Archive for August 12th, 2007
Filed under: Rants and raves, Columns, Personal finance
A few days ago, I wrote on BloggingStocks about a new study suggesting that most high school students don’t know much about economics. Here’s what I wrote:
What’s a shame is that I really believe that economics could be made into the most interesting high school class if it was approached with creatitivity. In recent years, there have been a slew of amazing books on economics: Freakonomics, The Undercover Economist, Travels of a T-Shirt in the Global Economy, etc.
I bet that if schools ditched traditional textbooks and adopted a more user-friendly format, we would see these numbers skyrocket. People learn better when they’re not bored.
Now The New York Times’s Robert Frank seems to agree, in a great column called “The Dismal Science, Dismally Taught.” He refers to studies suggesting that students fare no better on a basic economic literacy after taking a course than those who don’t, and discusses an interesting method for teaching economics that he refers to as “economic naturalism,” which seems very freakonomical.
Take a look at the column, and give a copy to every economics teacher you know.
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 $5000 Closing Cost Help! House has been totally renovated including kitchen w/atrium doors to deck; all bathrooms updated; HW floors refinished. Ceiling fans in every bedroom; basement totally finished including 2 BR, 1 full BA, carpeted family room, HW floor library, and craft room. Large fenced backyard with deck; slate front porch; off street parking for 4 cars; outside shed connected to home alarm system; don’t miss this one.
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According to CNN, American Home Mortgage (AHM) is another company facing issues regarding the subprime fall out:
“NEW YORK (Reuters) — American Home Mortgage Investment Corp. shares sank on Monday after the home loan provider announced “major” writedowns, delayed a dividend and said lenders were demanding it put up more cash.
Shares of American Home were down 39 percent, falling in pre-market trading to $6.39 from Friday’s close of $10.47. On Friday the shares hit their lowest level since April 2003. Trading on Monday was halted for news pending.”
The beating AHM is taking is predominantly on their announcement to delay dividends on their stock. Guess when they announced this. Late Friday! Since AHM knew that if the announcement came any earlier, it would take a beat down like any of the housing related stocks last week. So they let it fester over the weekend and as of this posting, trading has halted on further “news.” But how much market cap was lost over the weekend? We always hear that massive corrections cannot occur over night but really in terms of money, how much was lost? Well let us take a look at some details regarding the company:
American Home Mortgage
Shares Outstanding: 54.28M
Price Per Share on Friday: $10.47
Current Pre-Market Share Price: $6.39
Friday Market Cap: $568,290,000
Pre-Market Cap: $346,849,000
Down in Two Days: $221,441,000
Here’s the thing. All things real estate can go down fast and dirty. Keep in mind this is only one example of many companies. The fact of the matter here is that this company has a market cap of half a billion dollars and is rather large. The disturbing part, as highlighted by the CNN article is you have a company as of the end of March, that had $4.01 billion in “warehouse” credit lines. It is becoming apparent that the subprime contagion is spreading all across the housing sectors.
In reality companies are valued on multiple fronts including their potential earnings or cash flow. For example, say you and I own a company with $40,000 in assets. We decide that we will only have two owners (shareholders) and have two shares outstanding. Therefore each of us would have a “stock” of $20,000 in the company assuming we have $0 in liabilities. Say we expect to earn $100,000 next year in revenue. Obviously the share price of $20,000 will jump up because of the projected earning potential. But what happens should we have negative cash flow? That is what is occurring with these companies but on a larger scale. Of course this is a rudimentary explanation but many of these companies are in similar situations like home owners facing massive resets yet have negative cash flow that they didn’t expect. In addition, your underlying asset gets impacted by negative growth potential. The market is calling it liquidity issues but ultimately it boils down to being unable to pay your bills.
Issues on the Home Front
And then we have stories like this one submitted by a reader of a Ventura Country couple trying to sell their home at bubblicious prices. From the Ventura County Star:
“The Conroys might have aimed high at a time when the market is soft. The most comparable home with similar square footage in the Golf Course Villas had an asking price of $759,000 and sold for $773,500 in October, said Joe Virnig, president of Ventura County Coastal Association of Realtors. He said he believes the same pricing strategy would have been successful for the Conroys.
