Last week I profiled a neighborhood in Irvine that inexplicably dropped about 20% in value since the tax credit expired. As it turns out, widespread price declines are beginning to show up in the aggregate statistics. The leg down we have been expecting this fall and winter is happening now. Clear Capital: Home price drop sudden and dramatic by KERRY CURRY -- Friday, October 22nd, 2010, 12:25 pm Clear Capital said a 6%, two-month decline in home prices represents a magnitude and speed not seen since March 2009. “Clear Capital’s latest data through Oct. 22 shows even more pronounced price declines than our most recent (Home Data Index) market report released two weeks ago,” said Alex Villacorta, senior statistician with…[READ MORE]

If I had to narrow my list down to the people most responsible for the housing bubble, Anthony Mozilo would be near the top of the list. The Option ARM loan was the primary loan product that inflated the housing bubble. Using negative amortization and teaser interest rates, people were able to borrow more than twice the amount than they could afford with a conventional 30-year fixed-rate amortizing mortgage. Once the Option ARM imploded and lending retreated to conventional mortgages, prices needed to fall significantly to rebalance affordability. The Option ARM was the Ponzi virus that caused the debilitating financial disease that inflated the housing bubble and created the current economic morass still plaguing the country. The only person perhaps…[READ MORE]

The mortgage industry was kissed by a witch in the night. Looking for their own selfish gain they came up with a cunning system to transfer mortgages and shortcut the public recording system. Washed clean by the market crash, mortgage holders insisted their title claims were true, and the system is nursing its pain. Bubble, Bubble, Toil and Trouble in the Foreclosure Market By: Stan Humphries, -- October 11th, 2010 Well, what initially looked to be a technical road bump in the foreclosure process is now certainly blossoming into something with a more material impact on the housing market. Initially, this situation had the appearance of a sloppy record-keeping scandal, one that was important to resolve but that involved supporting…[READ MORE]

Last week when I wrote about Private Property Rights: A Casualty of the Housing Bubble, I didn't fully grasp the seriousness of the problem facing our system of property rights. We live in a nation of laws. Our laws of ownership of property are the basis of our economic system. These laws are being threatened. Barry Ritholtz quoted Hernando de Soto, The Mystery of Capital: “In the West, this formal property system begins to process assets into capital by describing and organizing the most economically and socially useful aspects about assets, preserving this information in a recording system—as insertions in a written ledger or a blip on a computer disk—and then embodying it in a title. A set of detailed…[READ MORE]

Are foreign cash buyers savvy investors who are taking advantage of low prices to snap up bargains, or are they the fools who purchase overprices assets that natives won't touch? Often its a little of both. I always enjoy reading Rich Toscano's writing, and back in 2006, he wrote a brief post on what generally happens when foreign investment becomes prevalent in a market. The Dumb Money RICH TOSCANO -- December 20, 2006 One argument I hear a lot is that foreign demand for local real estate has grown substantially in recent years, and that such foreign demand will be supportive of prices in the future. Unfortunately, this argument puts the cart squarely in front of the horse. Investors from…[READ MORE]

What do you do when the people who are supposed to protect you and serve your interests steal from you? Protest? To whom? What do you do when the government that is supposed to look out for us steals our money and gives it to greedy and corrupt corporations and bankers? It's happening to you right now. The greatest heist in our country’s history by PAUL JACKSON -- Tuesday, October 5th, 2010, 5:29 pm Our economy is being stolen from us, and our nation’s real estate crisis is providing cover for what will — if it goes unchallenged — go down as one of the greatest heists in our country’s history. Yes, a mortgage crisis of historic proportions has now suddenly become…[READ MORE]

In housing markets where a significant number of properties are being converted from owner-occupied to rental status, there is no government program or help for this transition to occur. Without government help, prices fall far below fundamental valuations as the imbalance of supply and demand becomes extreme. The only solution is to reduce supply and increase demand. To accomplish this, I propose that the GSEs promote investor programs that reduce the cost of ownership to small investors and encourage them to keep the supply off the resale market. I am about to argue for something that would benefit me personally, so take everything which follows with a dose of skepticism. I would like to think I can set my personal biases aside…[READ MORE]