january 2010 charleston market report

8/9/2019 January 2010 Charleston Market Report

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www.charlestonmarketreport.com


The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.William Arthur Ward

January 2010 Issue

In This Issue

Cartoons

The Nationalization of Housing

Charleston Residential Real Estate

Charleston Commercial Real Estate

The FDIC is Broke

Foreclosures

No Fear in the New Year

What Deflationists Are Missing

Cartoons


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The Nationalization of Housing

Existing home sales volumes are off 30% from the peak and have returned to 1998 levels (see the chart below thatremoves some of the month-to-month gyrations). While this might seem like a plunge, a little more historical analyis in order.

Current resale volumes represent 4.4 transactions per 100 households, which is higher than the historical norm (sin1968) of 3.9 transactions per 100 households. As shown in the chart at right, transaction volume remains well abovthe norms. Some of the boost in the early part of this decade was due to allowing Fannie and Freddie to raise

the limits on conforming loans from $207,000 in 1996 to $417,000 in 2006, and even higher "jumbo

conforming" loan limits in the last few years. With Fannie and Freddie now controlled by the government, w

expect major changes there, beginning in the spring when their budgets are due to be approved.

Sales volumes are being propped up by government intervention (tax credit, aggressive FHA lending, Freddie andFannie bailout, and Fed mortgage rate intervention) and investor activity that now exceeds 2005 levels as a % of toactivity. In other words, there would be far fewer home buyers today (just as there was in 1968-70, 1973-75,1981-83 and 1990-92) and house prices would be falling even further.

Therefore, if you run a business that is tied to housing, pay far more attention than usual to what is going on inWashington D.C. as it is likely to determine the health of your business in 2010.


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Watch all of the nuances in pending bills, which are likely to include changes to down payment requirements, FICOscores, insurance premiums, limits on certain types of buildings, dollar limits, and limits on costs that can be paid bthe seller. When steady job growth returns - which it almost certainly will not in the next few months, despite thismonth's encouraging news - market factors should be able to take over.Source: John Burns Real Estate

Charleston, SC Real Estate

I have not published my trend momentum charts in a couple of months. One of the reasons I became bullish on t

affordable segment of the market was the improvement in these charts along with some major job announcementfrom Boeing and others. These trend charts were directly responsible for my ability to see the distress occurring inthe local Charleston market back in 2005-2006. The charts do not lie because they are based on the irrefutable lawsupply and demand. Could these charts worsen? Yes, if the overall economy takes another major blow and credittightens again but I do not believe we will see anything like we witnessed in 2008-09 again because of the number jobs coming to Charleston.

Just to give everyone a reminder of how these charts work please read below:

In order to identify trends in the real estate market it is important to measure past data with current data. Once weknow which way the leading indicators are going, we should be able to identify the major trends in the market. Inorder to analyze our leading indicators, I use monthly data to help identify market momentum for tracking real

estate trends. The momentum measures the speed at which the trends can change in the market.

How to interpret the market momentum charts.

When the trend reading crosses the 0 line, this means the trend of this Leading Indicator has changed from adowntrend to an uptrend or vice versa. Thus, as the 0 line is approached there is a strong possibility that you will able to anticipate a real estate market trend reversal.

Trend:The general direction (up or down) in which a Leading Indicator is moving.

Moving Average (MA): This calculation gives you a monthly average for the Leading Indicator data over a certainperiod of time. The MA is important because it smoothes out month to month data and fluctuations and gives you avery good sense of market direction.

Market Momentum:Measures whether the trend is getting stronger or weaker.Trend Identification: A series of steps must be taken in order to create the Leading Indicators.

1. Gather the monthly data.2. Calculate the 12 month moving average for each indicator.3. Calculate the momentum reading for each indicator.4. Analyze the data.

Existing Home Sales

This is one of the best leading indicators of real estate price trends. Buyers create the demand for housing that isdirectly linked with price movement. When this trend increases it demonstrates more buyers coming into the markeand prices tend to rise. Sellers do play a role in the transaction of a house or condo, but the buyer plays the dominatrole because they must be willing to pay the price the seller is asking.