Doughtery thinks the weekend’s event will likely expedite the sale, but not without a cost.
“I think if you want to unload a property for less than the actual value, then this is the way to go,” he said.
Still, Virnig warns there must be a catch to this type of marketing tactic, and calls it a “gimmick” to get people to see the house. It’s the first time he’s seen such a strategy in Ventura County.
“I have trouble believing they’d honor the $594,000 price if that’s all they get,” he said. “I see all kinds of problems with real estate agents adopting these tactics. I’m not about to adopt it — it’s fraught with risk. Until the inspection period is up, it would be difficult to be sure that you didn’t end up buying a problem.”
You should really examine the entire article but the fact of the matter is we have people stuck on housing bubble yesteryear prices. They are asking $849,000 when a comparable home sold last October for $773,500. Even the fact that they are “entertaining” offers above $594,000, they are still in the belief that they can yield top prices from their rhetoric. In addition, I’m not sure if they are aware, we are in full out suprime and Alt-A meltdown mode therefore limiting access to whacky LaLa land credit. So the pool of buyers is limited in comparison to October of last year. In fact, standards didn’t get tighter until Q1 of this year. So they may look at the $773,500 price and laugh at it, but they’d be lucky to even get that. And the scary part of the article is that there are many folks still looking to jump into the game. Thankfully, I’m sure many of these would be buyers are having issues getting mortgages since they probably don’t have a sufficient down payment and Wall Street is done with the creative financing game. Even in today’s absurd market, all you need is 5 to 10 percent to get top notch mortgage products and rates. Yet with our negative savings rate, this is obviously too much to ask.
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Filed under: Bargain stocks, Chasing Value, Stocks to Buy
In a volatile market, investors need to keep one thing in mind: valuation. As the term volatile implies, stocks easily move up and down in this type of market. As a result, if you plan on holding a stock for the long run and don’t firmly believe in the future of your stocks, you stand to be incredibly stressed and nervous at almost all times.
On this note, I’d like to introduce a company that I consider to be a very interesting long-term play for this market — Steven Madden (NASDAQ: SHOO), a purveyor of middle-to-upper level shoes. While there are certainly issues with the company, namely the fact that the company’s founder is a convicted felon who served several years in prison (and got paid during this time), I think the turnaround in the stock is very interesting for a variety of reasons, most importantly the stock’s cheap valuation and recently announced increase in its share buyback.
Steven Madden sells a wide variety of shoes, encompassing products you might find at a discount retailer like Marshall’s to shoes that could be found at a high-end retailer like Bloomingdales, implying that the company has a highly diverse pool of potential buyers. As a result, if any one group of the consumer is hit (e.g., lower-class consumer), the company wouldn’t suffer completely because it also caters to a higher-class consumer. With the company in the process of designing a new line of dresses and growing in hot markets like New York and Las Vegas, I think there’s certainly potential for operating momentum going into next year.
The stock is very cheap at its current price of $26 per share, less than a dollar per share above its 52-week low. When the company reported earnings on Tuesday, it expects $2.00 to $2.10 per share in earnings per share this year, putting the stock at 13x this year’s earnings or less. When you look at other footwear companies priced around this level — Sketchers USA Inc. (NYSE: SKX) and Brown Shoe Inc. (NYSE: BWS) — the value in this earnings multiple quickly becomes apparent.
Sketchers is currently priced at around 12x this year’s earnings and Brown is trading for roughly 13.5x earnings. It’s interesting that these companies are being valued similarly to Steven Madden by the market despite less-profitable operations. Sketchers has a profit margin of roughly 5.7% and operating margins of 8.8%, while Brown has a profit margin of 2.65% and operating margins of 4.5%. Considering that none of these companies have terrible balance sheets (Brown has a little bit of debt and Sketchers is net-cash positive), they seem to make sense as comparables for the current valuation.
