14 replies to this topic

[Rogerdodger]

Top investor sees U.S. property crash
Wed Mar 14, 2007 12:59PM EDT By Elif Kaban

MOSCOW (Reuters) - Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.

"You can't believe how bad it's going to get before it gets any better," the prominent U.S. fund manager told Reuters by telephone from New York.

"It's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops.

"It is going to be a huge mess," said Rogers, who has put his $15 million belle epoque mansion on Manhattan's Upper West Side on the market and is planning to move to Asia.

Worries about losses in the U.S. mortgage market have sent stock prices falling in Asia and Europe, with shares in financial services companies falling the most.

Some investors fear the problems of lenders who make subprime loans to people with weak credit histories are spreading to mainstream financial firms and will worsen the U.S. housing slowdown.

"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said.

"When markets turn from bubble to reality, a lot of people get burned."

The fund manager, who co-founded the Quantum Fund with billionaire investor George Soros in the 1970s and has focused on commodities since 1998, said the crisis would spread to emerging markets which he said now faced a prolonged bear run.

"When you have a financial crisis, it reverberates in other financial markets, especially in those with speculative excess," he said.

"Right now, there is huge speculative excess in emerging markets around the world. There will be a lot of money coming out of emerging markets.

"I've sold out of emerging markets except for China," said Rogers, long a prominent China bull.

Even in China, the world's fastest expanding economy, Rogers said stocks were overvalued and could go down 30-40 percent.

But he added: "China is one of the few countries in the world where I'm willing to sit out a 30-40 percent decline."

The last stock market bubble to burst was the dot-com craze which sparked a crash from March 2000 to October 2002.

When the last bubble burst in Japan, said Rogers, stock prices went down 85 percent despite the country's high savings rate and huge balance of payment surplus.

"This is the end of the liquidity party," said Rogers. "Some emerging markets will go down 80 percent, some will go down 50 percent. Some will most probably collapse."

[A-ha]

Looks like he is catching up but I think there will be more upside if they dont shut their mouth !

Edited by xD&Cox, 17 March 2007 - 09:46 AM.

[nimblebear]

Why not just rent a home or apartment ?

[Russ]

James Dines says regarding US housing...."Run for your Lives." Here is an article from Moneytalks.net 03/15/07 Surging U.S. mortgage debt spells trouble Even if you're not a numbers person, you'll probably be blown away by this statistic brought to my attention by the legendary market analyst, Richard Russell of the Dow Theory Letters: Between late 2000 and the third quarter of 2006, $14.7 trillion US in new mortgage debt was taken on by U.S. consumers. That's a ridiculously big number that few of us can fathom, given that the mortgage increase alone is about three times higher that the total value of every asset in Canada. But the part that grabbed my attention was the fact that more mortgage debt has been created in the past six years than the previous 50 years combined. After the initial "wow" you might ask, "What's that got to do with me?" The short answer is: More than you might think. Given that 81 per cent of Canada's exports are bought by American consumers, more than a few good analysts have noted that when America sneezes, Canada catches a cold. Rising personal bankruptcies, mortgage foreclosures and massive write-offs for lenders could have a significant impact on Canada. The immediate problem is centered around the so-called "subprime" mortgage lending market that caters to low-income earners and individuals with questionable credit histories. The growth in this market has been phenomenal. The subprime market has more than doubled since 2001, from $600 billion to over $120 billion, and now makes up more than 20 per cent of the entire market. James Fielding, a homebuilding credit analyst at Standard & Poor's in New York, recently stated: "Probably the gain in home ownership over the last four, five years, is almost entirely due to looser lending standards [inherent in subprime loans]." As a result, it's now estimated that homeownership rates in the United States have risen to 70 per cent. Not surprisingly, as the U.S. housing market cools, individuals with higher debt levels and lower incomes are having problems, and that's what the market is concerned with today. The problem stems from a Catch-22 in the market: On the one hand, regulators and institutions are pressured into offering loans to low-income individuals, but in order to do so they charge higher interest rates that are adjustable two or three years out, depending on the new rate environment. The current scenario sees both the borrowers and the lenders getting hit with the slowdown in the U.S. housing market. RealtyTrac Inc., an online marketplace for foreclosure properties, estimates that foreclosures rose 35 per cent in December 2006 compared to the previous year. The problems are also clearly higher than the lending industry anticipated, given that loan loss provisions are being raised and as many as 25 subprime lenders have shut their doors in the past few months. The worry is that the problems may spread to the larger institutions which took on subprime loan portfolios and then repackaged and sold them to investors. This past week, The Sunday Times reported that HSBC Holdings Plc will write off $11 billion US to cover losses from its American business, HSBC Finance Co., with the majority of that loss in home-equity loans. The foreclosures add to the already growing inventory of unsold homes, which further puts downward pressure on prices. In the meantime, as news continues to build about the woes in the mortgage market, I'm reminded of trader Dennis Gartman's warning that: "There is never only one cockroach." If that's the case and more significant problems come to light, then you can expect slowing U.S. consumer spending, lower economic growth in the U.S., and, at best, a struggling stock market. Michael Campbell

[selecto]

I can understand players having traded all this stuff, but whoever made a decision to buy-and-hold, has to have had a numbered account somewhere, or some big, bad habits. Maybe everybody - as individuals - have made their money, and if the facilitating institutions blow up, who cares? Just catch the next train. You can't convince an ant colony not to feast on a dead cow, even though end of the bonanza will be dire for many.