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Vital Sign Market Momentum Chart

Tri-County Existing Residential Sales

-40

-30

-20

-10

10

20

30

40

Dec-90

Dec-91

Dec-92

Dec-93

Dec-94

Dec-95

Dec-96

Dec-97

Dec-98

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

MarketMomentumR

eading

Above "0" Line: Favorable market conditions.

Below "0" Line: Unfavorable market conditions.

Dec. 2009 = - 9

Recession

Mar 1990- Feb 1991

9/11

NASDAQ Correction

Top of the real

estate market.


Source:CTAR

The first chart above shows some dramatic improvement since April 2009, which was the lowest reading in the past19 years. The reason this occurred is that 2008 was such a horrendous year for housing and the economy after the

credit collapse occurred. The reason the trend is improving is due to the terrible sales figures that occurred after thcredit markets shut down in 08. We are seeing improvements due to the nationalization of the housing market via t1st time homebuyer tax credits, price drops and Federal Reserve mortgage repurchase program, which keeps interesrates artificially low. Those of you who heeded the warnings of this newsletter and remained patient are saving bigbucks right now because list prices have dropped and interest rates are still low. Those who did not listen, especialon the upper end of the market, probably have lost a large amount of equity over the past few years. The homes wiowners looking to sell who are upside down (owe more than the home is worth on the market) are clearly headedfor the rental market or the short sale/foreclosure market at some point. This a major problem with many of thehomes purchased over the past few years when demand was artificially high due to easy credit.

If we break up the local Tri-County residential market in two categories the difference in sales for 2009 are

staggering.

Price Range Percentage of Sales1. Less than $350k 82%2. Greater than $350k 18%

A much more detailed breakdown of sales is below.


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Sold Listings

Price Range # of Listings Average DOM % of Listings

$0 - $9,999 5 105 0.06%

$10,000 - $19,999 18 93 0.22%

$20,000 - $29,999 45 94 0.56%

$30,000 - $39,999 65 76 0.81%

$40,000 - $49,999 93 86 1.16%

$50,000 - $59,999 109 95 1.36%

$60,000 - $69,999 115 98 1.44%$70,000 - $79,999 111 99 1.39%

$80,000 - $89,999 120 111 1.50%

$90,000 - $99,999 187 85 2.34%

$100,000 - $109,999 243 105 3.04%

$110,000 - $119,999 276 102 3.45%

$120,000 - $129,999 367 86 4.60%

$130,000 - $139,999 387 90 4.85%

$140,000 - $149,999 389 100 4.87%

$150,000 - $159,999 442 91 5.54%

$160,000 - $169,999 497 87 6.22%$170,000 - $179,999 404 91 5.06%

$180,000 - $189,999 371 98 4.65%

$190,000 - $199,999 315 90 3.94%

$200,000 - $219,999 520 103 6.51%

$220,000 - $239,999 452 112 5.66%

$240,000 - $259,999 345 113 4.32%

$260,000 - $279,999 263 107 3.29%

$280,000 - $299,999 213 129 2.66%

$300,000 - $349,999 362 137 4.53%

$350,000 - $399,999 269 144 3.37%$400,000 - $449,999 203 165 2.54%

$450,000 - $499,999 156 196 1.95%

$500,000 - $549,999 110 189 1.37%

$550,000 - $599,999 75 191 0.94%

$600,000 - $649,999 66 199 0.82%

$650,000 - $699,999 49 218 0.61%

$700,000 - $749,999 38 187 0.47%

$750,000 - $799,999 38 229 0.47%

$800,000 - $849,999 25 283 0.31%

$850,000 - $899,999 18 290 0.22%$900,000 - $949,999 16 273 0.20%

$950,000 - $999,999 26 135 0.32%

$1,000,000 - $1,049,999 13 230 0.16%

$1,050,000 - $1,099,999 15 193 0.18%

$1,100,000 - $1,149,999 10 157 0.12%

$1,150,000 - $1,199,999 6 246 0.07%

$1,200,000 - $1,249,999 17 141 0.21%


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$1,250,000 - $1,299,999 14 228 0.17%

