December 29, 2007

What Were The Biggest Housing Bubble Events Of 2007?

A weekend topic on the past year. “We have just experienced a historic year. What was the biggest housing bubble event of 2007?”

One posted, “Containment didn’t happen.”

Another added, “The housing bubble was renamed the ‘Subprime this’ or the ‘Subprime that.’ Mentally containing it, just a little, to loans (and only ‘dodgy loans’ at that). Thus the concern for how loans perform, rather than overpriced houses. And all the interest in propping up housing prices because the problem we have is with bad loans.”

One agreed. “Yet another attempt to pin this fiasco on poor people, aka ’subprime borrowers.’ The problem was not with the borrowers. The problem was with the collateral. Lenders were making loans which far exceeded the fundamental valuation of the property based on income, i.e. rents.”

“That’s the real problem, it extended across all loan classes, and all types of property from Compton to West LA. And all of these properties are going to be experiencing defaults.”

To which was said, “The collapse in collateral prices was just the fan on the house of cards that was the entire lending/borrowing/investing in housing during this period.”

“The (inevitable) collapse in prices just happened to be the first step in knocking the whole thing down.”

Another said, “In a way, the biggest story was the dog that didn’t bark.”

“Consider all that has happened — the media realizing the bubble was a bubble, the media realizing the bubble had popped, financial organizations admitting huge losses, soaring energy prices, a credit crunch, a dollar collapse, etc. These are the worst economic conditions I can recall since the 1970s and early 1980s, worse than the early 1990s.”

“And yet employment and the stock market (in total) are up. Was 2007 the year the sea suddenly pulled away from the shore after an earthquake, drawing onlookers to the beach?”

One was specific. “The article (in April I think) in the New York Times that it is better to rent than buy, and stating exactly why accurately. MSM coverage changed after that.”

“Another watershed event might be the credit freeze that began around November that had central banks of the world scrambling in unison to restore liquidity.” A local opinion.

“Regionally, the big event in the northeast was the dramatic decline in sales in Sept/Oct. The notion that nothing has changed and the status quo still holds among RE believers is still very strong.”

“Few if any of them make the fundamental connection between sales volume and pricing and none are willing to admit that sales volume is the lifeblood of the entire market. Their perspective is something like ‘I don’t have to sell, therefore, I haven’t lost anything.’”

“My point is that the last 5-6 years haven’t put a nickel in their pocket. Not one red cent.”

One pointed to the past summer. “The Funds of August…”

One had a HBB reference, “What was the biggest housing bubble event of 2007? The introduction of the Joshua tree as a WMD.”

The Motley Fool. “In January 2007, the chief economist at the National Association of Realtors said, about the housing market, ‘The steady improvement in [home] sales will support price appreciation … [despite] all the wild projections by academics, Wall Street analysts, and others in the media.’”

“‘We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system,’ Federal Reserve Chairman Ben Bernanke said in May.”

“Months later, a global credit crunch of widespread proportions set in and affected the likes of Citigroup, and just about everyone else with exposure to credit products.”

From Bloomberg. “If you didn’t know what subprime meant at the start of the year, it was hard to avoid its meaning by year end.”

“The big question now is what will the subprime crisis and ensuing credit crunch cost. In mid-July, Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee that estimates of losses associated with subprime-credit products were $50 billion to $100 billion.”

“Those numbers ‘are far too low,’ Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc., said in a mid-November report. Based ‘on historical default and loss patterns in different home-price environments,’ he estimates U.S. losses will be roughly $400 billion.”

The Chicago Tribune. “When Morgan Stanley credit strategist Gregory Peters sat down to write his 2008 outlook, he was delighted to bid 2007 farewell. ‘Good riddance to 2007,’ he wrote. ‘It was one of the most grueling, volatile and taxing years in credit market history.’”

“In an unusual twist, which defied typical bond behavior, a blood bath occurred in some bonds that investors would have assumed were the safest of the safe — mortgage-related bonds rated AAA or AA by firms such as Standard & Poor’s and Moody’s.”

“It turned out that neither Wall Street nor the rating agencies understood the risks, so the safety labels were misapplied and continue to undermine lending confidence.”

