^ the exurbs.

 

LOL. Who wants a McCraptastic Mansion these days? LOL

 

Hah!  Certainly not me.

 

LK: I got mine in a third-party trade through Fidelity, in case you were actually serious.  I got it more as an experiment than as a major investment, though.  Bond investing is something of a new thing for me--and I'm a little iffy on expanding it, both because I'm still learning about it and because I'm pretty sure that we're in for a massive spike in inflation sometime in the next couple of years given the deficits Obama is shamelessly running.  Stocks tend to rise with inflation, at least somewhat, as will commodities (though there will still be incredible volatility in that market--there always is); bonds won't.

^Thanks.  One reads about this stuff, but it's usually in the context of big firms and I was curious how an individual would even go about completing such a trade.

Initial placements are often through large firms, just like IPOs for stocks.  The secondary market is more individual-friendly, but still not quite as easy to navigate as the major stock exchanges.

That actually would be kind of fun to mess with, wouldn't it? With your "fun money" of course. Geez, I am still kind of a financial nerd despite abandoning the industry.

Heh.  That's basically what I'm doing now, and I've never been in "the industry."  Heck, I'm a bankruptcy lawyer--"the industry" and I are often squaring off against each other, though of course it's a lot more complicated than that.

These guys are heavy hitters and usually don't make blank statements.

 

Britain 'could lose cherished AAA credit within 12 months'

Investment chief at Pimco warns of disaster facing UK's public finances and banking

 

"One of the world's most powerful investment houses has given notice that Britain's cherished AAA credit rating could be lost within a year, with disastrous consequences for the public finances and the stability of the financial system."

 

"Pimco is reducing the weight of UK, US and European sovereign debt in its portfolios. "Miracles are needed in the next six months in order to keep economic growth in the developed world," Mr Mather said."

http://www.independent.co.uk/news/business/news/britain-could-lose-cherished-aaa-credit-within-12-months-1933967.html

It's another unexpected, the economist were off moment.

 

New jobless claims increase unexpectedly

 

"The Labor Department said Thursday that first-time claims increased by 18,000 in the week ending April 3, to a seasonally adjusted 460,000. That's worse than economists' estimates of a drop to 435,000, according to a survey by Thomson Reuters."

http://www.ibj.com/new-jobless-claims-increase-unexpectedly/PARAMS/article/19165

As we have previously discussed, the concept of walking way is growing rapidly. I still don't have a problem with it, its simply a business deal. What I do have a problem with is looting on the way out, damaging the house or people that walk away who have Home Equity Loans. I'm believing more and more this is main streets way of 'showing its anger' at the banks and wall street. No riots, just walk away.

 

Feeling entitled, homeowners walk away or loot fixtures

 

Homeowners are walking away - even when they can afford their payments. Some loot on the way out the door, carting off light fixtures, appliances, anything of value.

 

But today's homeowners are tired of watching the lenders who triggered the financial meltdown get bailed out while they suffer. They want revenge.

 

"It went from being a shame to being behind on your mortgage to feeling like it's a big joke," said Jim Kelly, a Tampa homeowner who said numerous neighbors of his have stopped paying. "The big talk at cocktail parties is how underwater is your house and how long have you lived there for free."

http://www2.tbo.com/content/2010/apr/02/feeling-entitled-homeowners-walk-away-or-loot-fixt/c_3/#comments

Wow, the major bank's unethical conduct and the manipulation of their books are just amazing. Wouldn't it be great if we all could do this when we needed money or wanted someone to invest in a business. Just remove 40% or 50% of you debt off the books until you get the loan, then put the debt back on the books. The level of corruption has become stunning. I guess its just another day in NYC and DC. So, I guess this means GS, JP Morgan, BofA, etc. debt levels are averaging about 40% more than what is being reported.

 

Major U.S. banks masked risk levels: report

 

"(Reuters) - Major U.S. banks temporarily lowered their debt levels just before reporting in the past five quarters, making it appear their balance sheets were less risky, the Wall Street Journal said, citing data from the Federal Reserve Bank of New York."

 

"The paper said on Friday 18 banks, including Goldman Sachs Group (GS.N), Morgan Stanley (MS.N), J.P. Morgan Chase (JPM.N) Bank of America (BAC.N) and Citigroup (C.N), understated the debt levels used to fund securities trades by lowering them an average of 42 percent at the end of each period."

http://www.reuters.com/article/idUSTRE63813R20100409

Wish they would start sending people to prison. Madoff is nothing compared to what's been happening.