$1,300,000 - $1,349,999 8 94 0.10%

$1,350,000 - $1,399,999 5 204 0.06%

$1,400,000 - $1,449,999 3 549 0.03%

$1,450,000 - $1,499,999 5 82 0.06%

$1,500,000 - $1,549,999 4 420 0.05%

$1,550,000 - $1,599,999 2 332 0.02%

$1,600,000 - $1,649,999 2 114 0.02%

$1,650,000 - $1,699,999 3 274 0.03%$1,700,000 - $1,749,999 3 8 0.03%

$1,750,000 - $1,799,999 6 144 0.07%

$1,800,000 - $1,849,999 6 185 0.07%

$1,850,000 - $1,899,999 0 0 0.00%

$1,900,000 - $1,949,999 4 195 0.05%

$1,950,000 - $1,999,999 2 162 0.02%

$2,000,000 - $2,499,999 23 229 0.28%

Over $2,500,000 24 117 0.30%

# Total Listings: 7,978 Average Price: $255,486 Median Price: $183,000

Highest Price: $7,375,000 Lowest Price: $2,500 Average DOM: 113

New Building Permits

Real estate construction is one of the largest industries in the United States. Homebuilders are very aware of thedemand for housing in the areas of the country where they offer their services. Historically, the trend in buildingpermits will drop before the economy weakens.

It should also be noted that local municipalities can have an effect on this indicator. The town of Mount Pleasant is

great example of government manipulating the market that reduces the number of building permits allowed which ccause housing prices to escalate quicker than normal. Inventory gets scarcer as demand increases. The end result wa significant increase in housing prices once the town decided to control the number of building permits allowed eayear


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New Building Permits

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-40

-30

-20

-10

10

20

30

40

50

Dec-95

Jun-96

Dec-96

Jun-97

Dec-97

Jun-98

Dec-98

Jun-99

Dec-99

Jun-00

Dec-00

Jun-01

Dec-01

Jun-02

Dec-02

Jun-03

Dec-03

Jun-04

Dec-04

Jun-05

Dec-05

Jun-06

Dec-06

Jun-07

Dec-07

Jun-08

Dec-08

Jun-09

Dec-09

MarketMomentumR

ead

ing



NASDAQ Correction

9/11

Dec. 2009 = -20


Top of the real

estate market

Source:US Census

You may be asking yourselves why the Building Permit trend chart would be improving. Part of the reason isdetailed in the following article which appeared in the 1/31/10 Post & Courier:

http://www.postandcourier.com/news/2010/jan/31/change-in-plans/

Most builders, developers, buyers, sellers and real estate agents did not do their homework! They listened to the mstream media and fools like Ben Bernanke who kept telling everyone that everything was contained. Now thepeeps in the homebuilding industry are scrambling to position themselves to capture the affordable market inCharleston. Buyers can not lie about their income and get a Stated No Doc Mortgage anymore. Buyers must nowdocument their incomes and most can only afford the homes less than $350k, which I have been discussing for a lolong time. The result is that some of these newer subdivisions are becoming mutt subdivisions (I made that up!with a mixture of tract built and custom built homes. Not good if you own the custom built home.

What these developers are doing is unfortunate in my opinion but a necessary move if you can relate to Darwinism

This scenario could be much worse for these residents but I am sure that is not much comfort. All I can say them isYou got bamboozled into buying an overpriced home at the top the market and feel thankful you have a roof overyou head. It could be worse.


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Monthly Inventory RatioThis ratio is calculated by dividing sold monthly listings by new active monthly listings. In most cases demand ismore sensitive to change than supply. Supply is more sluggish since it takes time to build new homes. On the otherhand it is more difficult to withdraw supply already on the market. As a consequence, markets cycle betweenoversupply, equilibrium and shortage.

Typically the changes in cycles can take years. Inventory in a buyers market tends to be high because the market isoversupplied with homes based on demand. Inventory in a sellers market is low because of the scarcity of homesavailable based on demand. As this ratio increases it signals an increase in inventory levels and a decrease in deman

This can ultimately lead to housing prices to stagnate and possibly fall if the trend lasts long enough. This occursbecause sellers will become more motivated to sell their property the longer it stays on the market.


