Somehow I missed this last week ..

but another interesting piece in the USA Today on the history and potential future of the US real estate market. I guess you could say this is bad news for all those who used "creative financing" to buy second homes at Deep Creek Lake at the peak of the market, but with all the bailout programs in the works or still coming maybe all these debts will just magically go away. Read the full story from the USA Today entitled "Why home values may take decades to recover". If you click on the link to the charts under "Anatomy of a crisis" you'll also see some historical inventory charts not unlike the one I have linked at the top of this page for the Deep Creek market specifically. I also found it interesting that on a national level an inventory of 6 months is considered a healthy market. That begs the question what would the Realtors put that number at for the Deep Creek market? I'm guessing it would be considerably less than the current 37, perhaps more like 8-9 tops. There are a lot of interesting thoughts and charts enclosed in the links so check them out if you are a follower of the housing market.

Meanwhile, on a slightly different note, last week I also read on another blog that the current state of the economy is good news for Wisp ski resort and should increase revenue this season (as if it were likely or a given that this would happen). A good snow season might help increase revenues at Wisp this year but I highly doubt the folks at Wisp are counting on a banner year unless we get a really good snow season. The basic premise of the argument was that people are avoiding taking longer more expensive trips to western ski resorts and instead finding closer alternatives. While that may be the case for a select few, those following this logic also have to consider that some of the previous pool of regular visitors to Wisp may choose to stay home altogether. As it is however, I can only assume that this writer believes middle income people are less affected by the economic downturn than those higher up the scale who could previously afford regular ski trips to Vail or other western destinations. It's mindboggling the kind of logic (or lack thereof) you can find online these days.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

While crisis looms and foreclosures and short sales abound ..

your neighborly Deep Creek real estate agents are still shamelessly promoting no money down buying. In my opinion, it's time for these agents to stop misleading people and getting us into crisis situations like the one we find ourselves in right now.

If you'll recall, I basically wondered out loud how it could be that they were still promoting these wreckless loans back in early June. Given all that has happened since then you have to wonder if they even understand what is going on.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

Should we really be surprised at where the economy is today?

A Yahoo! Personal Finance piece from Laura Rowley in February 2006.

"Mostly, we can't help wondering if the lending and spending free-for-all of recent history will end badly -- for all of us. Imagine interest rates continuing to rise amid an employment downturn. The option ARM holders and other over-leveraged consumers put their homes on the market, or hand the keys to their lenders. The housing market experiences a sharp decline. Commercial banks, Fannie Mae, and Freddie Mac require a taxpayer bailout (a la the early 1990s) -- increasing either the current or future tax liability."

Don't forget to check back to Dan's Deep Creek Blog for future updates.

Covering all the bases ..

While I do appreciate Mike Kennedy's fair and objective assessment of the current mortgage market, I do have to question his authenticity when he states "loans that only required 5% or 10% down are a thing of the past" and "these stricter lending guidelines and much needed changes in the mortgage industry should have an overall positive effect on the real estate market ..."

Maybe they've had a change of heart at Railey Realty and are shifting away from the days of promoting the "power of no money down buying" and haven't had a chance to remove these items from the website or buying guide or maybe they are just speaking out of both sides of the mouth. You be the judge.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

Puzzled by the fact that a major Deep Creek real estate firm is still promoting "no money down buying" ..

See #6 under what their "buying guide" covers.

I hope people using their services understand that, as far as I can tell, none of them are certified financial planners or advisors and thus should not be giving "investment" advice for pay (and as one of their REALTORS told me last week free advice can be the worst advice). As for nothing down, here's a little something I read a while back about the history of nothing down. And here is a warning from BankRate.com about these type of loans.

If everyone would have heeded the warnings given in these sources we would not be in the real estate/sub-prime mess we are in right now in this country. Notice John Reed indicates it is very difficult for a buyer to complete a no money down deal for a rental (investment) property that is "ethical", "legal" and "profitable". Also note that both sources were composed prior to the onset of the current meltdown. At least someone out there is still trying to promote financial responsibility and sanity while so many lenders, flippers, gurus and REALTORS posing as investment advisors use self-serving campaigns to encourage Americans to risk everything. Meanwhile those giving the questionable advice are profiting from the risk taking of others. Only in America.

The more people who take the bait and follow the "plan" the more money everyone in the dirty food chain makes and the bigger the eventual losses are for those playing the part of the greater fool (see Greater Fool Theory). And yet people keep falling for it and the government keeps bailing people out without punishing the people responsible. Completely absurd! And rest assured if the proposed mortgage bailout plan being discussed in Congress is eventually passed (which I assume it will be because everyone is in love with "free" money in an election year) I will be one angry taxpayer.

Don't forget to check back to Dan's Deep Creek Blog for future updates.