Unfortunately, the real crime may be what's legal, not what isn't. :-(

Most people invest in debt via debt funds to provide diversification and reduce risk.  I don't have any money in distressed assets, but I do have money invested in high yield bond funds.

 

We individually couldn't take stuff off of our credit reports to try to get loans, why should they?????

These banks live by a completely different set of rules (if there are any). The law doesn't touch them or get in their way.

You know, a few years ago a lot of this stuff would be considered tinfoil hat stuff. Now all the corruption and manipulation is just an accepted 'evil' to save the world's economy.

 

Metal$ are in the pits

Trader blows whistle on gold & silver price manipulation

 

"The banks, which do the Federal Reserve's bidding in the metals markets, have long been the government's lead actors in keeping down the prices of gold and silver, according to a former Goldman Sachs trader working at the London Bullion Market Association."

 

"JPMorgan acts as an agent for the Federal Reserve; they act to halt the rise of gold and silver against the US dollar. JPMorgan is insulated from potential losses [on their short positions] by the Fed and/or the US taxpayer," Maguire said."

 

Read more: http://www.nypost.com/p/news/business/metal_are_in_the_pits_2arTlGNbMK7mb1uJeVHb0O#ixzz0ku3B58B6

I think its becoming pretty clear the housing market is about to take a double dip. All this is happening even with the taxpayer home buying credit. Wait until that expires, things are going to get pretty nasty again, for the housing market. Places like Cincy with an almost 50% increase in homes for sale are going to see some significant pressure on home prices and an increase in foreclosures. Supply and Demand continue to be way out of order.

 

America's Worst-Selling Housing Markets 2010

Home prices have dropped, and inventory and sale prices are up in these big cities.

 

"Milwaukee, Wis., is home to Miller Brewing, one of the country's biggest beer makers. That's good news for home-sellers there: They probably need a drink more than ever. Milwaukee is the big city with the worst-selling housing market in America."

 

"Many of America's major cities are saddled with thousands of unsold homes. Speculative buyers spurred overbuilding in markets like San Diego, Atlanta and Los Angeles during the housing boom, and those homes were left to languish once the bubble burst. In other cities that have been struggling economically for years, like Cincinnati and Cleveland, more and more lost jobs mean demand can't keep up with supply."

 

"Former manufacturing hubs in the Midwest have it rough as well. High unemployment combined with the nationwide financial crisis has left fewer families in a position to buy homes, causing real estate markets to stagnate. Cincinnati, for example, has seen the biggest year-over-year inventory increase of all the cities we measured, at 48%. Inventory in St. Louis, Mo., rose by 36%, and similar problems afflict Cleveland and Milwaukee."

http://realestate.yahoo.com/promo/americas-worst-selling-housing-markets-2010

 

 

 

As far as the analysis applies to Cleveland, I don't know how accurate it is.  Sure, Cleveland has a lot of vacant properties.  But a good majority of those properties should be torn down.  Wood sided/framed homes that have been neglected for years and are past the point of repair.  The weather has just beat the hell out of these homes.  I would put more weight in the number of "new builds" sitting on the market than the overall numbers which would include a large amount of rundown properties incapable of being labeled a 'fixer-upper'.  I assume the same caveat would apply to other cold-weather cities that have similar issues.

 

To ragerunner, deep breaths buddy.  We are going to make it through this.

As far as the analysis applies to Cleveland, I don't know how accurate it is.  Sure, Cleveland has a lot of vacant properties.  But a good majority of those properties should be torn down.  Wood sided/framed homes that have been neglected for years and are past the point of repair.  The weather has just beat the hell out of these homes.  I would put more weight in the number of "new builds" sitting on the market than the overall numbers which would include a large amount of rundown properties incapable of being labeled a 'fixer-upper'.  I assume the same caveat would apply to other cold-weather cities that have similar issues.

 

To ragerunner, deep breaths buddy.  We are going to make it through this.

 

Old or new, the inventory of homes is still there and is causing an increase in blight condition, a drain on limited resources, increases the foreclosure rate and puts downward pressure on home values.

 

I am very sure we will make it through this. What the US and other nations look like after it's over is what is up for debate.

