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EDITOR’S NOTE: The illusion of securitization has popped as analysts pore over balance sheets and income statements, coming up empty — no real assets worth the necessary amount to sustain the megabanks while at the same time the real assets are not perceived where they have been all along — with the average American consumer, homeowner, borrower, credit card holder, student loan borrower etc., because the great weight of the impossibly high debt that is claimed does not exist, for the most part, and is certainly not secured, nor qualified to be called non-dischargeable in bankruptcy.

As long as government and society sticks with the illusion we will be going around in circles and the housing market will never find a bottom because the current state of the title registry across the nation is corrupted. We can pretend it isn’t true but the reality is there is no way out except to tell the truth and get it over with, thus stimulating the economy, the housing market, and the our society back into the engine of growth, prosperity and the envy of the world.

By accepting the illusion we are stuck with the same thought going around in the heads of most people: “You borrowed the money, you didn’t make the payments, a contract is a contract and so you lose.” The reason this doesn’t work is simple: it isn’t true – none of it. Nobody borrowed money in the old conventional sense. They bought a loan product that seemed like a normal loan but was really the issuance of a security as part of a scam that included the issuance of multiple securities based upon the same transaction.

By moving the shells around, and relying upon the perception that these are moral obligations that the buyer (“borrower”) should repay Wall Street gets the benefit of both worlds — (1) profits from the sale of all the securities issued and traded and subjected to all sorts of sophisticated insurance contracts, credit default swaps and other third party guarantees that went to the benefit of Wall Street instead of the real parties in interest — the buyers of bogus bonds and the buyers of bogus loan products who still think of themselves as borrowers (2) the real assets as well, all of which were falsely represented at the commencement of any any of the transactions.

Our predictions have held true and constant since we began this blog — that this mess will probably continue for decades because the politics of it will interfere with  basic application of simple laws, rules and procedures that have been in place for centuries. There won’t be a housing recovery until we end the foreclosures and reverse the ones that have the appearance of being completed. They were and shall always be a farce that continue their corrupting influence, growing like a cancer on our economy every time another transaction takes place either at the level of high finance where another security is traded, or at ground level where they are “selling” a house they don’t own or which still has multiple mortgages and clouds on title that can never be fixed.

Home Prices Slid in December in Most U.S. Cities, Index Shows


Real estate prices slid in just about every part of the country in December, pushing a housing market that once seemed to be rebounding nearly back to its lowest level since the crash began.

At this dismal point, some economists and analysts say that the damage has been done, and there is nowhere to go but up. Many others argue that the market has still not finished falling.

And then there are those who maintain that, possibly, things are about to get a whole lot worse.

Robert J. Shiller, the Yale economist who is the author of “Irrational Exuberance” and who helped develop the Standard & Poor’s/Case-Shiller Home Price Index, put himself in this last group. Mr. Shiller said in a conference call on Tuesday that he saw “a substantial risk” of the market falling another 15, 20 or even 25 percent.

The 20-city Case-Shiller composite is already off 31.2 percent from its peak, according to data released Tuesday. Average home prices in Atlanta, Cleveland, Las Vegas and Detroit are below the levels of 11 years ago. A drop the size that Mr. Shiller says he thinks could happen would put Chicago, Dallas, Charlotte and Minneapolis there, too. It would create a lost decade for housing in much of the country even before the effects of inflation.

Mr. Shiller said several political trends indicated a dreary future, including the uncertainty over the mortgage holding companies Fannie Mae and Freddie Mac and proposals to reduce the mortgage tax deduction.

Mr. Shiller’s colleague, the economist Karl E. Case, a professor emeritus of economics at Wellesley College, says he does not think the outlook is so dire. He said in the conference call on Tuesday that he thought the housing market was at “a rocky bottom with a down trend.”

The S.& P./Case-Shiller index of 20 large metropolitan areas fell 1 percent in December from November, although the drop was just 0.4 percent when the data was adjusted for seasonal variations. Eleven cities in the index posted their lowest levels in December since home price peaks in 2006 and 2007, up from nine cities in November. Phoenix and New York joined a list that includes Atlanta, Chicago and Seattle.

The only city in the index that posted a monthly gain on an unadjusted basis was Washington. Five cities posted a gain on an adjusted basis.

One data point that favored Mr. Case’s optimism: The adjusted declines in December and November were about half the drops in the previous two months, indicating the slide might be slowing.

Most analysts seem to fall between Mr. Shiller and Mr. Case in their forecasts.

“Even though affordability is exceptionally high and housing is incredibly cheap, the double-dip in house prices that began last year will continue throughout this year,” Capital Economics, a consulting firm, said Tuesday. Their estimate was that prices would drop another 5 percent unless a “vicious circle” of falling prices and rising foreclosures developed, in which case prices would be worse.

