Following is an article from Adrian Van Eck. He has been forecasting banking and real estate for over 40 years. In 40 years he has never been wrong in his forecast, early yes, wrong never. He is my reason for believing that the market is going to recover. Existing home sales are up 7.4% THIS WEEK. Not Quite the gloom and doom we are hearing from every where else. What you think about comes about. Start looking at the good that is happening. 7.4% increase in new homes sales this week is good news.
Adrian Van Eck's Mortgage and Property Hotline
For: Thursday, October 9, 2008
(800) 219-1333. VetHotline@aol.com. VanEckTillman.com. EACH DAY WE GET AT LEAST ONE LETTER FROM A READER ASKING HOW WE CAN STAY SO CALM AND CONFIDENT ABOUT HOUSING AND REAL ESTATE WHEN SO MANY PEOPLE ON WALL STREET AND ON MAIN STREET ARE TEARING THEIR HAIR OUT AND LISTENING TO GLOOM AND DOOM TYPES WHO ARE SCREAMING THAT THE SKY IS FALLING AND TELLING THEM TO SELL THEIR HOME AND ANY OTHER REAL ESTATE THEY OWN, INCLUDING ANY SECOND HOME AND ANY INVESTMENT PROPERTY THEY BOUGHT FOR RENTAL INCOME. LET ME SAY THAT IF I THOUGHT FOR ONE MINUTE THAT THIS WAS A REPLAY OF 1929 AND 1930, I WOULD ADOPT THAT ALL-OUT NEGATIVITY. WITH ALL THE INFORMATION I HAVE FLOWING IN TO ME - I DEFINITELY CANNOT ENDORSE SUCH A NEGATIVE APPROACH TO HOUSING AND REAL ESTATE. AS YOU KNOW, I TURNED BEARISH ON HOUSING IN THE LATE SPRING OF 2005 AND I STOOD MY GROUND EVEN AS SOME SUBSCRIBERS SHARPLY CRITICIZED WHAT I WAS SAYING. THE MILDER NOTES HINTED THAT I WAS MISSING THE BIG PICTURE. THE NASTIER NOTES BLUNTLY SAID I HAD JUST RUINED MY REPUTATION AND WAS FINISHED AS A FORECASTER. IT TURNED OUT I WAS, AS USUAL, JUST EARLY. THAT HAS BEEN MY CURSE FOR 40 YEARS. I JUST SOAK UP SO MUCH INFORMATION AS I CAN AND THEN MAKE MY DECISION. THAT USUALLY PUTS ME OUT IN FRONT OF MARKETS. "ALWAYS RIGHT AND ALWAYS EARLY" IS WHAT WALL STREET VP STEPHEN M. MILLER TELLS HIS CLIENTS ABOUT US. I AM NOT ALONE IN MY FEELING OF CALM. I RECENTLY PHONED OVER TO THE OFFICE OF DAVID JENNETT TO COMPARE NOTES. DAVID IS PRESIDENT OF OUR AFFILIATE, THE FINANCIAL RESEARCH CENTER. HE IS THE PUBLISHER OF MY MONEY-FORECAST LETTER. ERIN DONAHUE INFORMED ME THAT WHEN DAVE WOKE UP AND SAW UNSEASONABLY WARM WEATHER OUTDOORS HE DECIDED TO GO GOLFING. WITH NEW ENGLAND WINTER WEATHER WAITING AROUND THE CORNER, HE HEADED AT ONCE TO THE LINKS. IF HE WAS WORRIED ABOUT THE ECONOMY AND THE MARKETS, HE WOULD BE ON THE PHONE AND NOT ON THE GOLF COURSE. I TURNED WORRIED AND THEN BEARISH THREE AND A HALF YEARS AGO WHEN LITTLE AND THEN BIG FACTS TRICKLED IN AND THEN STARTED COMING FASTER AND FASTER. I KNEW REAL ESTATE AND HOUSING HAD