Finding Foreclosures:

If you are out looking for a new home, there are many things in the neighborhood or area that you want to look for. These include, of course, low unemployment, job growth, jobs in the area and a location close to urban areas (which increases demand because of urban sprawl). Look to see if a Home Depot or Target is moving in. Where do I recommend? Here are a few areas:

1. Idaho – around Boise and Idaho Falls. While I was laughed at earlier this week and told that “all four viewers” would call and complain, Idaho has a 2.7 percent unemployment rate and a five-year job growth rate of more than 18 percent. Median household income is above average. It’s a little boring, though; not necessarily right for the young and single. Prices are about 70 percent of what they were two years ago but have been stable now for months.
2. Salt Lake City and Logan, Utah. I’ve been bullish on SLC and Boise for the past year. Both have a 2.8 percent unemployment rate and a five-year job growth of more than 18 percent. Lots of biomedical and high-tech companies are moving in, and there are lots of call centers, too.
3. Key Largo , Florida. Not as battered as other areas of
   Florida, it still saw a more than 30 percent price decrease but is relatively stable now. I still like
   Palm Beach as well due to the numbers of boomers moving.
4. Las Vegas, Nevada. I get beat up for this pick, but look at the facts. It has a 12 percent year-over-year increase in population, and retirees are moving here in droves. The deals are all over the place because of still very high foreclosure rates. Vegas also has a low unemployment rate. Prices dropped 19 percent in one year leaving some great bargains!
5. Phoenix, Arizona. After experiencing a one-year drop in prices of 18 percent after another year of 22 percent, prices are low, low, low.
   Phoenix is the fifth-largest city in the country by population, and it continues to grow. Many major companies such as Motorola, Boeing and Intel continue to create jobs. The city retail sales tax is 2 percent. It’s an inexpensive state to live and work in. Also, boomers will continue to create demand.

Yesterday I received a call from a friend on Wall Street who sat on a conference call announcing a major change from Wamu, advising its withdrawal from the wholesale side of the mortgage lending world.

That’s to be expected, given the recent pressures in the lending industry, specifically as the mortgage broker becomes more irrelevant each waking day.

The big surprise comes from the fact that Wamu has chosen to shut down its entire retail lending operation. Of course, you could stop at a branch and have a 19-year-old open a checking account, help you with your safety deposit box and write a mortgage while he or she is at it (presuming the teen knows how to spell “mortgage”).

Seriously, this announcement–effective immediately–essentially puts a nail in the coffin representing the riskiest mortgage program in America. For the investor community, the program generated tremendous cash flow and investment opportunities for those who understood its complexity. For the everyday homeowner, it was used as a way of stretching the affordability factor, and now it’s gone.

We suspect the elimination of the program will allow for greater stability in the mortgage markets, resulting in a flight to quality for many consumers who, blessed with an ounce of equity, will be able to refinance into more favorable terms in a more conservative, 30-year-fixed program.

I further suspect in the short term that those who became accustomed to $1,400 payments on a $450,000 mortgage will simply walk away, realizing that the ability to refinance will still result in an increased payment compared with the deferred payment that failed to cover the minimum interest payments.

I’m interested to see what impact that will have on lenders such as Wamu that control a huge portfolio of those toxic loans.

Great time to buy from a value perspective, but I feel for any borrower who lives close to one of these homes that has become a ticking time bomb. Of course, I feel even worse for the employees at Wamu who just had their legs kicked out from underneath them because their CEO failed to plan ahead.

Bill Nazur

As late as mid-January of 2008, a survey of economists conducted by leading financial publications resulted in a prediction that the U.S. had less than a 50 percent chance of going into a recession in 2008.

If you listened to the media, you’d think the world was ending. Who are the worst offenders?

I did a search to see how many hits I got on websites noted below, with hit rates indicated:

Fox News: 1,530;

CNN: 1,692;

ABC: Approximately 3,760; and

MSNBC: An astounding 23,200.

I took this into the newspaper arena and found the following:

The far left-leaning San Francisco Chronicle in 2008 alone mentioned a recession 464 times, according to its web search–more than it did the entire year of 2007, which came in at 329.

The New York Times, also left-leaning, 420 times in 2007 and 311 times since January 1, 2008.

Compare this to The Washington Times (considered more conservative), which mentions it 149 times in 2007 and 77 times in 2008.

One could speculate on the motivations behind using the R word. Perhaps it’s pure drama that drives viewers.

But the media have a responsibility here, and it seems very few people are holding them accountable. The more they mention the word recession (whether we are in one or not), the more people assume we are.

In the first two weeks of 2008, ABC, CBS and NBC presented negative stories about a pending or looming recession 32 times. Positive predictions were presented eight times. (Source: Business & Media Institute).

Here are the facts: A Bloomberg News study of 62 economists released January 9 showed economists predicting 1.5 percent growth in the first half of 2008. This is definitely weak expansion, but it is far from a recession. The Wall Street Journal reported similar findings, predicting growth of 2 percent or less and a 42 percent chance of recession. This holds true for unemployment, also exaggerated by the media. Take The Today Show reporting on January 5 that unemployment moved up to 5 percent last month, the highest rate in two years. Actually, in September of 2005, unemployment was at 5.1 percent. The 5 percent rate is the highest in 16 months, not two years. It’s also below the 5.4 percent 10-year average and the 6 percent 30-year average (Source: Business & Media Institute).

I can only speculate on why the media would choose to report the news as they do in an election year or when circulation at some aforementioned newspapers is down (you can guess which ones), but the media owe it to the public to talk about the facts and not use scare tactics, selectively choosing the data they wish to represent.

Dani