2 big banks forecast major rise in foreclosures in 2010 (Update 1)

By Ryan Frank, The Oregonian

April 09, 2010, 6:05AM

HousingWire reports:

 

"Bank of America, which currently forecloses on 7,500 homes every month will see that number rise to 45,000 by December 2010 as one senior executive pointed out at a recent trade show. However, a spokesman for BofA told HousingWire, he could not confirm the numbers and they do not reflect a public position of the bank.

 

JPMorgan Chase ,,, expects the amount of real estate owned (REO) properties in its portfolio to reach between 33,000 to 45,000 in Q410. By comparison, in Q409, REO inventories were at 23,100."

http://blog.oregonlive.com/frontporch/2010/04/2_big_banks_forecast_major_ris.html

 

^  Are the banks finally getting to the point in the balance sheet repairing process that they can now start to recognize their losses?

 

I think the losses have been their since the start of the financial collapse, but the banks could not recognize them because doing so would have caused their immediate failure. Their balance sheets and bank reserves simply could not handle the losses.  Now after 18 months of the FED pumping money into them, it looks like they may be approaching the point where they can start to show a sizable chunck of the losses and still remain solvent (on paper). 

 

So I guess we can start to see foreclosures climb as the banks begin to take action against delinquent mortgage holders, now that their (bank's) balance sheets are strong enough to withstand the losses.  Oh - it doesn't hurt that the banks are making a lot of money now borrowing from the FED at 0% interest and turning around and lending the money back to the government for an nice little profit.

 

^ Are the banks finally getting to the point in the balance sheet repairing process that they can now start to recognize their losses?

 

I think the losses have been their since the start of the financial collapse, but the banks could not recognize them because doing so would have caused their immediate failure. Their balance sheets and bank reserves simply could not handle the losses. Now after 18 months of the FED pumping money into them, it looks like they may be approaching the point where they can start to show a sizable chunck of the losses and still remain solvent (on paper).

 

So I guess we can start to see foreclosures climb as the banks begin to take action against delinquent mortgage holders, now that their (bank's) balance sheets are strong enough to withstand the losses. Oh - it doesn't hurt that the banks are making a lot of money now borrowing from the FED at 0% interest and turning around and lending the money back to the government for an nice little profit.

 

 

I think they are getting closer. Maybe we will go through waves. Spend 2 years getting free money, then spend a year foreclosing. Rinse and repeat. Whatever the plan is prices are about to take another nice drop.

I think the question is what happens as the shadow inventory gets processed in some way or another. Westerville is sprouting signs like its going out of business. It will be interesting to see the prices can hold. The neighborhood is supposedly down about 6%, but if there is more stuff that was just waiting for a little up breeze to come out the prices could take a step down - this would probably cascade down through NE Cbus. I think a process like this is going on throughout the country.

What exactly do you mean by shadow inventory? Is that old/obsolete/overstock inventory that's in warehouses that will have to be sold at a discount somehow?

What exactly do you mean by shadow inventory? Is that old/obsolete/overstock inventory that's in warehouses that will have to be sold at a discount somehow?

 

The shadow inventory is the large amount of bank owned foreclosures that they have yet to put on the market for sale. The banks have been slowly putting their 'supply' on the market in an effort not to overwhelm the market.

^ I think Shadow inventory also probably includes houses that people would like to sell but are holding back on listing because they feel the house won't sell in this market (at a price approaching what they want).  Sell is a bit of a pain, so why go thru it when there is little chance of finding a buyer.  This group of "shadow-inventory" sellers includes people divorcing who do not necessarily have to sell right away, young people needing more room because of growing families, and empty nesters who are ready to downsize. They (and others) can stay put where they are for now, but would prefer to sell, and will try to do so if they think the market is picking up.

 

And of course, there are a lot of houses that the banks have delayed foreclosing on because they can't handle the volume (part of the "dolling out the houses in small numbers to not overwhelm the market" approach banks seem to be taking).  Better for the banks to have someone living in a house and not paying the mortgage than to have a house sitting empty and no one paying the mortgage.

 

Then there are all the people wanting to relocate for job opportunities, weather-related reasons (traditional retirees and such), etc, who can't because they can't sell their current place.  When the house market picks up, they are likely to test the waters as well.

 

In essense, there is a large pent-up supply of currently-occuppied houses waiting to be listed as soon as people perceive the market has improved.  It could be a tidal-wave that sinks the sprouts that are greening.

 

The banks have been very slow to complete the foreclosure process and are even delaying the foreclosure proceedings. There is a lot of shadow inventory.

What are the people waiting to upsize, downsize, and relocate looking to upsize, downsize, and relocate to?