CEASED TO BE A GOOD VALUE. IN FACT I KNEW THAT A PERIOD OF TEMPORARY INSANITY HAD BEGUN. I ALSO KNEW THAT MOST PEOPLE WOULD NOT BELIEVE ME. FORTUNATELY I DO NOT DEAL WITH MOST PEOPLE. OVER THE YEARS AN ELITE GROUP HAS FORMED AROUND ME. YOU ARE ONE OF THESE ELITE. THAT IS WHY I DARE TALK TO YOU AS I AM DOING NOW. YOU UNDERSTAND THAT WHEN THE NATIONAL ASSOCIATION OF HOMEBUILDERS SAID THIS WEEK THAT EXISTING HOME SALES HAVE JUMPED 7.4%, WITH THE STRONGEST TURN COMING IN THOSE AREAS WHERE PRICES HAVE TAKEN THE BIGGEST HIT, IT IS TIME TO PAY ATTENTION. THEN TODAY I HEARD THAT SHERIFF'S DEPUTIES GOING TO SEIZE VACANT, FORECLOSED HOMES ARE FINDING THAT IN A GREAT MANY CASES THE INSIDES OF THESE HOMES HAVE BEEN TRASHED. I REMEMBER WHEN THE SAME THING HAPPENED DURING THE 1991 REAL ESTATE RECESSION. PEOPLE HAD BEGGED THEIR BANKS TO LET THEM LIVE IN THEIR OWN HOMES UNTIL BUYERS WERE FOUND. SOME EVEN ASKED THE BANKS TO WRITE THE MORTGAGE DOWN TO REFLECT FALLING MARKET VALUES. BANKS WERE SMUG AND SAID NO. I WARNED THAT VACANT HOMES WOULD BE RIPPED OPEN BY TEENAGERS LOOKING FOR WILD AFTERNOON PARTIES, AND AT NIGHT THE WEATHER WOULD HAVE ITS WAY WITH EMPTY, OPEN HOUSES. ONCE THAT HAPPENED, WE SAID, DRUG DEALERS AND PROSTITUTES WOULD TAKE OVER. HOMES WOULD LOSE VALUE FAST. THIS TIME AROUND IT IS EVEN WORSE. AGAIN, YOUNG TEENAGERS ARE LOOKING FOR A PLACE TO PARTY OUT OF SIGHT OF THEIR PARENTS AND THE LOCAL AUTHORITIES. ONCE AGAIN HOUSES ARE BEING EXPOSED TO INCLEMENT WEATHER. NOW WE HAVE A NEW ELEMENT. HOMES WERE FORECLOSED HUNDREDS AT A TIME BY LAWYERS REPRESENTING UNKNOWN FOREIGN BUYERS. LOCAL BANKS HAD LONG SINCE SOLD THE MORTGAGE AND LOST INTEREST. VANDALS HAVE COME IN AND TRASHED MANY EMPTY HOMES. THEY RIPPED WALLS OPEN AND YANKED OUT COPPER PLUMBING AND COPPER ELECTRICAL WIRING, FOR RESALE AS SCRAP METAL. I HAVE SEEN A FEW FORECLOSED HOMES THAT WILL IN ALL PROBABILITY HAVE TO BE DESTROYED. THIS REMOVES HOMES FROM THE INVENTORY OF UNSOLD HOUSES, BRINGING CLOSER THE DAY WHEN BUILDING MUST COME BACK TO LIFE. GIVEN THE UNRELENTING WEAKNESS IN THE U.S. STOCK MARKET IN RECENT WEEKS, THERE IS A FEELING IN THE MEDIA AND IN THE BROAD FINANCIAL COMMUNITY THAT THINGS ARE TERRIBLE AND THAT THEY ARE GOING TO REMAIN SO - PERHAPS FOREVER. WE HAVE BEEN HERE BEFORE AND WE JUST DO NOT BELIEVE SUCH NEGATIVE HYPE. THE HOUSING SECTOR HAS ALREADY GONE THROUGH MOST OF THE WASHOUT PROCESS AND NOW THE WHEELS ARE TURNING - BRINGING FORCES TO THE MARKETPLACE THAT SHOULD HELP TO STABILIZE PRICES. MORE NEXT WEEK. ADRIAN VAN ECK. Next hotline updated no later than 6:00 P.M. Eastern on Thursday, October 16, 2008
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