Edited by selecto, 17 March 2007 - 11:18 AM.

[SemiBizz]

Yeah... Real Estate is just terrible here .... NOT.

Marin tops Bay Area in home sales

The median price of a single-family home in Marin increased less than half a percent last month - to $929,500 - over the previous February, but saw the largest jump in sales volume - nearly 25 percent - among the nine Bay Area counties.

Single-family sales totaled 167 in February, up from 134 in February 2006, according to DataQuick Information Systems, a La Jolla-based real estate information service.

"It is consistent with the real estate history of Marin County as far as sales go," said Fred Angeli, vice president and manager of the Frank Howard Allen San Rafael office. "In Marin we have limited new construction, a lot of open space and it continues to be highly desirable to live here."

The Marin median condo price rose by 2.3 percent to $544,000 last month, up from $531,750 the year before, and sales fell 12 percent to 58, from 66.

Marin's overall market activity was strongest in the Bay Area with the overall median price, including condominiums, increasing by 3.8 percent to $829,000 last month from $799,000 last year. Marin also saw the largest increase in overall sales, which jumped by 4.1 percent to 228 from 219 last year. Overall sales in all other Bay Area counties dropped by 6 percent or more, (More)

Edited by SemiBizz, 17 March 2007 - 02:05 PM.

[Chilidawgz]

semi, you naughty rascal, you know Marvelous Marin is exclusive! 40 miles north of you our values have dropped 10 to 12% from the peak.

cheers, Chili

[ed rader]

semi, you naughty rascal, you know Marvelous Marin is exclusive! 40 miles north of you our values have dropped 10 to 12% from the peak.

cheers, Chili

even the in-laws carmel home that they bought 4 years ago has shed some value and there is no more land there and i'll bet a minimum of sub prime loans by people who plan to keep the homes.

my view is not as apocalyptic has the bow-tied one but i think what's coming down the pike will affect all RE prices.

one thing about rogers is while he is very bright i have always had the feeling that one day he'll do something really whacky that will end up being the only thing he is remembered for .

you know like al gore will probably always be remembered for inventing the internet .

ed rader

Edited by ed rader, 17 March 2007 - 03:02 PM.

[SemiBizz]

semi, you naughty rascal, you know Marvelous Marin is exclusive! 40 miles north of you our values have dropped 10 to 12% from the peak.

cheers, Chili

even the in-laws carmel home that they bought 4 years ago has shed some value and there is no more land there and i'll bet a minimum of sub prime loans by people who plan to keep the homes.

my view is apocalyptic has the bow-tied one but i think what's coming down the pike will affect all RE prices.

one thing about rogers is while he is very bright i have always had the feeling that one day he'll do something really wacky that will end up being what he is remembered for .

you know like al gore will probably always be remebered for investing the internet .

ed rader

A lot of times Rogers is early. I remember a few years in the 90s when he was short the market and long commodities getting his clock cleaned,,, used to come and preach on CNBC frequently, they loved to make a fool out of him - After he got tired of being the laughingstock icon of the dotcom bubble... he and his wife finally took a driving trip around the World and we didn't see much of him... eventually he was right and he returned to public life on the Bush Network (Fox News). That could be the case here too, he just might be early. Right now I"m sticking with the trend though and staying long Marin R.E. for a little longer...

[ed rader]

semi, you naughty rascal, you know Marvelous Marin is exclusive! 40 miles north of you our values have dropped 10 to 12% from the peak.

cheers, Chili

even the in-laws carmel home that they bought 4 years ago has shed some value and there is no more land there and i'll bet a minimum of sub prime loans by people who plan to keep the homes.

my view is apocalyptic has the bow-tied one but i think what's coming down the pike will affect all RE prices.

one thing about rogers is while he is very bright i have always had the feeling that one day he'll do something really wacky that will end up being what he is remembered for .

you know like al gore will probably always be remebered for investing the internet .

ed rader

A lot of times Rogers is early. I remember a few years in the 90s when he was short the market and long commodities getting his clock cleaned,,, used to come and preach on CNBC frequently, they loved to make a fool out of him - After he got tired of being the laughingstock icon of the dotcom bubble... he and his wife finally took a driving trip around the World and we didn't see much of him... eventually he was right and he returned to public life on the Bush Network (Fox News). That could be the case here too, he just might be early. Right now I"m sticking with the trend though and staying long Marin R.E. for a little longer...

oftentimes i am too early too because i tend not to keep an open mind and it costs me.

i was on crash watch in 1999 and i missed a very big year or so in the market. the money i "lost' was money i didn't make tho.

luckily most of our money is managed in such a manner that it's always grown, and sometimes spectacularly.

i've been preaching the demise of the real estate market for sooo long that my friends just roll their eyes when i talk about what i think is coming down the pike.

i remember a few years ago they were laughing at warren buffet too for missing out on the tech bubble but they ain't laughing now .

ed rader