Tri-County Monthly Inventory Ratio

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-20

-10

10

20

30

40

Dec-90

Dec-91

Dec-92

Dec-93

Dec-94

Dec-95

Dec-96

Dec-97

Dec-98

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

MarketMomentumR

eading



Recession

Mar 1990- Feb1991

NASDAQ Correction

9/11

Dec. 2009 = 8


Source:CTAR

The Single Family Detached (SFD) market has 9 months of inventory $350k whewe average out what is in the MLS for 2009.

The Single Family Attached (SFA) market has 17 months of inventory $350k whenwe average out what is in the MLS for 2009.

Obviously the inventory situation is much worse (practically 2 times worse) for townhouses/condos vs. houbased on the stats above.

This is another example of developers not doing their homework in order to determine what buyers reallydesire along with way too many condo conversions in the past.


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Single Family Detached

Tri-County ($350,000)

Month YearMonthly

SalesAvg List $ Avg Sale $ Avg $/Sqft Median Sold $ Avg DOM

Current

Inventory

Months

Inventory

January 2009 51 $809,861 $739,931 $247 $450,000 135 2859 56.05

February 2009 54 $717,803 $645,762 $233 $503,750 151 2981 55.20

March 2009 85 $701,905 $642,745 $226 $486,000 177 3043 35.80

April 2009 76 $884,164 $784,640 $261 $525,000 170 3155 41.51May 2009 92 $887,190 $798,878 $236 $535,000 167 3172 34.47

June 2009 131 $691,451 $630,737 $223 $510,000 185 3112 23.75

July 2009 120 $794,143 $717,299 $240 $495,000 205 3024 25.20

August 2009 101 $666,461 $614,774 $219 $508,598 182 2965 29.35

September 2009 89 $683,601 $638,223 $218 $475,000 184 2892 32.49

October 2009 92 $768,458 $705,458 $225 $487,500 191 2839 30.85

November 2009 84 $631,417 $584,987 $205 $450,000 157 2757 32.82

December 2009 115 $820,979 $744,265 $239 $520,000 205 2682 23.32

Annual: 1090 $752,958 $685,870 230 $500,000 180 2957 32.55


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Single Family Attached

Tri-County ($350,000)

Month YearMonthly

SalesAvg List $ Avg Sale $ Avg $/Sqft Median Sold $ Avg DOM

Current

Inventory

Months

Inventory

January 2009 16 $811,301 $785,088 $368 $470,000 224 953 59.56

February 2009 9 $1,056,450 $1,042,238 $484 $700,000 112 980 108.88

March 2009 14 $946,471 $897,798 $363 $487,500 197 999 71.35

April 2009 15 $876,260 $814,864 $473 $610,000 112 1005 67.00May 2009 10 $597,830 $576,652 $353 $512,500 328 1024 102.40

June 2009 14 $650,914 $606,678 $352 $480,000 298 1010 72.14

July 2009 20 $521,795 $483,353 $328 $442,000 169 980 49.00

August 2009 10 $758,865 $692,878 $349 $635,000 177 964 96.40

September 2009 11 $693,890 $642,191 $389 $550,000 316 931 84.63

October 2009 16 $730,592 $650,543 $323 $501,000 145 915 57.18

November 2009 16 $710,343 $639,552 $380 $557,500 358 934 58.37

December 2009 15 $775,413 $615,833 $363 $475,000 271 926 61.73

Annual: 166 $748,903 $689,956 373 $508,500 224 968 69.97

The following bullets and charts come from Doug Holmes of Carolina One Real Estate. I do not know Doug verywell and he recently started sending me his newsletters. Doug is also a math professor at the College of Charlestonlike his data because he is telling the truth and analyzing it in a manner that I feel is helpful to the market. His dataalso backs up much of what I have been discussing on this website the past 3.5 years since September 2006.

If you want his newsletter you can email him at [email protected].


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Charleston residential market was down about 9% in number of transactions and 9% in price for 2009 versu2008. That includes SFD, SFA, and mobile homes in the tri-county area. SFD (single family detached) waquite as bad, down 6% in transactions and 8% in price. In fact SFD inventory has fallen a little to just over6200. That's 67% of the overall inventory. On the other hand, SFA inventory has been rising.