What are the people waiting to upsize, downsize, and relocate looking to upsize, downsize, and relocate to?

 

a lot of people are stuck. 

What are the people waiting to upsize, downsize, and relocate looking to upsize, downsize, and relocate to?

 

a lot of people are stuck.

 

a lot of people are also broke. Just wanting for the bank to finally kick them out.

What are the people waiting to upsize, downsize, and relocate looking to upsize, downsize, and relocate to?

 

a lot of people are stuck. 

 

a lot of people are also broke. Just wanting for the bank to finally kick them out.

 

That too.  some banks are even willing to sell homes with home owners still on the property.

Wow, I was way off. haha

What are the people waiting to upsize, downsize, and relocate looking to upsize, downsize, and relocate to?

 

a lot of people are stuck.

What are the people waiting to upsize, downsize, and relocate looking to upsize, downsize, and relocate to?

 

a lot of people are stuck.

 

a lot of people are also broke. Just wanting for the bank to finally kick them out.

 

Are these the people who are waiting to upsize, downsize, and relocate that we were talking about?

Initial jobless claims continue to rise...

 

http://articles.moneycentral.msn.com/Investing/Dispatch/default.aspx?feat=1742049

 

...the Labor Department reported an increase in initial jobless claims this morning.

 

First-time claims rose 24,000 last week to a seasonally adjusted 484,000. Economists had expected claims to fall to 430,000.

 

The increase was partly due to the Easter holiday. The four-week average of initial claims, which takes out weekly volatility, rose by 7,500 to 457,750; economists had expected a decline to 430,000. Continuing claims in the week of April 3 climbed 73,000 to 4.64 million.

 

We keep hearing that the economy is improving (which it probably is based on all the measures they use) and that hiring has started again.  However, each week economists seem to be surprised that initial unemployment claims stay high or increase.  This is usually in contrast to their predictions for a drop.

 

So while hiring appears to be picking up some, job stability does not seem to be improving. There is little sign that people are feeling more confident that their job is NOT going away.  People fearing for their job are less likely to undertake major purchases.

 

I know employment is a lagging indicator of the business cycle, but this time employment seems to be lagging a little longer than usual. 

 

Either that, or the churn rate of jobs in the economy has increased noticably.

 

(I don't remember ever seeing a statistic on the job-turnover rate for the US economy.  Would be an interesting one graphed over the past 70 years.)

Initial jobless claims continue to rise...

 

http://articles.moneycentral.msn.com/Investing/Dispatch/default.aspx?feat=1742049

 

...the Labor Department reported an increase in initial jobless claims this morning.

 

First-time claims rose 24,000 last week to a seasonally adjusted 484,000. Economists had expected claims to fall to 430,000.

 

The increase was partly due to the Easter holiday. The four-week average of initial claims, which takes out weekly volatility, rose by 7,500 to 457,750; economists had expected a decline to 430,000. Continuing claims in the week of April 3 climbed 73,000 to 4.64 million.

 

We keep hearing that the economy is improving (which it probably is based on all the measures they use) and that hiring has started again.  However, each week economists seem to be surprised that initial unemployment claims stay high or increase.  This is usually in contrast to their predictions for a drop.

 

So while hiring appears to be picking up some, job stability does not seem to be improving. There is little sign that people are feeling more confident that their job is NOT going away.  People fearing for their job are less likely to undertake major purchases.

 

I know employment is a lagging indicator of the business cycle, but this time employment seems to be lagging a little longer than usual. 

 

Either that, or the churn rate of jobs in the economy has increased noticably.

 

(I don't remember ever seeing a statistic on the job-turnover rate for the US economy.  Would be an interesting one graphed over the past 70 years.)

 

Main Street will not see a jobless economic recovery. Banks on Wall Street may have a different outcome.

Greek aid in doubt as German professors prepare court challenge

 

"A quartet of German professors is to preparing to challenge the EU-IMF rescue for Greece at Germany's constitutional court as soon as the mechanism is activated, claiming that it violates the 'no-bail-out' clause of the EU Treaties."

 

"The legal challenge has far-reaching implications. It threatens to cloud the issue for weeks or months and may ultimately force Berlin to withdraw support, raising the risk of wider systemic crisis in Southern Europe."

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7591027/Greek-aid-in-doubt-as-German-professors-prepare-court-challenge.html

Initial jobless claims continue to rise...