The Palm Beach Post. “Broker Douglas Rill asked me to recap my top stories of the year…so here they are. What many hoped was only a brief breather for Palm Beach County and the Treasure Coast turned into an outright correction. In October 2007, Palm Beach County’s median home price was down 17 percent from the late 2005 peak, while Martin-St. Lucie prices fell 23 percent.”

“Daredevil builders like Standard Pacific and Tarragon got burned. Both recently sold Palm Beach County properties for less than they paid during the boom. Even old stalwart DiVosta laid off hundreds of workers.”

“Record-low mortgage rates helped inflate the housing bubble. But the subprime meltdown and the housing crash were bad news for mortgage companies. HomeBanc went broke, and companies such as First NLC and First Magnus laid off hundreds in Palm Beach County.”

“Housing-related layoffs caused Palm Beach County’s once-microscopic unemployment rate to jump. Publicly traded companies such as Office Depot blamed the slowdown for dwindling profits.”

“Even the state’s supersafe investment fund for municipal governments suffered a run after it gave off the whiff of mortgage taint.”

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Comment by crispy&cole
2007-12-29 10:52:03

This was my subprime prediction on Dec 7, 2006

Looking at the latest postings on the Broker Outpost, one would think the Sub prime market is ready to blow up:

Comment by crispy&cole
2007-12-29 10:56:39

Then again in Feb 2007:


Anyone who says this was a surprise (BB, Yun, Lereah, Paulson,etc..) was asleep at the switch. If a moron like me can do some goggle searches and find out what hell is going on…

Comment by dennis
2007-12-29 12:12:42

Maybe we ought to start a No Analyst Left Behind program on a national basis and have them pass a National Test before they can ever post or reply to a news agency again.

Comment by Professor Bear
2007-12-29 12:26:59

These guys are paid very well to tell plausible-sounding lies.

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Comment by txchick57
2007-12-29 14:58:53

lol, good one

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Comment by Professor Bear
2007-12-29 15:23:07

That would go along well with a No Journalist Left Behind program to provide journalists with remedial training in finance, economics and mathematics.

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Comment by Matt_in_TX
2007-12-30 08:56:07

There are only so many credit hours to go around. Don’t want to lose that 1 hour elective on ethics.

Comment by vozworth
2007-12-29 10:52:39

teeazer freezer…

Homer Debtors cry out “Dont let the bank taze me bro!”

Comment by vozworth
2007-12-29 11:07:42

forgiveness of income tax on debt forgiveness relating to stupidity, by rule of law

Comment by Doug in Boone, NC
2007-12-29 11:22:02

Just out of curiosity, if we were allowed to declare a “stupidity deduction” on our income tax, I wonder how many people would declare it?

Comment by vozworth
2007-12-29 11:25:24

only the ones who can read.

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Comment by vozworth
2007-12-29 11:08:37

23A Exlusion Letters.

Comment by vozworth
2007-12-29 11:16:06

CDO, SIV, ABCP….shut down
credit spread spikes.
dislocation of the 10 year from Mortgage rates.
Inverted Yield curves.
Global CB interventions.
Price Controls in the emerging markets.
Super-Enhanced SIV blowup promoted by treasury.

The man behind the curtain turns out to be swimming naked, we only know this because the tsunami wave is out and he’s floundering on the beach.

Comment by vozworth
2007-12-29 11:22:41

USandA GDP over 4% on the lowest inflation in half century.

Ministry of Truth
Managment of Expectations
Greatest Story Never Told

The notion that whatever the hell is wrong has nothing to do with the real economy.

move along, nothing to see here.

Comment by Professor Bear
2007-12-29 12:25:58

What kind of voter support does the teaser-freezer plan enjoy?

(Click on the “Question of the Day” link from the article posted below to get a sense of how Wall Street Journal Online readers feel about it.)

Some Cry Foul Over Relief Plan For Borrowers
December 4, 2007; Page D1

The Bush administration’s plan to give subprime borrowers a break on their mortgages is already catching flak from an unexpected source: other homeowners.

Comment by Neil
2007-12-29 10:53:44

One posted, “Containment didn’t happen.”

That is true of 2007.
It will be sadly true for 2008.