Steven Madden is significantly more profitable than either comparably priced company. The company boasts 9.45% profit margins and nearly 16% operating margins. In addition, Steven Madden is more efficient with its capital — its return on equity is significantly higher than either comparable.
While I’m not willing to put a “price target” on the stock, I think one can safely assume that the stock is considerably undervalued at its current price, assuming neither Sketchers nor Brown is drastically overvalued, and it is probably worth 15-18x earnings. On the downside, I don’t think the stock could trade below 11-12x earnings barring very extreme circumstances.
In the most recent quarterly report, the company also announced that it has increased its share buyback to $75 million. While this figure doesn’t seem very significant at first glance, when you consider that the company market cap is just $530 million, it quickly becomes much more significant. This buyback makes sense because the stock is currently undervalued. Also, it stands to bolster earnings per share in coming quarters, which could make the stock more attractive to Wall Street.
Looking for catalysts is also very important for value investments. I think the current consensus estimate for next year — $2.24 per share– is too low. This assumes growth of roughly 12% over this year. With sales expected to increase more than 7% and a share buyback of 15% of the float, this assumption figures incredible margin contraction — an unlikely scenario.
Although turnaround stocks can be risky in a volatile stock market, I don’t think that’s the case for Steven Madden. Not only is it profitable, but it earns significantly more per dollar in sales and greater returns on equity than any of its similarly priced competitors. Throw in the company’s great balance sheet, share buyback, and well-known brand, and I think the stock is very interesting for the volatile stock market.
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 Just in time for the upcoming summer events in Norfolk! A must see Condo in newly built 388 Boush Street community in Downtown Norfolk. Located at the corner of Boush and Freemason Streets. 2 bedrooms/2 baths with brand new appliances throughout. Hardwood floors, tiled bathrooms and carpeted bedrooms make the place look spectacular. Secure parking (city garage) and several kepad entrances make for easy access and added security. 6 month leases are welcome (monthly rent to be discussed).
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When Darth Vadar lured unsuspecting folks to the dark side, he was actually referring to the sinister and destructive nature of lax credit. For some reason, the business world and the mainstream media believed that this economy built on recycling credit was going to last forever. Even listening to the numerous housing shows, you would think that housing would always be the number one greatest investment on the face of the planet. Even today, as I was heading over to an appointment, I was listening to a prominent radio show on FM regarding real estate and the host is still in wonderland. One of the female co-host actually told a caller this:
“Right now is the perfect time to buy. Because even if real estate goes down, in 3 to 5 years you will have massive equity.”
I almost punched my stereo by this financially retarded advice. For one, the caller had no down payment. And another point, if real estate is going down and he comes in with little money, how is he going to have “massive equity” in the home? This was a case and point of so called real estate experts purporting short-term thinking and failing to look at the macro scope of this credit bubble. And then, I was watching a local television station this week discuss the record foreclosures here in California and they told the audience this nugget of wisdom:
“If you are having a hard time making your payment and have equity, refinance your house and get some money out. This will keep you afloat for a while longer. If this doesn’t do it, go ahead and cash advance on your credit cards to keep your mortgage payments.”
Am I really hearing and seeing this? Did I eat some kind of imported food tainted with hallucinogenic mushrooms? This “advice” is wrong on so many levels. For one, tapping out equity to keep a payment you clearly cannot afford is financial suicide. What you need to do is evaluate whether you need to sell your home or not. And tapping into credit cards as a short-term carryover loan to pay your mortgage is flat out stupid. You think these folks are going to pay the bank before they purchase food and keep their utilities on? The inflated sense of self for some of these experts makes you think that we are seeing miniature Napoleons running around.
In this article we will examine three major converging factors that bursted the housing bubble. First, we will examine the end of subprime lending. Second, we will look at the cancerous spread of horrible loans into the prime sector. Finally, as noted by last week’s tremendous drop in the stock market we will examine what will happen now that the bubble has fully burst and is spilling green toxic sewage credit all over the country.
