Maybe That Talk of Recession Was Overblown?

I suspect it was:

NEW YORK, March 24 (Reuters) - U.S. stocks jumped on Monday after a raised buyout offer for Bear Stearns Cos Inc suggested that financial stocks may have reached bottom, especially in light of fresh data that fueled hopes for a turnaround in housing.

Stocks rang up big gains for a second straight session after JPMorgan Chase & Co lifted its offer for Bear Stearns to $10 a share from $2, helping alleviate concerns that other investment banking shares could tumble. JPMorgan’s move also relieved worry that a prolonged fight with disgruntled shareholders could have derailed the deal…

…A surprising increase in sales of pre-owned homes last month fueled optimism that the worst of the housing slump may have passed. That ignited a rally in home building shares.

“More write-downs are expected in the financial space, but people are starting to see a light at the end of the tunnel and they suspect that it’s not an oncoming train,” said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey. “At $2 a share for Bear Stearns, the question was: ‘What were the rest of the financials worth?’”

In my judgement, the only people who know less about economics than capitalists are socialists, who de-facto know nothing about the subject. Only a capitalist and a socialist could possibly be surpised by a rise in pre-owned home sales…with prices dropping like a rock, the natural result is to bring into the market people who wanted a home, but couldn’t afford them when the prices were rocketing upwards. There is still a lot of slack in the market - here in Vegas we have a huge supply of foreclosed homes to go through - but I judged January/February as the bottom out/turn around of the housing market. Now, I won’t get my 100k in lost equity back for a few years, but I think we’ll start to see a gradual unpward trend in home sales and prices - with a resultant modest increase in home construction. As a general rule, I don’t believe in the “boom and bust” cycle of economics - except in homes sales, which seem to generate economic idiocy on an average of once every 20 years.

Be that as it may, our economy is fundamentally strong, and the only thing which could knock us back is a tax increase and/or massive spending increases…which, of course, are promised by Democrats, who are thus promising to kill the economy if elected. Keep that in mind as November approaches.

Tags: Housing Market, sub-prime crisis

37 comments March 25th, 2008

Real Estate Turn Around?

Interesting:

Sales of residential and condominium units in Detroit nearly doubled in January, compared with the same month a year ago, and the region overall got a nearly 15 percent bump, according to real estate data firm Realcomp.

The city of Detroit led the gainers, posting a 45.5 percent increase in the month, with 736 closings.

Seven Realtors who deal primarily in downtown Detroit area property said they have enjoyed some of their recent best sale months in December and January. Sales of houses and condominiums in Detroit jumped by a 33.9 percent in December 2007, compared to December 2006. No other market in the Metro Detroit area came close to that kind of increase last year, according to Realcomp.

Realtors credit tumbling prices, low interest rates and sales of foreclosed properties or properties hoping to avoid foreclosures.

I bring this up because I have some anecdotal evidence of my own on this - I’ve seen a very large number of first-time home buyers entering the market over the past 6 weeks. Home prices have really been at unheard of bargain here in Vegas - houses which were going for 300k two years ago now list for 200k or less…though my wife did note that one new home developement just switched their “from the high 100s” sign to “from the low 200s”; meaning that at least some home builders are not as desperate as they were two months ago.

As I’ve said before, I’ve taken it in the shorts on my equity (my guess is that my house is worth at least 60 thousand less than I paid for it), but one man’s garbage is another man’s treasure…in this case, the garbage of my shrunken equity is the treasure of young families being able to afford their first home. For all the doom-and-gloom being spread out there (mostly, it goes without saying, by Democrats who also propose to “fix” the problem via Big Government), there is always an upside, if one cares to live a life with a sense of joy and gratitude to God for even so much as being in existence.

I suspect that we’ve seen the bottom of the real estate bust - it will, of course, take a couple years before equity recovers, but in the meanwhile a lot of Americans will be able to start living the American dream.

Tags: Housing Market

20 comments February 16th, 2008