Property Grunt

Saturday, August 27, 2005

Two more signs of the real estate apocalypse

Straight from the mouth of Alan Greenspan regarding the economy and the housing market from Yahooo news and the New York Times.

"Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation of the debt that supported higher prices," he said. "This is the reason that history has not dealt kindly with the aftermath of protracted periods of low risk premiums."

He also stated:

"What they perceive as newly abundant liquidity can readily disappear," he said. "Any onset of increased investor caution" could cause home and stock prices to drop, he noted.

This is Greenspan's way of saying duck and cover.

Janis of Inman another article on the Fannie Mae Situation that I am sure will give you warm fuzzies all over.

Here some highlights from the article.

Fannie Mae's retained portfolio totaled $788.8 billion at the end of July, down from $808.2 billion at the end of June.

The portfolio has shrunk at an annualized 20.9 percent so far this year as Congress continues to work on legislation that will curb or slash the company's mortgage holdings following an accounting scandal.

Looks like they are liquidating like mad.

Fannie Mae has been shrinking its portfolio to bolster its capital cushion and meet regulatory requirements as it struggles to resolve accounting problems uncovered by the Office of Federal Housing Enterprise Oversight last year that led to the possible restatement of as much as $12 billion in previously reported earnings.

Both the White House and Federal Reserve Chairman Alan Greenspan say Fannie Mae and Freddie Mac pose a risk to the economy because they have grown too large. Legislation to curb the company's mortgage holdings is currently under consideration in Congress.

While the rest of the market acting like grasshoppers, Ginnie Mae are working like ants storing up for the harsh winter.

I know I keep beating the Housing bubble/bomb drums but signs to me are too blatanly obvious to ignore.

Kind of ironic isn't it? I am a broker and I am telling people to run for cover. It is totally against my prime directive. I should be leading a Corcoran Conga line to Harlem.