Subprime Is Out to Lunch. Forever.
We witnessed weakness in the markets with many subprime lenders closing shop. We are now out over 100+ major players in the subprime market due to horrible loans and collapsing on their own weight. As the subprime market collapsed earlier this year, the market kept on chugging along because of the belief that this damage was contained to one sector. Clearly as the quarter progressed this was not the case. And how could it be any different? The housing market stalled and folks couldn’t play the musical chair game of refinancing. This was noted in the massive drop in mortgage equity withdrawals. Like a WWE wrestler, the market needed to tap out.
In addition, we realized that Wall Street had enough of subprime loans. Principally because hedge funds realized that the underlying assets may be a tiny bit overpriced. Oh really? I’m reminded of the story of some of the large hedge funds homes being inhabited by raccoons and roaming free range hogs. I wonder if the hogs went 2/28 on the property? The problem stemmed from long distant investors buying up properties sight unseen on inflated appraisals. Now that the market is scrutinizing what the collateral was, it does not like what it sees.
Later in the quarter, we have the end of the 2/28 teaser mortgages. A mainstay of the industry during boom times. No longer are folks able to squeeze into over priced places on these ridiculous loans. In Southern California we had a peak originating month in August of 2005. Perfect timing for next month where many loans will reset and folks are no longer able to refinance into additional loans. The problem is also happening where appraisers are now seeing homes drop in price. No longer will most banks give you a HELOC simply because you have a pulse and a home in an over inflated metro area. As in the last article, foreclosures are booming to the next level. Not only that, as highlighted in detail, people making $130,000 a year are also having problems covering their monthly nut.
It is clear that subprime is now down and out. But prime was protected right? Well this leads us into the end of Q2 and the infection of the prime sector.
Prime USDA Mortgages
Countrywide announced that it has faced one of its worst quarters. Not only that, the CEO Mozilo stated that he didn’t see housing coming back until 2009. Talk about a vote of confidence. We also saw the problems at Bear Sterns with prime loans going bad in the so-called Alt-A tranches. That is, financially risky loans given out to credit worthy customers. But again, simply because you have a 750 FICO doesn’t mean you can make the payments on a $600,000 mortgage unless you have income to back up your score. The issue with the last few years is income didn’t even matter. As I discussed many months ago, a study conducted by the LA Times found that stated income borrowers over stated their income 60 percent of the time. Out of these, 50 percent overstated their income by 50 percent. This in conjunction with mortgage resets is showing who has been swimming in Huntington Beach without any trousers now that the tide is going out.
So the market got extremely spooked. That is why last week we saw almost a 5% retrenchment of the overall stock market. And not only here in the US did markets suffer, but markets in Europe as well since they decided to jump into the worldwide credit orgy. Alt-A is going to face some serious pain. At the peak in California, 73 percent of all originated loans were adjustable. Now that rates are resetting in the face of housing depreciation home owners are facing something they didn’t expect. Being stuck. Stuck like a stick in the mud. Yet you hear housing pundits sound off asinine quotes like the two mainstream folks above, and you wonder why this bubble is bursting? Somehow they feel that everyone is living in their world of perpetual credit expansion. Many of the prime banks, hedge funds, and Wall Street drank this Kool Aid for many years. But the party is now finished. Eventually the music stops and the piper needs to be paid. Last week the overall stock market, which keep in mind supposedly tracks the health of the overall US market, went down with a three hit combination. And this is in the face of good GDP numbers! But the numbers are a farce because many are realizing that the sustained growth was predicated on us buying consumption goods on credit therefore inflating the health of the economy. Doubt me? Go to Target, Wal-Mart, Trader Joes, Ralphs, or the mall and count how many folks actually pay in cash or check.
So Now what that Housing is Done?
If you don’t want to take my word for it, you can listen to Mozilo who is head honcho of the mortgage giant Countrywide. He doesn’t see this “ship” turning around until 2009. I get a kick out of housing pundits stating things like this from the same housing radio show:
“Okay. Enough of the housing bubble. The correction is over. This is a perfect time to find a good deal. You will have equity in your home. Housing always goes up. We may see a small correction but once it goes up, it will go up fast like the last few years!”
