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Recently in Real Estate Category
My friend at Paper Economy is testing out his new data visualization engine and he pulled together a scary chart of Year over Year house prices in Phoenix, Arizona. Can you believe it? We are below 2000 prices?
This is truly a frightening chart and I suspect that real estate prices could go even lower in Arizona, and the rest of the country for that matter, if people continue to get laid off. This would confirm my observation from earlier this year about real estate and equity prices having further to fall.
In January 1973, the number of finished new homes for sale was 97,000, when the U.S. population was about 212 million, according to the U.S. Census Bureau. In December 2007, 197,000 completed homes were on the market and in January 2008 there were 195,000. The current population is 303.5 million.It seems that back in 1973, the % inventory to the US population was 0.05% and today its 0.06%. I really don't know if these numbers are a cause for all the calamity the Bloomberg article alludes too but what it does mean is that home prices probably have further to fall. It's just a matter of time till we work off the inventory and hit bottom and I think we're almost there.
A homeowner who can't sell his house tells the L.A.Times, "Foreclose me. ... I'll live in the house for free for 12 months, and I'll save my money and I'll move on." Banks and lenders fear this kind of thinking -- that walking away from a house could be the smart economic move -- appears to be on the rise. Wachovia, in a conference call yesterday, warned investors that increasing numbers of homeowners are walking away from their homes by choice: "... people that have otherwise had the capacity to pay, but have basically just decided not to because they feel like they've lost equity, value in their properties..."It sure makes business sense to me why homeowners are doing this, cut your losses and get out but is it the right thing to do? I don't know if its right or wrong but I do know that the Banks need to start being more accommodative to all borrowers now. Lending has gotten so tight that our mortgage company wants to charge us $5,000 just to refinance our investment property, and we have great credit! With all this voluntary foreclosure activity, is it time to be a foreclosure vulture capitalist? Not yet, wait till the banks are choking on supply.