I do like the comment about how ‘the dog didn’t bark.’ How the MSM provided no warning of the obvious. Now what amazes me is that they’re still clueless on Florida.

I read that bit about Palm Beach and I wanted to puke. Does anyone realize how little economy, outside the REIC, Palm Beach has left thanks to this bubble? I used to own a home in Jupiter and really loved the area. Then my employer (Pratt) moved us out of the area… my new employer was in talks to buy Pratt’s huge facility there… but walked from the table when it came time to discuss where the machinists would live… doh! They’ve scared away three to five years of non-REIC job growth.

In summary, the really big story hasn’t been told. Its the consequences of the mal-investment. Areas will pay that price for years.

Got popcorn?

Comment by Ben Jones
2007-12-29 10:55:59

‘the dog that didn’t bark.’

Like the oft-sighted bail-out myth?

Comment by Professor Bear
2007-12-29 11:58:05

Note that the bailout myth is supported by certain policymakers who keep hinting that a bailout is in the works. Too bad that none ever seems to actually materialize.

At least one presidential candidate has taken a firm stand on the proper role of government in cleaning up the mortgage mess. I am still eagerly waiting for Mitt Romney to weigh in on this issue. It would make it far easier to vote against Mrs. C if all her potential opponents took such a prinicipled stand.

Election 2008
Huckabee Talks Tough on Mortgage Bailout
Listen Now [6 min 53 sec] add to playlist

All Things Considered, December 14, 2007 · Earlier in the year, former Arkansas Gov. Mike Huckabee was near the back of the pack in the race for the Republican presidential nomination.

Now, he is leading the polls in Iowa and South Carolina — and running second, but gaining on, Rudolph Giuliani nationally.

Huckabee talks with Robert Siegel about Iran, the mortgage crisis and the current scrutiny of his religious beliefs.

Robert Siegel: In an interview on Fox News recently, you said that the government should not be bailing out people whose mortgages are about to reset to interest rates that they can’t afford. Foreclosures are at record rates right now. Wouldn’t doing nothing — as millions of Americans risk losing their homes — smack of Herbert Hoover deferring to the market as 25 percent of Americans were unemployed in the Depression?

Mike Huckabee: Not at all. What you have is a situation where you have culpability on the part of the lenders and the borrowers. The fact is you need to encourage the lenders to try to work with those who have borrowed to keep from foreclosure because ultimately nobody wins. The banks don’t need an enormous inventory of property on their hands that they can’t move any more than the market can. The lender doesn’t need to be in default and ultimately bankruptcy and out of a home.

But what we don’t need is a government bailout. That is not the purpose of government, to prop people up from every poor decision they make. In fact, when you do that … whether it’s in the world of finance or the world of drug addiction … it creates an enabling codependency. It’s the last thing that really helps people.

Is there some way to bring some resolve to it? Yes. But it needs to be handled by the … people who made the mistake in the first place: overambitious borrowers and greedy lenders, who saw a way to suck people into interest rates that they should have known they couldn’t afford in the long term.

Comment by vozworth
2007-12-29 12:06:10

it was not the interest rate they could not afford, it was the Ficticious Value of the underlying asset.

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Comment by Professor Bear
2007-12-29 17:37:08

Spot on — like most other MSM-quoted observers, he does not grasp the affordability issue. But at least Mike Huckabee has the moral strength of character to clearly state what is wrong with bailouts. Where is that other Republican candidate, who is trying to claim the conservative mantle of Ronald Reagan, on this issue?

Comment by Professor Bear
2007-12-29 12:21:42

Case in point for how bailout cargo-cultist myths are kept alive and kicking:

Paulson Urges Congress To Act on Loan Woes
By Michael M. Phillips and Ruth Simon
Word Count: 858 | Companies Featured in This Article: Fannie Mae, Freddie Mac

Comment by wawawa
2007-12-29 10:58:08

I know some people including myself started shorting residencial RE builders a while back and they are still short. Good for them.

I think next problem area will be commercial RE, What would be good shorts in this sectors?

Comment by vozworth
2007-12-29 11:05:19


Comment by tuxedo_junction
2007-12-29 13:21:17


Comment by Ben Jones
2007-12-29 11:00:44

I can think of a couple that don’t get much mention. The ’spring bounce’ failing for a second straight time took the wind out of the market. And the rate cuts for the MBSs was a big catalyst for the credit meltdown.