 

http://articles.moneycentral.msn.com/Investing/Dispatch/default.aspx?feat=1742049

 

...the Labor Department reported an increase in initial jobless claims this morning.

 

First-time claims rose 24,000 last week to a seasonally adjusted 484,000. Economists had expected claims to fall to 430,000.

 

The increase was partly due to the Easter holiday. The four-week average of initial claims, which takes out weekly volatility, rose by 7,500 to 457,750; economists had expected a decline to 430,000. Continuing claims in the week of April 3 climbed 73,000 to 4.64 million.

 

We keep hearing that the economy is improving (which it probably is based on all the measures they use) and that hiring has started again. However, each week economists seem to be surprised that initial unemployment claims stay high or increase. This is usually in contrast to their predictions for a drop.

 

So while hiring appears to be picking up some, job stability does not seem to be improving. There is little sign that people are feeling more confident that their job is NOT going away. People fearing for their job are less likely to undertake major purchases.

 

I know employment is a lagging indicator of the business cycle, but this time employment seems to be lagging a little longer than usual.

 

Either that, or the churn rate of jobs in the economy has increased noticably.

 

(I don't remember ever seeing a statistic on the job-turnover rate for the US economy. Would be an interesting one graphed over the past 70 years.)

 

Main Street will not see a jobless economic recovery. Banks on Wall Street may have a different outcome.

 

The numbers I'd be interested in finding (though not enough to dig up) isn't the unemployment figure, it's the workforce-exit figure.  You only get counted in the unemployment numbers if you're still actively looking for work.  Many may well not be, which would make the total jobless picture more bleak than it actually is--assuming, of course, that those who have stopped looking for work are adults.  (For example, if it means fewer high schoolers looking for work or more married women (or men!) staying at home to take care of children, that isn't as bad as having truly long-term unemployed breadwinners who have been unemployed so long they don't even count as job-seekers anymore, though it will still have a net negative effect on GDP.)

^ "The numbers I'd be interested in finding (though not enough to dig up) isn't the unemployment figure, it's the workforce-exit figure."

 

This would probably be similar to the "Labor Participation Rate", which is a published statistic.  I think our Dayton economic expert here may post it in some of his charts as well.  Unfortunately, I can't recall it off the top of my head, but it should be pretty easy to find the Labor Participation Rate.

 

Lot's of things affect the Labor Participation Rate (LPR), but on the whole it's an evolutionary thing, with gradual shifts over time.  However, in times like this, the LPR can (and is) make a relatively big shift in a relatively short time period (say 18 months).

http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LNS11300000

 

Here is the Labor Participation rate with a chart for the past decade.  Notice how the rate drifted downward from 67.5% in jan-2000 to just over 66% in mid 2008.  Then it took a decidedly turn lower.

http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LNS11300000

 

Here is the Labor Participation rate with a chart for the past decade. Notice how the rate drifted downward from 67.5% in jan-2000 to just over 66% in mid 2008. Then it took a decidedly turn lower.

 

CincyDad:

 

That is also useful information, but it's not 100% the same as workforce exit because of the effects of population growth.  In other words, the LPR could go down even as the workforce increased in size because population increased even *more,* or it could go down because people were really exiting the workforce.  By contrast, you could have the LPR trend upwards simply by losing large numbers of nonworking people, not by actually increasing the size of the workforce.  This is not to belittle the LPR, which is also an important economic stat--just saying that it's a little different.  Even the absolute number of people in the workforce, which is also a readily available stat, is a little different, because it doesn't measure the number of people who specifically went from "working" to "seeking work" to "no longer seeking work."

^ Gramarye... I see what you are saying, but I'm not sure you can really measure what you want.  At least not easily.

 

People exit the workforce for a number of reasons, of course.  Some are temporary, some are permanent.  It would be difficult right now to count the number of people who "exited the workforce" to go back to school.  These people "intend" in re-enter the workforce, but who knows what the employment picture will look like in 2 years.  Similarly, a lot of people exited the workforce over the previous few years via retirement (voluntary or otherwise).  Yet a number of these people seem to be re-entering the workforce due to financial reasons.

 

I agree that measuring the number of people exiting the workforce, and conversly entering the workforce, each month would be a wonderful stat to have.  And I suppose the gov't plugs in an estimate of this very thing somewhere in the bowls of their employment models.  But I suspect the number they use is just an estimate based on historical trends (like the birth/death model used to estimate new companies each month), and probably turns out to be extremely in-accurate at the inflexion points of the economy, like we've had for the past 18 months.