Correction? We’ve been in a decade long boom and they think two quarters is a correction? We are in for multiple years of housing being a horrible overall investment. This assumption that housing goes up massively in good times and only retracts baby steps in bad times is fundamentally wrong and is clouded by their own judgment. To quote Upton Sinclair, “It is difficult to get a man to understand something when his job depends on not understanding it.” Clearly they are seeing what they want to see because the implication would imply challenging times for them should the market go down. You can’t blame them for this faulty analysis. However, they are fundamentally wrong and demonstrate their lack of macroeconomic policy each time they open their mouths.
On Friday we were left with a taste of things to come. An announcement that Fannie Mae and Freddie Mac may face losses of $4.7 billion in the subprime market. These government sponsored entities are the white elephants in the room in our over mortgaged 3/2 stucco home. As we were too busy looking at subprime imploding and Alt-A tranches getting hammered, most mainstream folks failed to examine the cancerous growth of this credit bubble. Now it is reaching the absolute nucleus of the US housing market. These two behemoths should they face a problem have the potential of bringing down the entire market significantly. Last week we dropped almost 5 percent across all major markets because of Countrywide and a fear of credit being shut off. Just wait if issues at the two GSEs are as bad as many think.
The housing and credit bubble lasted too long. There is tremendous excess that needs to be washed out. The market is in for a long and prolonged downturn. What you need to look out for is snake oil salesmen trying to tell you that we’ve already had our correction and it is time to buy. It is comical to think that many months ago the former NAR chief David Lereah had called the bottom, multiple times. Maybe we have a differing view on what constitutes a bottom.
Do you think Fannie Mae and Freddie Mac are the next to show cracks due to this housing market?
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Filed under: Earnings reports, Good news, Competitive strategy, Avery Dennison Corp (AVY)
Avery Dennison Corporation (NYSE: AVY) makes products every office, large or small, everywhere in the world uses. Its acquisition of Paxar in June has expanded Avery’s market share and geographic reach. Cost savings from the acquisition were recently revised to be bigger than expected, $115-$125 million, and materialize sooner. The stock has a P/E ratio below its industry average while the company’s EPS is 500% (not a typo) above industry average. Additionally, the stock has fallen more than 10% in price since opening the year at $68.08, so might be considered undervalued at its present price of $59.72.
In late July, Avery Dennison released 2Q 2007 earnings which, though filled with hedges regarding the final costs of acquiring and integrating Paxar, present a very positive current outlook that is forecast to improve even more in 2008. Despite the fact that net income for 2Q declined, net sales increased 8% to $1.52 billion through both acquisition and organic growth. Adjusted EPS was up 3%, but this figure excludes the impact of Paxar that equates to acquisition charges of $0.15 per share thus far. Avery’s pressure-sensitive label division increased sales by 8.6% to $879 million, while the retail brand ID division increased sales almost 21% to $219 million, due primarily to the Paxar acquisition. Non-label office products division showed a 1% decline in sales in $263 million.
The fluctuations throughout the company are due to restructuring and reorganizing necessary to integrate Paxar. Thus has caused Avery Dennison CEO Dean Scarborough to revise FY 2007 guidance downwards slightly from EPS in the $4.05-$4.30 range to EPS in the $3.90-$4.10 range. Management still forecasts revenue growth to be in the double digit range, including the bump in revenue from Paxar.
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 Nice 3 Br Gambrel with paved driveway. Child friendly back yard. Second floor expansion could allow 2nd Ba and 4th BR. Country living, but close to everything.Home has been through the "WRAP" Energy Efficiency Program.
