High End
Stocks, the Euro, oil/gasoline all moved sideways today.
Bonds fell with an increase in interest rates.
Gold fell and hit $1180 for the third time in the last two weeks, and is now a cautious buy for those of you who are thinking of buying some more gold.
In the news today……
Consumer Sentiment – fell to one of its lowest levels in a long time. This is just bad news for the economy in general. Take this indicator with some scepticism, as it is fickle, and can change radically month to month.
High End Housing – is being foreclosed on by banks, just like lower priced homes are being foreclosed on. The difference is that banks are not putting the expensive houses back on the market. The definition of “expensive” is above $300,000. Take a look at the following table of homes that are being held by banks in various cities, and you will draw this DRAMATIC conclusion.
Why are banks holding back on selling their “expensive” homes? Well, first of all, there are many, many more cheap homes being foreclosed on. And, second, what would happen to the housing market if these expensive homes were dumped on the market?
Simple answer. The price of expensive homes would be depressed (even more than they are today), and they would put a downward pressure on cheaper, lesser quality homes. In other words, banks would lose money by selling their expensive homes today.
The only question I must ask is WHEN will the FDIC or FED require the banks to sell these non-performing loans?
The conclusion that you can reach from this interesting story is that there will be a day of reckoning when housing prices will be going down further, and now you have one additional reason why they will be going DOWN.
Here are the last numbers for today:
Dow Jones 30 Industrial – 10,538 (up 12)
10 Year Treasury Bond – 3.05% (up 0.05%)
Euro – $1.2997
Gold – $1183 (down $12)
Oil – $77.50 (down $1.48)
Gasoline – $2.06 (down $0.06)