Locally, the flood of condos and condo conversions made it impossible for anyone to deny there is a big problem.

Comment by ChicagoANT
2007-12-29 11:20:25

Any denial that occurred for the past year and a half, I took that as an opportunity to pay down as much debt as possible while padding my savings.

The party is ending. The last record is being played, and looks like many are now slowly admitting that the roaring mid-00’s times are over.

Comment by dennis
2007-12-29 12:51:38

Let’s call this era the “Roaring Otts” or the “Roaring Zero’s”

Comment by mjh
2007-12-29 22:08:10

Roaring zeros - is that a play on what interest rates will soon be?

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Comment by Matt_in_TX
2007-12-30 08:58:01

“Whining” not Roaring

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Comment by Kime
2007-12-29 11:08:31

“Based ‘on historical default and loss patterns in different home-price environments,’ he estimates U.S. losses will be roughly $400 billion.””

I’m guessing that it will pass the 1 trillion mark eventually. This is way beyond historical patterns, this has gone much farther and deeper than anything in our history.

Comment by mrktMaven FL
2007-12-29 11:14:45

The CREDIT CRUNCH heard around the globe.

Comment by bill in Maryland
2007-12-29 11:19:33

On “Bulls and Bears” this morning, I think it was Gary B who shared his worst 2007 pick. In June he was for Hovnanian, but that stock dropped 60%. He did admit it was like catching a falling knife. I missed their RE predictions for later today.

On Cavuto, Liz MacDonald talked about the big news of the sales drops and price drops. I think they are finally starting to get it. I think the tone of the analysts is that 2008 will be a bad year in Real Estate. Charles Payne thinks stocks will do well in 2008. If interest rates are cut again in January, they will help stocks but they won’t help real estate. I think the Fed will cut rates and they will admit that only significant price drops in existing home prices and new home prices will rescue the low number of sales. The Fed will be focusing on counteracting the recession that is underway. Lots of jobs are being cut now.

This is good for precious metals. On the other hand the big Colombian discovery of gold could keep gold between $800 and $900 per ounce in 2008. It will be awhile for the huge gold discovery to be absorbed by demand the next few years. Platinum and silver will probably do well in 2008 (up 15% to 20%). The Fed actions will be much more money chasing fewer goods, especially with a drop of goods produced.

Comment by vannuysrenter
2007-12-29 11:51:22

The fed will have a very hard time lowering interest rates again. I happen to know though my in laws, who are big in the import export business that overseas many transactions can no longer happen in USD. The dollar is becoming worthless.

Comment by dennis
2007-12-30 00:58:59

I could not agree more with you. The Fed has totally disconected with rate policy to protect inflation. They are being run by Wall Street and the PPT along with that worthless Paulson who should be removed for total lack of financial contribution to our economic policy. At some point we should all be paid in euros.

Comment by bill in Maryland
2007-12-30 11:39:05

That the Fed is totally disconnected with rate policy and reality won’t prevent them from lowering rates. I think the Fed is on a reckless tear. Ben Bernanke is no Paul Volker (Volcker?).

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Comment by Matt_in_TX
2007-12-30 09:00:03

Which ones predicted Dow 15000 by the end of the year?

Comment by fries with that?
2007-12-29 11:21:45

I think the biggest bubble event was the rise (or our sudden discovery of the rise) of government wealth funds. Some of America’s large financial companies seem to be selling chunks of themselves off to entities controlled by governments in the Far East and Middle East.

If socialism is a system in which the government controls the economy, what’s it called when a foreign government controls the economy?

Comment by vozworth
2007-12-29 11:28:57


Comment by travanx
2007-12-29 13:59:54

A really bad idea? I am surprised people are ok with countries buying our banking system.

Comment by Professor Bear
2007-12-29 17:31:29

Desperate situations lead to desperation measures.

Comment by mrktMaven FL
2007-12-29 11:23:57

DL’s resignation and the NAR’s downwardly adjusted year of predictions.

Comment by Bill in Carolina
2007-12-29 11:44:36

Hillary has the solution: Freeze rates on adjustable mortgages, and freeze home foreclosures…

It’s near the bottom of the page.

