I decided to make a Baltimore Housing bubble Blog. Would you mind linking? I’ve already linked to your site.
http://bubblemore.blogspot.com/index.html

Thanks,

Kevin

The report said contracts on new home sales — after falling for nine months straight — had ticked up. Was that good news? Some key sources said yes. But look closer, because even the Census Bureau admits the way they tally those numbers doesn’t work.

From the Census Bureau Web site: “As a result of our methodology, if conditions are worsening in the marketplace and cancellations are high, sales would be temporarily overestimated.”

Suppose you put a contract on a house in November, then cancel in December. The sale never happens. But the contract still shows up in the Census Bureau report.

Says Mark Zandi, the chief economist over at Moody’s/Economy.com, “Given the rise in cancellation rates… between 150,000- 200,000 home sales are being counted that did not actually occur.”

I doubt anyone has any reliable stats on the percent of projected REOs that will occur. There was a recent study stating that 1 out 5 subrime mortgages, which account for 8 percent of all mortgage debt, will go into default in the next two years. This puts the number of homes going into some type of foreclosure over 1 million.

We’ve never had this type of global liquidity and housing appreciation so we can only use past models to determine what will occur in the market.

I wasn’t aware of the negative bias at The Big Picture blog but everyone is welcome to their view of what will occur in 2007.

Thansk for reading and commenting.