Foreclosure filings decreased again in Colorado.

[Nick Gromicko]

April foreclosure filings in Colorado fell 40.1% from a year earlier, marking the fifth consecutive month where both foreclosure filings and sales declined, according to the Colorado Division of Housing. In April, the state recorded 1,933 foreclosure filings, down from 3,228 a year earlier. Foreclosure sales at auction declined 11.2% during the month, dropping to 1,604 from 1,806 sales in April 2010.

[Waqar Quraishi]

With all due respect, one or few states don't represent the entire country. The fact is 11% of homes are unoccupied, 28% of mortgagee are behind payment. Double dip on the horizon for the housing market is expected. The few sparks that we see in the market place is realized after price cuts.

[Nick Gromicko]

That is good news for home inspectors. Keep the inventory growing, the housing prices falling, and the fear of inflation spreading. All three are good for our industry.

[Waqar Quraishi]

The statement might be construed ambiguous, "Keep the inventory growing, the housing prices falling, and the fear of inflation spreading," to the contrary, when the inventory rises it deflates price power but does not construct wall of inflation.
Heads you win, tails I lose bet is not always a winning preposition in a real "game theory."

[Nick Gromicko]

Housing prices are declining due to rising inventory, but despite this one sector, we are most definitely in an overall inflationary phase.

All three are good for home inspectors, especially inflation. Inflation going up means the number of home inspections go up.

[Waqar Quraishi]

Housing is one sector that is not been the victim of inflation in our current environment. Deflation in housing, yes, but inflation? Not at all, far from it. Far very far.

[Nick Gromicko]

That's what I said.

Having falling housing prices in an overall inflationary phase of the economy is really good for home inspectors, because it means more home inspections.

Bad for economy, good for inspection industry.

[Waqar Quraishi]

Stagnation does not mean activity for home inspectors.

Bottom line, buyers are cautious, banks are absolutely risk averse, credit is extremely tight. And homes are not selling at the asking price, therefore, it affects the home inspection industry and it's bleaker than Charles Dickens "Bleak House," except for the fat cats.

[Kevin M. Leonard]

Personally I'd like to see the days of "bidding wars" return along with a boom in new construction.

Unfortunately I don't see that happening for a long long time.

[Nick Gromicko]

If the Fed even hints at QE3 houses will sell like crazy. The two are totally tied.

[Steven C. Waskewicz]

Is QE3 Ahead?

Mises Daily: Friday, March 18, 2011 by Llewellyn H. Rockwell Jr.


Austrian School economists have often explained the business cycle using the metaphor of liquor or drugs. The expansion of paper money and credit gives a sense of exuberance, an economic high that leads to excessive risk taking and balloons of production. But it can't be sustained. There is a morning after.
Then what? There is a choice: more drugs and liquor — or sobriety. Sadly, the economy — meaning the choices made by you, me, and billions of others — is not permitted to make the choice. It is made for us by our lords and masters in Washington. Here are the meth dealers. Guess what choice they make.
And so we had Bush's QE1 (QE stands for "quantitative easing," a euphemism for printing money), but the effects didn't last that long. Then there was Obama's QE2 and the effects of that are likely to run out sometime this summer. (As an aside, maybe we should just start referring to the QE[n] administration, inserting the appropriate number, since otherwise these presidents are mostly interchangeable.)
Note the following important point: These various attempts to restore the inebriated happy time have unpredictable and uncontrollable effects, and the metaphor helps here, too. The body is weakened. It might take more of the drug to get the same effect. The drug promotes underlying disease. Each new dose makes the person ever less rational, ever more incoherent.
The stimulant can land anywhere but where it is intended to land by the money printers. The Fed wanted to lift housing prices and restimulate the entire real-estate sector. But guess what? Housing prices are still falling, and new home construction just tanked at a faster rate than at any time in 27 years.
What is being stimulated? Stock prices, certainly, but that is not wealth. Stock prices are just prices. They are no different than apple prices, coffee prices, and gas prices. When these go up, do we say, fantastic news, we are wealthier? Of course not. The belief that a rising stock price is great news remains one of the most wicked of all economic myths.
Then there is the problem of price increases more generally. The producer price index for February has generated terrifying results, though you probably haven't heard about them. Predictions were for a 0.6 percent increase but the reality was 1.6 percent, which points to double digits on an annualized basis.
And that just the beginning. Food prices rose the most since November 1974. Prices of raw materials rose by 3.4 percent in February from the previous month. Intermediate prices climbed 2.0 percent, with diesel fuel up a monthly 12.6 percent in February. These huge increases were counterbalanced by falling prices in cars, trucks, warehousing, and other areas that have already been showing signs of a postboom slump.
Will there be a QE3? Most likely.
Look at this exchange with Bernanke at the National Press Club (in a journalist's summary):

Question: Will there be a Q3?
Bernanke: In the end, we'll just ask the same questions. Where's the economy going, and what do various inflation indicators look like? We'll ask those questions. If unemployment is still too high, then we may continue. If we're moving towards full employment, then we won't need to stimulate more.