Comment by Professor Bear
2007-12-29 12:30:55

Why not just freeze everything market-related, and worsen the free fall already in progress? Her “freeze everything” housing market solution brings to mind unfond memories of her biggest policy flop during the Bill Clinton era: Top-down, big-goverment health care. She is an attorney who thinks they best way to manage the economy is through command and control policies, akin to those which led to the demise of the late great Soviet Union. I have no fonder political wish for 2008 than for her to not become the next CIC.

Comment by travanx
2007-12-29 14:02:21

She should first freeze paying any taxes. That way everyone can “benefit” from a freeze of paying money, instead of only stupid people benefiting. And yes I was sick of everyone telling me I should buy a house/condo. So everyone who bought during this bubble period and is getting screwed, sucks to be you.

Comment by mrktMaven FL
2007-12-29 11:45:19

The Maestro’s fall from grace.

Comment by Ben Jones
2007-12-29 11:48:54

Both of those posts are good.

Comment by vozworth
2007-12-29 12:03:26

havent gotten to the Prodigal Son story just yet.

Comment by gascap
2007-12-29 11:48:26

Watching football recently, it occurred to me why J6P still believes his house is worth peak price, the forward-progress rule!

Comment by oc-ed
2007-12-30 07:54:40

Problem is that FBs never had possession and a personal foul was committed on the play by the offense. 15 yards and loss of down.

But you are right, psychologically it is much like forward progress.

Comment by Earl The Vagabond
2007-12-30 10:49:47

The FBs can have their forward progress. But they’d better keep in mind, the clock’s still running and they’re out of time outs.

Tick-tock, tick,tock…

Comment by phillygal
2007-12-29 12:04:41

Not so much a Bubble Event in 2007, as an unintended consequence:

The new ghost towns

Comment by Professor Bear
2007-12-29 12:06:35

“What Were The Biggest Housing Bubble Events Of 2007?”

They are too numerous to count, but a few of them include:

- Resignation of David Lereah

- Collapse of AAA ratings of mortgage-backed assets from the major credit rating services

- Paradigm shift from “subprime is contained” to “credit crunch is not contained”

- Falling home prices on a national basis by the largest amount since the Great Depression

Comment by Home_a_Loan
2007-12-29 12:10:51

I think one of the biggest developments in 07 was the hipness of being a bear. Folks like Thornberg and Shiller are getting more mileage in the media, and blogs like this are increasing in popularity. Many of you may have former RE bulls at the workplace that have suddenly turned bearish.

It’s truly amazing watching the evolution of the herd psychology happen. What was heresy at one point is becoming dogma. Slowly. But the optimism of the bubble still reigns, and I don’t think people as a whole have a feeling for how bad it’s getting.

RE in general is on a lot of people’s minds. Witness the success of blogs like this. Some people who consider themselves RE bears talk about how they’re going to swoop in and catch “great deals” they see when something in their neighborhood goes for 2001 or 2002 prices.

Somewhere in the back of people’s minds I think they see the bubblemania returning after a price correction. I really really don’t think that’s going to happen, and part of the late stage bubble burst is going to be a lesson to those that do. In a few years, residential real estate is going to revert to being something boring, which appreciates at a rate a bit more than inflation, but a bit less than interest rates. They will become large things you live in and have to fix and pay for. The process of going from here and now (still focusing on RE) to there and then (boring old RE, shoot I gotta paint this thing again this year) will go in stages and be painful to many. I dare say some of the bears on this board will get some of that pain.

Comment by exeter
2007-12-30 12:08:41

“Somewhere in the back of people’s minds I think they see the bubblemania returning after a price correction.”

I hear a whole lot of that concept from RE-tards. They can’t be basing that belief on historical trends because there isn’t one to base it on. My only guess it is wishful pining for “the good old days”. Some even try to suggest that there is historical basis for this to happen. When I ask them for specific years, they go silent.

Comment by CarrieAnn
2007-12-29 12:17:42

“What Were The Biggest Housing Bubble Events Of 2007?”

For me locally it was watching the New Venture Gear auto industry workers say in their parking lot that layoffs in the auto industry weren’t that surprising given the problems in the housing and credit markets.