Also released Tuesday was the Case-Shiller quarterly index that covers all homes in the country. It showed prices fell 3.9 percent in the fourth quarter and 4.1 percent for all of 2010.

The Case-Shiller index is a three-month moving average, which means it changes slowly. It is now less than 3 percent above the low recorded in the spring of 2009, when there was widespread hope that the market was starting to recover.

To accelerate the process, the Obama administration offered a carrot for new buyers: a tax credit. The credit did its job, enticing hundreds of thousands of buyers to accelerate their purchases in the fall of 2009 and the spring of 2010. But the credit did not lay the groundwork for a permanent rebound.

“Every place is pretty much getting hit a second time for essentially the same reasons,” said Andrew LePage, an analyst with DataQuick Information Systems. “Slow economic recovery, little job growth, still-tight credit, no more government stimulus, a pervasive and gnawing sense that prices could fall more, too few people getting jobs and too many worrying about losing the one they have.”

Amid all this gloom, one group thinks the situation is much better than generally portrayed: the National Association of Realtors. Its data shows the median existing single-family home price rose in 78 out of 152 metropolitan statistical areas in the fourth quarter of 2010 from the fourth quarter of 2009, including 10 with double-digit increases.

But even as the group asserts that the market’s decline has been overstated, it is being accused of having bad numbers of its own.

The blog Calculated Risk wrote last month that the real estate group was planning major downward revisions to the last three years of house sales data. CoreLogic, a data company, said last week that it estimated 2010 home sales at 3.6 million, much less than the 4.9 million the National Association of Realtors was claiming. If accurate, the CoreLogic numbers would indicate a market even more troubled than is generally assumed.

Against this welter of conflicting claims and dark predictions, many would-be sellers are opting out until that distant moment when they can get what they think they deserve. Some are renting their home after moving to new quarters; others are simply turning down that new job and staying put.

This can work to the advantage of those who plunge ahead. Jordan and Caitlin Van Horn bought their house in the fashionable Seattle neighborhood of Ballard three years ago. Ever since then, the market has slumped. The couple is moving to Alabama and feared the worst when they put their home on the market.

They were pleasantly surprised. Their four-bedroom house fetched $545,000 after less than a week, only 5 percent less than they paid.

“The lack of inventory really worked to our advantage,” said Mr. Van Horn, a co-developer of a bookkeeping system for small businesses. “We feel thankful for the way things turned out.”

7 Responses

  1. They are buliding into the system growing deferred losses-the houses that are foreclosed and sit inventoried are damaged—intentionally by the servicer asset preservation companies to obtain carryover insurance proceeds -as by freeze damage, wnd damage, buglary etc for a few months at least. watch the settlement agreements. Hits your insurance history. Or the empty house just sits there and deteriorates after the insurance lapses-stripped ————-so those are hanging out there as deliberate wrireoffs to take supply off to hold up values to unsustainable levels——–What workers with 2 incomes that loses one can pay anything but a teaser rate min pmt loan? market is not real——

  2. i agree with “judge” all the prices will go back to 1997 levels, that is a real price that people can afford ,i remember back in 97 a modest house around 1,400 sqf in miami, fl would go for about 60k to 119 k, i saw condos of 700 sqf being sold for 300-400k. appraisal FRAUD ? anyone?

  3. here in the kountry of kalipornia
    the real estate market or.. realty …[how ironic] when reality has nothing to do with real estate here.
    the dre & the mls have completely cornered,colluded, controlled [the ENTIRE MARKET , prices , inflated unrealistic value for the last 40+ years.there is NO chance of that changing here ever!!!
    .no free market, no recovery , until there is a revaluation of prop in cal the entire country is doomed to languish in the housing malaise.

  4. A good Bankster is a Jailed Bankster

  5. Prices officially rose a few percent in central Florida recently … but the average size of the houses increased by a greater amount so the price per sq ft. actually fell..

  6. Notice that Washington is the only city with a net price gain in real estate. Why? Because the place is filled with “civil servants” that are on an inflated payroll and do no work.

    Remember Linda Tripp? She was the leftover Republican who tried to bring down the Clinton Administration by secretly recording Monica’s needy phone calls (an illegal act of wiretapping, to be sure, but hey, it’s the Government). She was being paid $93,000 a year. She was spending hours doing the taping – on Government work time. Did she get fired? Nope.

    Linda Tripp represents everything that is wrong with the DC workforce: people paid the big bucks to do no real work. When you have an imaginary economy, you can have imaginary house prices. Compare those prices to Cleveland or Detroit, where people also do no work, but are not getting paid for doing no work.

  7. Prices are still too high in any markets. Prices will continue to drop until they get back to 1997 levels

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