I have seen the
bottom and it is here!

(I hope....maybe....quite possibly.....we'll see....tune in 1/1/09)

I'm taking a leap of faith today. A proverbial high wire exercise without a net. I'm assuming things and we all know what happens when you assume but this time it will be different. Once upon a time Felix Unger demonstrated to Oscar Madison that to assume meant you make an "ASS" of "U" and "ME". I'm hoping my outcome will be more positive.

Assuming that in fact this bill that passed Congress and was signed by the President will allow fewer homes to enter into foreclosure, I believe we are in the lowest trough of the current real estate downturn and here's why:

In 2005, 2006 and early 2007 there were roughly 14,000,000 loans made in the U.S. with a staggering 7,000,000+- being considered 'subprime.' I know, how could we have been so STUPID? It's no shock given those numbers as to why we have the ridiculous mortgage/banking crisis we've seen in the past year and a half. The most recent legislation dubbed the 'housing bill' may go far in curing the foreclosure dilemma because of this bill. Of the 7,000,000 subprime loans, many of which are cascading toward foreclosure, the majority are owned by Bank of America, Wachovia, Washington Mutual and several other large national institutions. The bill as passed will allow these lenders to go back and refinance their bad loans if they choose to a more palatable level of pain for the homeowners. Make no mistake these lenders may still take a hit on these loans BUT if they can save 80% or even 70% of the potential defaults, it will vastly reduce the number of bank owned properties coming into the market place. THAT is the place any housing recovery must begin....reducing the foreclosures.

From that point legit resale inventories will begin to vanish and good grief we may actually see a building market recovery after that. If it all sounds too swell to believe, it is. While we may be on the path to recovery, there is no guarentee as to how long this will take. The factors that may influence that timeline are incredibly wide ranging and volatile. Energy costs affecting inflation which could affect mortgage rates, the value of the dollar, other geo political events unseen today, etc., may all play a role. The most prolific point remains and that being the downturn of bank owned sales potentially declining in the market as a whole. If our bonehead lawmakers got one thing right if even by accident, it may be slowing and decreasing the foreclosure mess that has plagued our national real estate market to a very deep degree.

Questions? Comments? Donations? Greg@GregCooper.com or 317.848.GREG (4734)