Housing Getting Worse

We are far from the housing bottom.  How bad is it?  Well it is so bad that Ben B is recommending Freddie and Fannie be allowed to increase it's portfolio size to $1 million.  Just a little less than a montha ago, he was against raising that amount to $500,000!

How bad is it?  Henry Paulson now wants to bail out the home owners.  He is asking the lenders to change to loans with better terms for homeowners who are at risk of default. 

The best plan was from Sheila Blair, chairwoman of Federal Deposit Insurance Corp., who wanted to freeze the interest rate on two million mortgages due to reset.  Yes, let's fix everyone to the introductor 2 percent rate!  I don't know which one is scarier - the fact that she is the chairwoman of FDIC or that she is the chairwomand AND this is her plan.  Remember FDIC is the one insuring our deposits at banks.

D.R. Horton swung to a loss in the fiscal fourth quarter.  And the company is looking to more price cuts.  I hope Lennar is listening.  It's pretty bad when the CEO Donald Tommintz says "It's going to be a little more painful for us in '08 than it was in '07."  No, it's not just us saying it anymore.  The homebuilders are saying it. 

Of course leave it upto the monkeys at NAR to come up with a positive spin on horrible data.  Existing Homesales declined in 47 states.  Compared to third quarter of last year, median prices fell 10 percent in Florida and California. 

"Some metro areas are hot while others are experiencing localized problems," Lawrence Yun, the group's chief economist, said in a statement. "Home prices in the vast midsection of America, from the Appalachians to the Rockies, are affordable and, perhaps, even undervalued."

How about putting your money where your mouth is Mr. Yun and buy some properties in the "undervalued" rockies?

All this bad news and the stock market is down only 1 percent?  Disconnect?  Manipulation?  I don't know what it is, but something is wrong here. 

Disclosure: I am shorting this market using put options (CFC and homebuilders and SRS (Ultra short Real estate and Ultra short Small Cap 600).