This is not true across the board but some of the “Regular Guys” out there get it. Da Boyz will lose control of their spin as this thing progresses. Now who’s got Neil’s popcorn? We need some down this end.

Comment by mrktMaven FL
2007-12-29 12:17:50

Panic on the streets of London — Northern Rock.

Comment by mjh
2007-12-29 22:13:45

That’s a great one.

As a follow-up: Me having to explain the importance of that to coworkers, with ages ranging from mid-20’s to early-50’s!

Comment by Matt_in_TX
2007-12-30 09:08:45

Explanation to 20-something:
Store expects 1 Wii, but takes 30 deposits. How do you fight your way to the front of the line?

Comment by ChillintheOC
2007-12-29 12:20:08

Without question the biggest bubble event of 2007 was the seizure of the credit markets. This (which is still going on…) will have a HUGE effect going forward on the housing market. Mandated down payment requirements by lenders are becomming the rule again and this more than anything else I believe will cause prices to fall.

A co-worker of mine just recently tried to purchase a $ 580 k townhome but was told by Wells Fargo that she needed to come up with at least a $ 30 k down (which she didn’t have). The deal fell through and she’s now looking for a place to rent.

Comment by Home_a_Loan
2007-12-29 12:49:10

“A co-worker of mine just recently tried to purchase a $ 580 k townhome but was told by Wells Fargo that she needed to come up with at least a $ 30 k down (which she didn’t have).”

Wow. Sometimes others have to force you to dodge the bullet. But then if she was going for 100% financing what kind of bullet did she dodge. The psychology of this mania never ceases to amaze me.

Comment by Matt_in_TX
2007-12-30 09:09:47

5% down, the new-age concept of 2007

Comment by Professor Bear
2007-12-29 12:39:48

‘One was specific. “The article (in April I think) in the New York Times that it is better to rent than buy, and stating exactly why accurately. MSM coverage changed after that.”’

A similar NY Times article ran in the early 1990s (maybe in 1991?). Sorry, I have no link available…

Comment by Professor Bear
2007-12-29 20:29:30

I would add that one of the most profitable investments possible in 2008 for those fortunate enough to be renters was to continue renting. For a very rough comparison, let’s estimate that a San Diego home valued at $600,000 one year ago would have rented for $2500 (reasonable ballpark estimate). If the value of the home fell by 11 percent (which is what the S&P/Case-Shiller home price index for San Diego suggests), that would represent a financial loss of $66,000. Let’s assume further that the home was 100% financed with a 6 percent loan, and the owner had to pay property taxes + insurance + maintenance costs + yard care costs + hoa dues + Mello Roos in some amount; since some of the interest may be tax deductible, assume the total of all ownership costs is 6 percent, which translates into $36,000 in ownership costs on a $600,000 McMansion.

Total estimated ownership costs =
Direct Cost + Home Equity Bath = $66,000 + $36,000 = $102,000.

Total estimated rental costs = 12 * $2500 = $30,000.

Net financial gain to renting versus owning =
$102,000 - $30,000 = $72,000, an amount in excess of the median San Diego household’s annual income.

I am sure that some accountants with sharper pencils than mine could come up with a more refined estimate, but I claim the order of magnitude of my estimate is correct.

Comment by Professor Bear
2007-12-29 12:49:26

“The big question now is what will the subprime crisis and ensuing credit crunch cost. In mid-July, Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee that estimates of losses associated with subprime-credit products were $50 billion to $100 billion.”

“Those numbers ‘are far too low,’ Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc., said in a mid-November report. Based ‘on historical default and loss patterns in different home-price environments,’ he estimates U.S. losses will be roughly $400 billion.”

Uncontained series of financial earthquakes (which I predict will continue well into 2008): Massive ongoing upward revision of the estimated size of U.S. mortgage losses, and related credit writedowns from subprime mortgage lending kingpins in the world’s financial capitals.

Credit loss could hit $US1trillion
David Nason, New York correspondent | December 27, 2007

THE US economy could be heading into its blackest year since the Great Depression as estimates of losses from the housing slump and sub-prime mortgage implosion reach unprecedented levels.