Buyer activity as shown by the number of contingents on the hot sheet each week was actually up abo

6% in 2009 versus 2008. Short sales kept us from closing more of them though.

Short sales and foreclosures account for 21% of the contingent listings currently on the MLS. And thare just the ones listed correctly under the Special category. There is easily another 4%, making the ss/fcmarket about 25% of what's under contract.

Shingle prices are going up in the middle of February and we have a lot of homes that need new roofs. It'sbeen 20 years since HUGO.

I read somewhere that there are over 6000 distressed homes in the Tri-County market right now. I can notremember the source.


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Charleston Commercial Real Estate

Courtesy of Grubb & Ellis, WRS

www.barkleyfraser.com

Grubb & Ellis has the best quarterly commercial real estate reports for the Charleston market IMO. Go check outtheir website if you want more info.

Q4 2009

Office Market Ends Decade on a Soft Note

At the end of the decade, Charleston, South Carolina is faced with the highest vacancy in nine years of tracking theoffice market. The final year-end vacancy was approximately 21 percent, 25 basis points higher than the 18.5 percevacancy at the end of 2008. Only the short lived drop of 2003 matched this level of vacancy which was also 18.5percent.

Prices have dropped sharply in the past twenty four months, with the average price of office space in Charlestondropping from $26.64 per square foot at the end of 2007 to just $20.32 per square foot at the end of 2009, a decreasof 24 percent or about 1 percent per month. This is evident in both new leases and renewals, as transactions areprimarily short-term lease renewals where landlords are cutting rates aggressively to keep tenants in place for shortterm deals.

The sales market has been stagnant with investment properties and owner occupant transactions kept to a minimumSellers (and their banks) have resisted dropping prices in line with the reduction of rental rates. More aggressivepricing is expected in the next twelve months enabling both investors and owner occupants to become more active 2010.

The big movers in the 2009 office market were governments and educators. Specifically, the City of North Charlespurchased its 150,000-square-foot headquarters in the summer of 2009 leaving behind a small fraction of a footprinin its former city hall space just down the street. New or expanding educators in the market include ITT, Virginia Clege & Strayer University, with others eyeing up expansions or market entry.

The rising vacancy is anticipated to peak in mid-2010 with a slow recovery to follow. In the meantime, those owne

who can afford to professionally maintain their propertys appearance and offer aggressive rates should see the mossuccess in the coming year.

Forecast

Vacancy rates will peak in the middle of 2010.

Office purchase prices will remain soft.

Tenants will seek value opportunities over high quality spaces.

Office Trends Report Q4 2009


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Industrial Market Glad to See 2009 End

The past year was difficult for all and the Charleston industrial market was no exception. The increased vacancy racompressed rental rates and lack of sales all reflect how dismal 2009 was for many people involved in the real estatmarket. However, there were some positive indicators that give everyone involved some hope that 2010 will be betMaersk Shipping Company, the port of Charlestons largest customer, renewed its contract with the Port Authority continue to call on Charleston until 2014, which should coincide with the completion of the Panama Canalrenovations. The Panama Canal Authority has invested heavily in improvements allowing it to handle the biggestocean going freight liners. In February 2010 Charleston is scheduled to receive its first call from an 8,000+ TEUvessel. Currently Charleston is the only port in the southeast with the air and water drafts in place to handle ships othis size.

Another positive indicator is the arrival of Boeings second manufacturing facility. The facility, which works onassembling parts for the 7E7 Dreamliner, is supposed to deliver over 3,800 direct jobs to a region suffering from th


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4th highest state unemployment in the country. In addition, dozens of additional suppliers are thought to beconsidering locating facilities in Charleston to service this new plant.

Further validation of Charlestons position in the global supply chain was the recent announcement by TBC TireKingdom to locate its new distribution facility here. The firm has signed a lease to occupy a 1.1 million-square-foobuild-to-suit facility that will be completed by year-end.

Forecast

Rental rates will finally stabilize by the end of the year. Existing well located product will be king.

Transaction activity will increase as some owners will be forced to sell due to inability to refinance andinvestors on the side lines will reenter the game.

Industrial market will bounce back before the other market segments.

