Dr. Housing Bubble 08/28/08

[Crewleader]

California Housing Inequality:
Top 4 and Bottom 4 Zip Codes in Los Angeles California. Foreclosures and Zip Codes do Matte

I was a bit surprised this week when I saw some positive spin being thrown out regarding the Case-Shiller Index. Even though we have dropped into record territory once again, the new Laundromat spin is that the drop was not as bad as previous months. This is like telling a person who just jumped off a 100 story building that zooming by the 50th floor is much better than going past the 73rd floor. The end outcome is inevitable and this desperation to spot the bottom is like those who desperately want to find Big Foot. The bottom will come but not today. The bottom won’t arrive tomorrow. It will be years before we ever recover from this decade long credit and housing bubble. That is the plain and simple truth. I have detailed 10 reasons why there will be no second half recovery for the United States. I’ve also talked about 10 reasons why California won’t see a bottom until May of 2011.

Right on cue like a booming orchestra, the FDIC mentions that it may need to tap into the Treasury. This after banks reported record low profits in the second quarter and the list of “troubled” banks grew from 90 to over 115. Keep in mind back in March the FDIC had a list of 90 banks with a total affected amount at $28 billion. Well now fast forward five months, and the list has grown to 117 and the affected amount has grown to $78 billion. This is a “tiny” problem given that the FDIC fund only has $53 billion at hand. Oh, and one more thing. As it turns out, it may cost a little bit more money than previously expected to bailout uber bank failure IndyMac.

Keep in mind that when a bank fails, the FDIC needs to sell off assets to other banks. Other banks that are probably just as screwed up as the current bank that got taken over. Maybe they took a deeper look into the portfolio of this California based institution and realized most of their assets are now located in a state that has seen a 40% median price drop in one year! That is right folks, this week the California Association of Realtors came out with their monthly report and we have now crossed the 40% year over year median price drop for the entire state. Can it be that some of those assets on the book are simply not worth what they once said they were worth?

http://www.doctorhousingbubble.com/california-housing-inequality-top-4-and-bottom-4-zip-codes-in-los-angeles-california-foreclosures-and-zip-codes-do-matter/