How would you feel if you had recently paid the full price in this development?

Needless to say, that’s 25-30% off. A bitter pill.

A new real estate blog has appeared. The blogger is a newbie real estate speculator who has used “Liar’s loans” (he admits the lying, a felony by the way) to buy several houses with the intention of flipping. Well the flipping has flopped and he is about to burn various lenders for about half a million dollars or more. But let him speak:

“I’m a 24-year-old real estate investor from Sacramento CA. This is my first year full-time in the business and I got in over my head. I am now facing foreclosure on 6 5 houses. I’m learning my lessons, meeting good people, finding solutions and blogging about it. There is hope so I’m still smiling.”

For those of us who bailed on gold, we are now putting together the elements of a buy signal per Hussman’s system. Today’s weak Philly Fed knocked bond yields and added the rate signal. It could also foreshadow a weak ISM (NAPM) in the early October report, which would complete the signal.

“Not surprisingly, the combination of all of these is rare but extremely powerful. In the rare instances when 1) The rate of inflation has been higher than 6 months earlier[check], 2) Treasury bond yields have been lower than 6 months earlier[check], 3) the NAPM Purchasing Managers Index has been below 50[not yet], and 4) the Gold/XAU ratio has been above 4.0[check], the XAU has soared at an astounding rate of 123.63% annualized. In contrast, when none of these have been true, the XAU has plunged at -53.21% annualized. That’s a gaping difference.”

Going For The Gold

“Reflecting increasing builder concerns about conditions in the market for new single-family homes, the National Association of Home Builders Housing Market Index declined for an eighth consecutive month to a level of 30 in September. This amounted to a three-point drop from an upwardly revised 33 reading in August, and is the lowest level the index has reached since February of 1991.”

And this bust is just getting started. The previous bust was well underway in early 1991.

From today’s BLS release: “Real average weekly earnings fell by 0.5 percent from July to August after seasonal adjustment “. The core CPI was up 2.8% y-o-y, the most in 5 years. That should be worrisome. But of course the market is being jammed anyway. .

Oh and by the way Daimler-Chrysler reduced its forecast (now planning to lose a mere €5 billion) - “difficult US market and high costs” - and Ford announced massive job cuts - one third of salaried workers and a buyout offer to all UAW members. Industrial output fell 0.1%. And did I mention that foreclosures were up 24% between August and July? One month? (And over 50% y-o-y). I guess everything is hunky-dory.

Commodities prices - metals, energies, etc. - are falling fast, down over 13% (CRB index) since the beginning of August. The bulish view is this is good for inflation - the bearish view is this is another indicator of economic slowdown.