Industrial Trends Report Q4 2009


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The Charleston Retail Market Remains Steady

Overall market conditions remained relatively unchanged in the fourth quarter of 2009 compared to third quarter.Vacancy rates in the Charleston MSA crept down slightly 10 basis points to 8.4 percent. While that number is notpositive, it shows that the market is heading in the right direction. However, compared with the fourth quarter of 20where vacancy was at 7.2 percent, it has a long way to go.

The announcement of Boeing selecting North Charleston, SC for its assembly plant for the 787 Dreamliner waswelcome news to the low country and to the entire state of South Carolina. Reports have stated that the directeconomic impact reaches into the billions of dollars and Boeing plans to employ close to 3,800 people.Leasing activity was slow during the third quarter of 2009 however very few vacant spaces were added to the markcompared to the first quarter of 2009. Tenants are beginning to have a positive outlook on the future with thereduction in competition as a result of attrition among retailers. An increase in leasing activity is expected during thfirst quarter of 2010 and throughout 2010 and 2011.

Landlords with existing properties are poised to do well in the upcoming quarters due to the fact there are few retaidevelopments planned that have not already broken ground. Difficulty finding financing will continue to slow the

development of new retail centers allowing landlords with existing availabilities to capture those tenants withexpansion plans.

The sale of retail properties continues to remain slow due to the unavailability of financing and low demand.According to the Charleston Commercial Multiple Listing Service only two retail sales transactions occurred durinthe fourth quarter of 2009 compared to 12 transactions during the same quarter two years ago.

Forecast

Very few (if any) new developments will break ground in 2010 as banks are still struggling with tightenedcredit and the possibility of pending foreclosures.

Tenants that fared well over the last several quarters may thrive with the lack or competing retail businesses

The Charleston market will recover faster than the national average.


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Retail Trends Report Q4 2009

The FDIC is Broke

The FDIC is bankrupt to the tune of a negative 8 billion which is evident in the chart below. This essentially meanwe are not out of the current crisis and there is still work ahead to repair the damage that has been done.

Resolution Trust went through a quarter-trillion in the 1990s, bailing out S&Ls in a crisis that was not nearly soserious and largely didnt involve the broader banking sector. The bailout size gets mixed up between TARP, the Foverpaying for MBS, and the FDIC itself, but there's probably $2 trillion of bad-asset write-downs coming. Of thatamount, the FDIC will have to cover on the order of $400 billion, and that can only come from Congress (whichmeans taxpayers).


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Source: http://www.fdic.gov/about/strategic/corporate/cfo_report_3rdqtr_09/balance.html


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Foreclosures

LAS VEGAS, CAPE CORAL, MERCED FORECLOSURE RATES HIGHEST AMONG MAJOR METRO AREAS IN 2009

Top 20 Cities are from California, Florida, Nevada and Arizona;

Utah, Illinois, Oregon, Idaho Cities Indicate Foreclosure Problem is Spreading

Charleston, SC ranked #64 out of 203 MSAs.IRVINE, Calif. Jan. 28, 2010 RealtyTrac (www.realtytrac.com), the leading online marketplace for foreclosuproperties, today released its Year-End 2009 Metropolitan Foreclosure Market Report, which shows that cities in foSun Belt states accounted for all top 20 foreclosure rates in 2009 among metro areas with a population of 200,000 omore, but foreclosure activity showed signs of spreading into previously insulated areas as unemployment becamemore of a driving factor.

California accounted for nine of the top 20 metro foreclosure rates, followed by Florida with eight, Nevada with twand Arizona with one. The highest-ranked metro area outside of those four states was in Boise City-Nampa, Idaho,which ranked No. 24 with 4.66 percent of its housing units receiving at least one foreclosure notice in 2009.

While it was expected that cities from states with the highest levels of foreclosure activity would top the charts, this evidence that were entering a new wave of foreclosures, driven more by unemployment and economic hardshipthan what weve seen over the past few years, said James J. Saccacio, chief executive officer of RealtyTrac. Arealike Provo, Utah, Fayetteville, Ark., Portland, Ore., and Rockford, Ill., all posted foreclosure rates above the U.S.average in 2009. And markets like Honolulu, Minneapolis and Seattle saw foreclosure activity increase at more thatwice the national pace over the past 12 months although all three of those markets still had 2009 foreclosure ratthat were at or below the U.S. average.