The latest bank estimate of $US700 billion in losses made this week by Rob McAdie, the UK-based head of credit at Barclays Capital, is $US300 billion more than a headline-grabbing Golden Sachs estimate that jolted US markets just last month.

And it is light years from the $US50-100 billion in losses predicted by US Federal Reserve chairman Ben Bernanke to Congress in July. Expressed another way, the International Monetary Fund and World Bank say only 15 countries have a GDP higher than $US700 billion. Australia was 15th on both lists.,24897,22973589-643,00.html

Comment by dan
2007-12-29 12:49:26

RE the ad: “I want to see fixer-uppers in OC”

Show me REAL fixer-uppers at REAL fixer-upper prices, not these overpriced P’sOS. Jesus, Mary & Joseph when will the fvcking BULLSHYT STOP?.

Comment by mrktMaven FL
2007-12-29 13:13:44

The fall of Casey Serin and like minded RE mogul wannabes.

Comment by Professor Bear
2007-12-29 15:16:57

The consensus housing price (decline) forecast from a ragtag band of bloggers beats the consensus forecast from the world’s top minds in finance and economics.

Comment by CA renter
2007-12-30 04:58:51

Cheers to that, GS! :)

Comment by Jackie Childs
2007-12-29 15:49:13

For me, the ringing of the bell this year was the news about the two Bear Stearns Hedge Funds that collapsed.

I think when I read that story, I thought this is the beginnig of the end.

Comment by CA renter
2007-12-30 05:00:33

I second this.

It was the collapse of the Bear Stearns funds that brought the problem out into the open.

Yes, it can happen here (BIG problems with big-name financial institutions).

Comment by sf jack
2007-12-30 09:34:09

Me, too.

I remember when someone “from Wall Street” was on the HBB here telling us we “didn’t get it” - that all was not as we believed with regard to the Bear Stearns funds meltdown.

And then an HBB regular, having to educate once again, replied with something like:

“Sorry, but you guys just don’t understand affordability.”

I laughed for a week after that one.

Comment by jaded
2007-12-29 18:21:59

Whatever happened to……

I came across this article from 2005 about real estate ‘winners’ I wonder what they have to say now?

Comment by NYCResident
2007-12-30 00:49:46

Do you notice the similarities among these Florida home buying families? They all make money on comparatively modest home purchase initially. Then they decide to buy larger homes and more homes to make even more money.

Comment by Professor Bear
2007-12-29 19:52:46

Year in review 2007
Slideshow: the year in review
Published: December 27 2007 13:01 | Last updated: December 28 2007 12:27

“The subprime mortgage crisis and the resulting credit squeeze was the defining financial story of the year.”

Comment by Professor Bear
2007-12-29 20:48:07

A burning issue

The most-read article on in 2007 was a report of a speech given in Washington by David Walker, the US comptroller general, in which he warned that the US was on a ”burning platform” of unsustainable fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments. A few days after that speech, Mr Walker wrote an op-ed article for the Financial Times on the same topic.

The notion that the US’s global pre-eminence may be waning under the twin threats of decline at home and rising competition overseas has been a topic of debate throughout the year. Some of the FT’s articles are presented here, along with a discussion forum for you to have your say. - Dec 18 2007,dwp_uuid=1903fc22-a717-11dc-a25a-0000779fd2ac,Authorised=false.html?

Comment by iz
2007-12-29 23:03:45

Kiss goodbye to the NAR and affiliates. I’m thinking that if housing drops by even a mere 50%, they are out the door along with Arthur Anderson, Enron, etc. It’s not like anyone takes them seriously anymore. Also, kiss goodbye to most of the mortgage companies and any industry that is dependent on housing. I’m thinking this is the big one, and even if you bought back in the 90s you’re going to get the Ben Bernanke swirly if you live in some areas. Quite honestly, I think the whole housing debate is over. I say no higher than 1980s prices in 2015.

Comment by geeah
2007-12-30 11:48:20

Since all RE is local, i’ll go ultra-local with my selection… going from the guy in the office who had eye-rolls, sarcastic quips, etc. tossed his way during RE discussions to actually having had someone tell someone else “go talk to him before you start looking”

Even the permabulls around me have shut up.

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