Richard Michael Abraham

FLORIDA HOME PRICES TUMBLE FURTHER

Just 5 years ago, the demographic researchers claimed a lion's share of the 75 Million Baby Boomers would choose Florida for retirement. Not likely anymore for many reasons.

The northern Baby Boomers can't sell their underwater or high end price homes and so, they won't be coming to Florida. Even tourism is way off. And foreclosures in Florida continue.

The job market in Florida is desperate. The young won't come to Florida. Seems the only jobs available are call center and telemarketing jobs, or a plethora of 100% shadowy commission sales jobs offering little hope of real earnings. There are no jobs for professionals or executives who wind up settling for low paying or even menial jobs. Unemployment will remain high in Florida. 

Florida, once economically based on tourism and construction industries, probably have lost these industries as value generators. More so with the construction industry. 

The housing market tells the story as home values keep plummeting. If you read the Realtor's ads, you'll always see their favorite slogan, "Now is the time to buy." Trouble is, they've been saying that for three years now, and every year the home values keep going further down. (The tax credit sales lifted prices slightly, but that's over now)  Anyone who purchased what they thought was a bargain price home a year ago, has already lost money.

Many Realtors now promote the position that prices have bottomed out.

But based on my research on the ground, I am projecting another 20% drop in home values in Florida in the next 12-24 months.

Prospective: Florida home values went up 125% from 1999-2005. They're now down about 55% from their highs, and so, unquestionably, home values in Florida would need to fall at least another 20%.

Because of the recession in the General Economy nationwide, a state like Florida is going to take the brunt of it. Shrinking tourism, the end of the construction industry, no jobs cannot earmark Florida as a vital state.

Crime seems to be rampant. City budgets lost their tax base and services have been greatly diminished.

My sense is Florida will continue to fall way short of the expectations and high hopes promised five years ago. In fact, evidence and research indicates that Florida could, under a worst case scenario, experience a 10-year period of stagnation, especially if the general U.S. economy continues to be lackluster.

Anyone considering buying a home in Florida should do their own research and I would strongly recommend holding off at least 12-18 months before even seriously thinking about it. As I indicated above, I forecast a further 20% drop in Florida home values in the next 12-24 months.

That means if you buy a home now for $250,000, in 12-24 months, it might be worth $200,000, or a $50,000 loss. 

Warmest regards,



Richard Michael Abraham

GOING, GOING, GONE - NO MORE SHORT SALES

Starting now, and until all distressed housing is sold, lenders will choose whenever possible to foreclose rather than entertain short sale offers.

Many agents wonder why lenders are not reacting timely on short sale offers. 

The answer relates to several factors:

1. Many of the distressed mortgages now will be ALT A mortgages, ARMS, FHA, etc. written 5-6 years ago, now resetting where the owner/borrower had less than 20% in equity. (more than an 80% LTV - loan to value)

2. In these instances, these borrowers were required to purchase PMI-Private Mortgage Insurance.

3. Under the provisions of PMI, the insurance is to protect the lender in the event of the borrower's default.

4. A short sale negotiated transaction is a voluntary act of the lender and thus, negates the insurance.

5. Since the lenders want to collect on the insurance, to mitigate their losses, it is to their advantage to avoid engaging in a short sale, and instead, foreclose, and collect the insurance proceeds.

6. Further, in most states, in most mortgage agreements, the borrower is responsible personally for mortgage deficiencies, as part of the promissory note contract. (Thus, the lenders do not need to waive this condition through negotiation that often takes place in a short sale)

The temporary robo-signing foreclosure halt is just temporary, P.R. stunt of lenders to try to gain public goodwill for stock values, etc. Soon banks will foreclose with a vengeance where PMI is involved. 

Example: Home has a Mortgage of $250,000 but now the home is only worth $180,000 in a short sale. But lender can get 90% of $250,000 in insurance or $225,000. Even after paying the $20,000 costs to foreclose, they're still way ahead.

Therefore, if you're a real estate agent, as we proceed into the future, expect lenders to foreclose rather than engage in short sales. My concern is, how will this affect the livelihood of real estate agents?