Top 10 metro foreclosure rates

Las Vegas posted the nations highest metro foreclosure rate for the year, with more than 12 percent of its housingunits receiving a foreclosure notice in 2009 more than five times the national average. Las Vegas reported aquarter-over-quarter decline in foreclosure activity in the fourth quarter as did all the other metro areas withforeclosure rates ranking among the top 10 for 2009.

With 11.87 percent of its housing units receiving a foreclosure notice in 2009, Cape Coral-Fort Myers, Fla.,documented the second highest metro foreclosure rate. Other Florida cities in the top 10 were Orlando-Kissimmee No. 7 (8.17 percent), Port St. Lucie at No. 9 (7.58 percent), and Miami-Fort Lauderdale-Pompano Beach at No. 10(7.16 percent).

Merced, Calif., registered the nations third highest metro foreclosure rate, with more than 10 percent of its housingunits receiving a foreclosure notice in 2009. Other California cities in the top 10 were Riverside-San Bernardino-Ontario at No. 4 (8.80 percent), Stockton at No. 5 (8.62 percent), and Modesto at No. 6 (8.53 percent).

The Phoenix-Mesa-Scottsdale metro area in Arizona documented the nations eighth highest metro foreclosure rate2009, with more than 8 percent of its housing units receiving a foreclosure notice during the year.

Report methodology

The RealtyTrac U.S. Foreclosure Market Report provides a count of the total number of properties with at least oneforeclosure filing entered into the RealtyTrac database during the year for metropolitan statistical areas with apopulation of 200,000 or more based on Census bureau estimates. Some foreclosure filings entered into the databas


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during the year may have been recorded in previous years. Data is collected from more than 2,200 countiesnationwide, and those counties account for more than 90 percent of the U.S. population. RealtyTracs reportincorporates documents filed in all three phases of foreclosure: Default Notice of Default (NOD) and Lis Penden(LIS); Auction Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, REO properties (that have been foreclosed on and repurchased by a bank). If more than one foreclosure document ireceived for a property during the year, only the most recent filing is counted in the report.

2009 U.S. Metro Foreclosure Market Data

Rate

Rank Metro NameProperties with

Filings%Housing

Units1/everyX HU

% from2008

% from2007

-- U.S. Total 2,824,674 2.21 45 21.21 119.67

1 Las Vegas-Paradise, NV 94,862 12.04 8 41.12 212.192 Cape Coral-Fort Myers, FL 42,734 11.87 8 4.13 234.123 Merced, CA 8,389 10.10 10 1.18 124.854 Riverside-San Bernardino-Ontario, CA 126,376 8.80 11 12.55 143.905 Stockton, CA 19,540 8.62 12 -7.51 84.226 Modesto, CA 14,812 8.53 12 -0.48 101.097 Orlando-Kissimmee, FL 72,141 8.17 12 54.01 357.86

8 Phoenix-Mesa-Scottsdale, AZ 133,809 8.03 12 36.98 343.129 Port St. Lucie, FL 15,630 7.58 13 21.52 217.55

10 Miami-Fort Lauderdale-Pompano Beach, FL 172,894 7.16 14 43.50 198.2811 Vallejo-Fairfield, CA 10,702 7.14 14 10.08 105.9312 Bakersfield, CA 19,174 7.13 14 18.30 154.7413 Naples-Marco Island, FL 12,251 6.38 16 31.15 339.5814 Reno-Sparks, NV 11,037 6.15 16 62.24 311.0615 Sacramento--Arden-Arcade--Roseville, CA 47,810 5.64 18 13.96 92.3616 Deltona-Daytona Beach-Ormond Beach, FL 13,125 5.32 19 49.25 215.0517 Sarasota-Bradenton-Venice, FL 20,507 5.26 19 18.84 201.5318 Lakeland, FL 14,405 5.19 19 40.52 177.98