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This week witnessed the final nail in the housing bubble coffin. We have reached what seems to be the Minsky moment for the housing market. Named after the US economist Hyman Minsky, the idea holds that over long periods of economic stability leverage tends to grow in predictable stages. This economic stability leads to a fertile environment sprouting trunks of easy credit access with little perceived risk. However, as the growth continues there seems to be a movement from moderate lending, risky lending, and finally outright irresponsible Ponzi like lending. With 100+ subprime lenders imploding on their own convoluted mortgages, the housing market is like a fish out of water gasping for life and clearly in the last stage of the lending cycle. The first event occurred on Tuesday when the gargantuan mortgage lender, Countrywide Financial announced dismal second quarter results. They announced that second quarter profits shrank by a third due to growing delinquencies and get this, creditworthy borrowers defaulting. The talk early in the year about subprime being contained turns out to be an absolute ruse. Now we have prime mortgage borrowers swept up in the housing slump. Yet the bigger news came from Countrywide’s CEO Mozilo, saying that he does not see housing recovering until 2009. Imagine that.
Then we have the inability of the mainstream news media to inform us regarding critical issues. Instead, we have the morning news plastered with Lohan up to her usual debauchery and athletes gone wild. As a matter of fact, while California set a new record in the foreclosure department, the mainstream media felt this only warranted a footnote at the end of the newscast. We don’t hear much about Iraq anymore. And what of the collapsing dollar? I think I hear Nero Fiddling while something burns.
In this article we’ll examine three critical factors that propelled housing into its public Minsky moment; prime contagion, record number of foreclosures, and negative publicity.
Prime Contagion
Mozilo likened the housing market to a gigantic ship needing to turn in the ocean. It will take time was his underlying point. I like to think of the housing market more like a NASA mortgage rocket with no turning back. Have you ever tried turning back a rocket-propelled vessel? His statement seems to offer some hope that housing will return even though he unloaded millions in his company stock. Maybe he forgot to mention that the ship he was referencing was the Titanic. Either way, housing is passed the shaky ground stage. I’ve shown countless examples in our Real Homes of Genius series that clearly highlights an outrageous bubble housing psychology. We also discussed a few months back the subprime implosion as credit suddenly tightened and subprime lenders started dropping like moths heading toward the light. In fact, I felt this was the watershed event and would set the tone for the summer.
Yet glorious housing bull pundits at this time championed the amazing summer rebound and the silo mentality of containing the subprime debacle. Ignoring rising inventory, $1 trillion in mortgage resets, and a stagnant market they decided to jump on the housing Pollyanna bandwagon. After all, this summer was housing’s last shot to demonstrate continued bubble resilience. Unfortunately, this summer is only the beginning of a very difficult downturn in the housing market and most likely the overall economy. The market has ballooned beyond any economic model of sustainability. I discussed the pseudo $5 trillion in wealth created by this housing bubble and all credit linked to it. How much of this wealth will disappear is yet to be seen.
Yet now we are realizing that prime loans are also taking a hit. No longer is this implosion contained to one segment of the housing market. For a large part, we have this entitlement mentality of folks thinking their homes are worth more than what they truly are. Say you bought in 1997 for $200,000. Now your home is worth $600,000. This is a very typical scenario in California. You’d feel $400,000 richer simply by living in your home. And many folks had this wealth effect. In fact, they converted their homes into ATM machines and used mortgage equity withdrawals to prop the economy. Unfortunately, many folks are now realizing that some appraisals may be bubblicious in their estimates. Say this given home drops to $400,000 in a few years. Nothing is lost, in fact they are “up” $200,000 but the psychology and perceived loss does make people feel poorer. When people feel poorer, they spend less. In our economy based on 70 percent consumption, that equals a recession. Clearly, this is where we are heading. We have scheduled mortgage adjustments set for 2008 and 2009 to the tune of approximately $2 trillion:
This housing market followed no economic rules and like the Minsky moments of past, greed and irresponsible credit will once again collapse another bubble. Chalk it up to history repeating itself. Which leads us to the historical moment set in California.
