 20 metropolitan areas with the highest foreclosure rates between July and September, foreclosure listing firm RealtyTrac Inc. said Thursday.

Those states saw housing values surge during the housing boom years. When the boom ended, values collapsed and foreclosures soared.

   I feel like I'm beating a dead horse when I state that the "foreclosure crisis" won't be over for at least another 5 years and recovery in the real estate market won't arrive until 2018-2019. I know that seems like a long time but this is how financial crises work. They take time and they burn up huge amounts of wealth before they're contained. While the foreclosure crisis is resolving itself over the next few years, the economy will continue to get stronger and the stock market's going to go ballistic. The seeds of the next boom have already been planted and all it's going to take is time. Most people don't have the patience to wait nearly a decade for all this to happen but my advice is to continue working at your job (if you have one), invest monthly, take care of your family, and watch for the boom to happen right before your eyes.

The Recession Ended in June 2009

   According to the National Bureau of Economic Research (NBER), the recession that began in December 2007 came to a conclusion in June 2009. The recession lasted 18 months which made it the lengthiest economic pullback in the United States since World War II. Although the recession's over, its effects and influences are still hanging over the economy as evidenced by the high unemployment rate, lackluster real estate market, and the rising stock market.

   "What? What did you say about the stock market," cried someone from the crowd. Well, it's true. The market's been on a tear since the summer of 2009 and it's going to go higher. It's like the market knew exactly when the recession had ended and started to kick itself into first gear, second gear, and soon third gear.

   It's too bad then that the average citizen is too scared of the market to put big money into mutual funds or ETFs. The beneficiaries of the coming stock market boom will be the rich, the rich, and the rich. Joe Sixpack is too busy trying to mine 1% interest from a money market fund or a bond fund to step into the market anytime soon. In my opinion, by the time Joe Sixpack steps back into the market, he'll be paying top notch prices and the newspapers will be crowing about how to get rich in the market. Maybe there'll be another book about DOW 30,000 and how it's different this time. That's when I get bearish and bet accordingly. Until then however, the market is swinging higher... without Joe Sixpack on board.

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.