We shall see. None of the big boys are currently being charged, just a vice president. Sacrificial lamb to appease the masses? But, maybe its a start.

 

Goldman charged with fraud over Paulson CDO trade

Shares of investment bank drop 10% after SEC files lawsuit

 

"SAN FRANCISCO (MarketWatch) -- The Securities and Exchange Commission on Friday charged Goldman Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product related to subprime mortgages."

http://www.marketwatch.com/story/goldman-charged-with-fraud-over-paulson-cdo-trade-2010-04-16

The take around the interwebs seems to be that this is a big deal - could eventually end up as the next Enron. It'll be interesting to watch.

I didn't know where else to post this

 

<b>U.S. Cities In Free Fall

Francesca Levy, Forbes.com Apr 13th, 2010</b>

 

Miami boasts a popular South Beach club scene, Art Deco Architecture, and perhaps the best Cuban food in the country. But residents don't have much else to celebrate.

 

More than three years after the economy started its downward slide, the Miami metro area, like a handful of Sun Belt cities, still hasn't begun to recover. Median home prices in Miami have fallen 38% since its market peaked in the second quarter of 2007; the city's 11% unemployment rate is above the national average and has grown more than most of the 40 cities we surveyed.

 

 

http://realestate.yahoo.com/promo/us-cities-in-free-fall

The jig is up. 

 

 

WASHINGTON -- China trimmed its holdings of U.S. Treasury debt 1.3 percent in February, the fourth consecutive decline. Those reductions are raising concerns that the U.S. government could face higher interest rates to finance its soaring budget deficits in the future.

 

The Treasury Department said today that China's holdings dropped $11.5 billion to $877.5 billion. That still leaves it as the largest foreign holder of U.S. Treasury debt. Japan retained the No. 2 spot with $768.5 billion, a drop of 0.4 percent from the January level.

 

more: http://www.cleveland.com/business/index.ssf/2010/04/china_trims_us_treasury_debt_h.html

 

 

Another crappy forbes list.

Merged with the US Recession: News & Discussion thread.

The take around the interwebs seems to be that this is a big deal - could eventually end up as the next Enron. It'll be interesting to watch.

 

We can only hope.

Probe Turns to Buffett Deal

Government Suspects Goldman Director Told Galleon of Berkshire's 2008 Investment

 

"A Goldman Sachs Group Inc. director tipped off a hedge-fund billionaire about a $5 billion investment in Goldman by Warren Buffett's Berkshire Hathaway Inc. before a public announcement of the deal at the height of the 2008 financial crisis, a person close to the situation says."

http://online.wsj.com/article/SB10001424052748703876404575200423282391104.html

 

:-D :lol: :wave:

These types of numbers with the tax credit. If the credit or another assistance program is not enacted at the end of the month we are going to see home sales and prices take another dump going into summer and pick up moment on the downside next fall/winter. Prices and supply/demand still have a ways to go before they are back in balance with reality.

 

Home Prices Fall in February; Further Declines Possible

 

"The S&P/Case-Shiller 20-city composite price index fell 0.9 percent on an unadjusted basis in February, worse than a 0.3 percent decline estimated in a Reuters survey. Seasonally adjusted, prices declined by 0.1 percent, as expected, after a string of eight straight monthly increases."

http://www.cnbc.com/id/36798965

^ I think that at this point, we all pretty much agree that housing will remain down for some time until, as you say, Prices and supply/demand still have a ways to go before they are back in balance with reality.  Prices will probably continue to slowly drift downward for some time, inventory will fluctuate as foreclosures gyrate, etc.

 

But what I'm now waiting to see, is when mortgage rates really begin to rise.  I don't know if it's next month or next year, but historically low rates cannot be sustained forever.  30-yr mortgage rates are set by the market, based on long-term bond rates, which seem poised to shoot up a couple hundred basis points once the financial crises "mends". 

 

The other thing I'm waiting for and looking for is a meaningful strengthening of lending standards.  Right now Fanny/Freddie suport 80+% of new US mortgages, and they have only slightly tightened standards.  At some point their stranglehold of mortgage lending has got to back off, and I'm curious as to what the rest of the market will demand as far as lending standards.

 

So when these 2 factors, mortgage interest rates and credit standards, move further back toward their historical positions (I don't look for a complete return to 20% down payments), I do not see how the housing market can avoid another decidedly leg down.  Until then, I look for a slow drift in the downward direction.