And what is full employment? The Fed's statisticians believe that full employment is an unemployment rate of 6 percent or so, and we are nowhere near headed that way.
Plus, Bernanke is wholly wrong to believe that somehow employment can be used as a measure of economic health. For many decades, socialist economies bragged about zero unemployment, but the economies regressed year after year. Even in mixed economies like ours, high employment is most often an effect of prosperity and never a cause.
Plus, we can't believe Bernanke that employment data alone will drive the decision. He is an errand boy for the big banks and Wall Street. That will drive his decisions, along with politics. And we can be all but certain that there will be plenty of bad news around by the summer, which will provide enough cover for another round of stimulus.
Meanwhile, what's anyone going to do about the problem of much higher prices, which is the ghastly beast waiting around the corner? The truth is that that the Fed pretends as if it has nothing to do with this. Bernanke routinely says that prices are formed by supply and demand — which is true enough in a free market, but money creation complicates the picture.
Another truth is that the Fed doesn't really care about inflation as much as it cares about the solvency of the banking and financial systems. Bernanke would drive us right into hyperinflation to save his industries. Savers living on pensions just don't have the political clout to stop the money machine.
And contrary to Bernanke's promises, he does not have the ability to turn off the monetary spigot once prices start zooming. The economy is too globalized for that. Keep in mind that although the Fed has loads of power, it has no power to control inflationary expectations and the demand for cash generally — and in hyperinflationary environments these are the driving factors.

History is littered with monetary managers who believed they were in total control — until the disaster hit. It is hubris of the first order to believe oneself master of the universe — but hubris is endemic in Washington.
QE3 is playing with fire. Or with a third dose of meth. Or another bottle of Jack. Choose your metaphor. It is a bad and deeply dangerous policy, all built on the insane view that if you stimulate a zombie enough with fiat money, it will start to live and breath on its own.
Reducing this even more, consider this: If you drink enough, does your body start to generate its own liquor? The Fed and the government have hooked the American economy on a wicked drug. Our job is to drive the dealers from their seats of power.

[Nick Gromicko]

QE3 is coming.

There are only 3 choices:

1. The Tea Party succeeds and stops the spending.
2. The U.S. defaults.
3. Bernanke prints (QE3, QE4, QE5...).

I think the odds of the Tea Party succeeding and saving us is now less than 5%

I think the odds of the U.S. permitting a default is now less than 1%.

That means I'm 94% certain there will be more printing which means the perfect storm for house sales... they'll go through the roof as money tries to find hard assets to escape a crashing dollar.

[Steven C. Waskewicz]

I have no doubt, no argument here...
that's all they know how to do...

[Waqar Quraishi]

Something amiss here. QE1-2-3-4, is not sustainable, these financial tools are applied only for short durations, especially if the financial markets are having cardiac arrest. The year 2008 is past. No sub-prime etc. None of the recent QE's has helped the housing so far. Will another QE matter?
Fed fund rate is at 0% to 0.25%, is there more room to lower it from 0%. We don't think so. How low can you go?
Raising it fights inflation and hence strengthens the dollar. It would be insidious to assume otherwise.

[Nick Gromicko]

Let me try to explain the connection between QE3 and # of home inspections needed.

There are only 3 ways to cover the national credit card bill. Two of them probably won't happen (we aren't going to balance the budget and we aren't going to default). That leaves printing as the only option. A thing's value (be it gold or $100 bills) is based on its rarity. So the more dollars they print, the less rare dollars become, and so the less purchasing power they command (inflation). In other words, the dollar begins to crash. As the news hits that the fed is going to do QE3, everyone will try to dump dollars into hard assets as a hedge. The main hard asset in the world is real estate. They'll buy homes. There is no where else for the money to go. Saving it would mean losing it (not in number of dollars but in purchasing power). The opposite of saving is borrowing to buy hard assets, which is what we should all be doing. The money will have to be spent on real estate or equities or copper or something real (U.S. dollars aren't real, they are backed by nothing, basically counterfeit). Hence the connection between the announcement of QE3 and the inspection industry.