My May 2010 Business Analysis

Forecast:

This writer predicts a slowly stabilizing home market forthe rest of 2010 wll into 2011 for the following reasons:

Unemployment still high at 9.7% No job -no mortgage payment!

The foreclosure backlog is still too high

Negative home equity will lead to more foreclosures as home owners walk away.They can now rent homes of equal or better quality than their own homes because of the deflation in home prices that has occurred. In some areas homes are down>50% over 2007 prices -which means many home owners have negative equity.

Commercial properties lenders will experience major foreclosures; due to overbuilding -adding to the problem of liquidity

Banks liquidity will stay the same or get worse until of the toxic mortgages are sold or written down

Less liquidity means harder to get mortgages

Cash rich investors are scooping up the best buys at historically low mortgage interest rates of 3.5 to 5% -rates not offered since the end of WW2!

Remember interests rate were 10-12 % in 1989-1992

Why buy/invest now?

The government can print more money but they can't print more land

What would anyone with a disposable income invest in CD's yielding 1-2%?

as a hedge against inflation when they can purchase homes at pre 2000 levels.

These resale homes are an inflation hedge -they are at or near the bottom!

New home builders have difficulty competing against these bargain prices

Just compare their prices with resale home prices