Record Foreclosures
Southern California has reached a record number of foreclosures. That is correct, we are swimming in uncharted territory. Notice of defaults are quickly approaching record territory as well. To be exact we are off by 102 homes, which by the time this article is posted, we will surpass. So we can say that we have record numbers of Notice of Defaults and foreclosures. Take a look at the chart below and see if you can spot the trend in California:
The interesting tidbit of this information is NODs are turning over and going into foreclosure. If anything, you can consider the NODs as a canary in the mine; and if we are to read the data correctly we are in for some massive foreclosures. As stated by DataQuick:
“Most of the loans that went into default last quarter were originated between July 2005 and August 2006. The median age was 16 months. Loan originations peaked in August 2005. The use of adjustable-rate mortgages for primary purchase home loans peaked at 77.8% in May 2005 and has since fallen.”
Now if you examine the rate reset chart in conjunction with the foreclosure data, there really isn’t anything stopping this train. Over 75 percent of loans originated in August 2005 were adjustable-rate mortgages. Given the hot product was 2/28 teaser suicide loans, what special date are we approaching? That is right, August 2007 where a massive batch of these loans will be resetting in a declining market with higher rates. So even if these folks want to refinance, they will be hit by higher rates and a larger payment.
Amazingly, these loans are also fairly new. With a median age of 16 months. Clearly the problem here is people jumping into homes they cannot afford by horrible mortgage products. In addition, the rate of default on second mortgages is also skyrocketing. This would seem obvious since missing the payment on the primary loan implies you are not paying your second. But guess what? In the midst of all this there is good news. The median price for a home keeps on going up! We won’t go into exposing the inaccuracy of using a tiny sample size of higher priced homes skewing overall market stats. We want to leave you with one piece of good housing news for the day.
Negative Publicity
This may turn out to be the only good news left for housing. The media is fickle and suffers from long-term memory loss. Even a year ago, we were reading about stories of people making thousands in real estate transactions. People were racing over like NASCAR drivers ready to become brokers and agents as reflected by the number of licenses issued by the Department of Real Estate here in California. Now, you are more likely to find negative housing information permeating the media machine. And don’t you find this odd in a state where housing is still flirting with a median price of $600,000? If the media dug deeper into this implication and did constructive journalism, it would be clear that we are in a full fledged housing bubble bursting. Why are they afraid to come out and simply admit what the data is suggesting? That housing is in for a major correction and housing prices grew on the back of irresponsible lending and greed. The key ingredients from any historical bubble are present again.
The issue is the real estate industry employs countless people, pays high amounts of money for advertising, and has many politicians bought. So of course they carry clout. But this will only get you so far. You can only fool the market for so long. It is becoming apparent that this system will collapse on its own weight. In a way we haven’t felt the ramifications of what is to come. We are only getting a sneak peak of the real housing bear market. I was looking at old LA Times articles and the positive rhetoric from housing peak to negative bubble chicken little print took about 3 to 4 years. So given this past reference, you can expect a bottom somewhere in 2009 or 2010. Employment numbers still do not accurately reflect the coming job losses we will face. Our economy was based on this bubble via credit, mortgage equity withdrawals, trading houses up like baseball cards, and a cultural neurosis on all things housing.
When do you think we will reach a housing bottom?
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 Just a few blocks from the capital, this newly renovated building is also within walking distance of the baseball stadium and riverfront. This two-story, downtown loft is 1,050 square feet and includes one bedroom and loft space for work or extra sleeping, along with one very large bath. Beautifully furnished with quality pieces, the loft has a modern interior, covered parking, stainless steel appliances, granite countertop, and large built-in desk space. A rooftop garden is available for all tenants to use. Additional photos of furnished rooms available upon request. One interior parking space and one exterior parking space comes with each unit. Secured entry. From a current tenant at the Loft: "I’m a Navy LCDR who is a student at ACSC at Maxwell. I have lived in Unit F all year and have loved it! Inside, it’s the coolest space I will probably ever live in. . The built-in desk is the center of gravity of this place, and it’s perfect for book storage and for your computer setup. This is where all my work gets done, and I can watch the TV in the living room area at the same time. If you like working out, it’s a 2.9 mile run from the loft, along the river, to the Maxwell base."
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