RE valuations will continue to drop.

[Alfred Bell]

I had said in my earlier post that prices would continue to drop and some questioned me. Here is some recent data that supports my projection.

Bloomberg: Housing Prices in 20 U.S. Cities Fall a Record 18.5%

Also, the Obama foreclosure rescue will not work. Over 48% of loan modifications done by Bush administration went into reforeclosure (probably more by now). Lowering distressed homeowners interest/payment rate isn't going to do much... they will still walk because of their negative equity, lack of savings, loss of job, salary cuts, etc.

Some may stay in their homes if their principle is reduced in a modification (or a bankruptcy judge cramsdown/reduces the principle, which they now have the right to do). But this is destructive and a direct breach by the Fed government of contract law and interfering with state's activity. Smart... the govmt wants banks to lend but at the same time is stepping in and changing their contracts on them and cutting down the balance owed on the loan! I wouldn't lend under those conditions would you? Reducing principle is ripping off and causing banks fruther losses, as well as stealing from investors who own those mortgages in bundles/tranches and expect an income stream from them.

Our brilliant government leaders have their foot on the brake and the accelerator at the same time.

They won't stop home prices from falling. There will be a glut of homes on the market for a very long time. Prices will come down to a good affordability rate. Wages have been stagnant for decades and now they are going down further. Home prices will follow them despite the government's attempt to intervene and try to prop up the bubble.

As a real estate investor my prospects look good for buying and selling foreclosures.