Warmest Regards,



Richard Michael Abraham

40% OF ALL AMERICANS - NEVER OWN A HOME AGAIN 
Do you think about them? Are you one of them?
FED Greenspan's easy money, too much, too long, too much Mortgage Derivative corruption.
FED Bernanke adds near zero interest for banks and also intentionally devalues the $ Dollar to spike the stock market.
FED market manipulation brings U.S. Main Street Capitalism to its knees, and destroys the lives of people.
100 Million Americans have either lost their homes by foreclosure, or are homeless, or lost their net worth and retirement savings, or lost their businesses or lost their jobs and have stopped looking for work. Many are destitute, broken - dying the slow death.
View your own circumstances objectively. Check your pocket book. Check your savings. Do you still own a home? Are you earning an adequate income? What is your net worth now? Thank God you are not destitute!
The Stock Market must soon crash and correct. A 60% increase since March, 2009 is not justified by the fundamentals. Disregard technical, theorists' definitions of GDP, Recessions and Depressions. Today, the United States is already in a Depression, at least for 100 Million Americans. How can you tell? Because you can see it and feel it.
And FED Bernanke or Treasury Secretary Geithner, or Motivational Speakers, or Sales Managers, or Spin Masters, or anyone who tells you "this is just a cycle," is spinning you or living in a dream world. Nobody can legitimately point to the economic conditions today and refer to them as "just another cycle." Never before, since the Great Depression have so many American lives been so brutally, financially decimated. Under my theory "Chain Breaks at Weakest Link", if the general economy was equated to the stock market, the DOW would be 7,500-8,000.
Denial - State of Shock
A tropical storm with winds that do not reach the scientific definition of a hurricane can still wipe out an entire city with 15 inches of water. Does that make the tropical storm by definition less destructive than the high winds of a hurricane? So when the Government says "We've had several quarters of GDP growth and are out of recession" that does not change the circumstances for the 100 Million already destroyed.
What is taking place in the U.S. Economy now could never have been imagined before:
1,400,000 foreclosures in 2008; 1,800,000 foreclosures in 2009; 3,000,000 expected in 2010; unemployment 9.5%, (real unemployment 18% counting underemployed ); 21 Billion shortfall in consumer credit card spending; 5,000,000 small businesses out of business in 2009, more in 2010; Record Bankruptcies, dollar worth 76 cents, incomparable deficits looming, likely hyper-inflation as dollars are printed.
Right now, the FEDs near zero interest rates and intentional devaluation of the $ Dollar are failed attempts to jump-start the economy. These artificial monetary and fiscal shemes have only helped Wall Street banks and hedge funds make obscene stock market profits; The banks lent little or no money to Main Street businesses and make home mortgages tough to get; Retail sales very slow; consumer spending down; 60%-80% of all homes and condominium sales are SHORT SALES or foreclosures at about 55 cents on the dollar; Double Dip Housing decline already underway, values will fall another 5%-15% depending on the geographical area.
A recovery? No, it's never been a recovery. It is just U.S., FED Spin, pure and simple. A manipulated, stimulus-driven, recent 2nd quarter GDP of 2.5% will be revised lower. Indeed, 3rd quarter GDP could fall to 1%. 
When a Government has to bailout too big to fail Banks, or Insurance companies and Auto Manufacturers, doesn't that raise a red flag of things to come?
What math are they using? What happened to stated policy 16 months ago that there could be no recovery unless the housing market was fixed, foreclosures and short sales ended, retail sales were up, unemployment reduced, and consumer confidence and consumer spending (66% of the GDP) were up.
The fundamentals don't mean anything, anymore. Now, the economy and talk of recovery seems to be measured by illusion of the day.
Even our government is broken, democrats vs. republicans and visa versa. Never ending wars, death and carnage in oil wealthy regions.
You Know A Depression When You See and Feel it!
In my view, everywhere I go, I can see it and I can feel it, and I am troubled deeply for the 100 Million Americans who already paid the price for this pervasive new strain of economic decline. 
The tragedy is ruthless. But who cares about those people. They'll never own a home again.
Assuredly the other 200 Million Americans who have yet to misstep or feel the sting of despair may soon feel the same bite.  

Warmest,

Richard Michael Abraham

CHAIN BREAKS AT WEAKEST LINK - Corrupted Stock Market

The Stock Market is no longer a reliable leading economic indicator. 

Relentless negative pressure persists in the Main Street economy e.g. housing market, foreclosures, joblessness, and the extraordinary deficits.

The U.S. Government provides near zero interest for banks and intentionally devalues the dollar.

This allows NYSE public corporations to keep the price of their products and services competitively cheap in order to stimulate export sales to foreign countries (artificially driving up the Stock Market). 

The reality reveals these two economies are separated, disconnected, and thus, as the Main Street economy falls, watch for a Stock Market fall further.

Consequently, in reality, the depressed Main Street economy has replaced the Stock Market as the leading indicator.

Chain Breaks at the Weakest Link -the Main Street economy is now the leading economic indicator and the Stock Market is the (artificial) and soon to be lagging economic indicator.

Severe, unveiled economic consequences are brewing in the U.S. while the Government tells us "we're heading in the right direction - all is well."  Fearful, FED Bernanke is in the dark.

The U.S. Economy will break at the weakest link in the chain. The stock market must fall to the level of the Main Street economy. The Main Street economy, if equated with the DOW, is worth 8,000-8,500.

But because the U.S. Stock Market is A Global Market business, and totally disconnected from Main Street, chances are the Stock Market will just keep going up.

If you understand this theory, it's just a matter of time before the Stock Market collapses to its correct level and so, be very careful about the duplicity underway e.g. the U.S. Government, the FED and Wall Street trying to dupe you into investing in the corrupt, manipulated Stock Market. 

Soldiers learn never to leave a fallen comrade. Wall Street is disconnected with Main Street Americans and instead, joined the World markets.

Warmest,

Richard Michael Abraham

BRING IT ON - R.E. AGENTS Fight, Fight On

You have battled nobly for the past 3 years and you are still standing. 

But now, to survive, real estate agents, quickly - start swimming upstream.

The convergence of a recession feel economy, low quarterly GDP, increasing foreclosures (and shadow inventory), high joblessness and a growing sense that housing is already experiencing a double dip, promises that real estate agents will now need to work even harder to stay in the game.

It's hard to imagine anyone could work harder than you've been working. Many have dropped out, but if you're reading this, chances are you've crossed over the 3 year foreboding chasm that brought such torment to so many. 

But alas, take heart, the final, monstrous storm cometh upon you.  It's a big and fierce one! I say, bring it on and be done with it! You are ready, armed with the heart and spirit of a true entrepreneur.

With continued hope, conviction, faith and determination, God speed, you can "hold on to that string" just a bit longer.

On the other side of this final storm lies your reward for hangin' in. Fight on, Fight on.

Warmest,

Richard Michael Abraham