19 Fresno, CA 14,974 4.92 20 19.12 141.2820 Salinas, CA 6,729 4.83 21 4.81 166.2821 Palm Bay-Melbourne-Titusville, FL 12,685 4.78 21 23.47 147.8022 Tampa-St. Petersburg-Clearwater, FL 62,719 4.77 21 16.95 161.7123 Visalia-Porterville, CA 6,350 4.69 21 42.92 189.0324 Boise City-Nampa, ID 11,009 4.66 21 103.34* 398.82*25 Ocala, FL 7,295 4.58 22 39.67 275.8426 Jacksonville, FL 26,537 4.53 22 55.87 178.1127 Prescott, AZ 4,561 4.36 23 70.95 400.1128 San Diego-Carlsbad-San Marcos, CA 49,125 4.34 23 9.33 142.9629 Greeley, CO 3,934 4.25 24 6.53 43.16

30 Provo-Orem, UT 5,818 4.11 24 100.76 579.6731 Oxnard-Thousand Oaks-Ventura, CA 11,155 4.09 24 32.45 157.3232 Los Angeles-Long Beach-Santa Ana, CA 175,810 3.99 25 37.06 203.3733 Fayetteville-Springdale-Rogers, AR-MO 6,912 3.77 27 31.66 336.6434 Atlanta-Sandy Springs-Marietta, GA 78,835 3.73 27 17.65 57.1035 Detroit-Warren-Livonia, MI 69,171 3.64 27 0.36 10.1836 Santa Rosa-Petaluma, CA 6,859 3.47 29 30.30 171.5437 San Francisco-Oakland-Fremont, CA 54,083 3.20 31 17.66 137.0838 Chicago-Naperville-Joliet, IL-IN-WI 119,662 3.19 31 33.39 108.8739 San Jose-Sunnyvale-Santa Clara, CA 19,920 3.15 32 27.42 217.86


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40 Flint, MI 5,963 3.02 33 1.71 10.7741 Tucson, AZ 12,798 3.01 33 41.52 201.2742 Santa Barbara-Santa Maria-Goleta, CA 4,432 2.93 34 33.70 150.8243 Salt Lake City, UT 11,413 2.91 34 72.19 208.9644 Pensacola-Ferry Pass-Brent, FL 5,616 2.85 35 34.00 130.8345 Memphis, TN-MS-AR 15,334 2.80 36 -11.08 35.9246 Denver-Aurora, CO 28,962 2.78 36 -12.02 9.0447 Santa Cruz-Watsonville, CA 2,781 2.70 37 30.26 205.60

48Washington-Arlington-Alexandria, DC-VA-MD-WV 56,347 2.64 38 1.70 158.51

49 San Luis Obispo-Paso Robles, CA 2,976 2.57 39 63.07 235.8950 Colorado Springs, CO 6,485 2.54 39 11.12 68.6251 Lansing-East Lansing, MI 4,981 2.54 39 19.22 38.8652 Ogden-Clearfield, UT 4,484 2.53 39 76.67 124.7653 Rockford, IL 3,623 2.52 40 16.23 60.3854 Chico, CA 2,380 2.51 40 50.35 167.7255 Indianapolis-Carmel, IN 18,408 2.47 41 -9.39 26.1656 Grand Rapids-Wyoming, MI 7,829 2.46 41 12.24 60.4357 Toledo, OH 7,359 2.46 41 -7.52 27.8558 Atlantic City, NJ 3,063 2.42 41 34.05 136.8959 Cleveland-Elyria-Mentor, OH 22,430 2.38 42 -19.00 -19.3160 Columbus, OH 17,672 2.29 44 -9.32 28.1861 Portland-Vancouver-Beaverton, OR-WA 20,017 2.26 44 87.35 287.4062 Minneapolis-St. Paul-Bloomington, MN-WI 29,115 2.20 45 57.80 169.6663 Canton-Massillon, OH 3,899 2.20 46 -13.05 -4.5364 Charleston-North Charleston, SC 6,198 2.20 46 77.04* 645.85*65 Holland-Grand Haven, MI 2,136 2.13 47 43.84 119.5366 Salem, OR 3,110 2.13 47 93.17 198.7567 Dayton, OH 7,914 2.08 48 -14.27 1.2868 Gainesville, FL 2,387 2.08 48 81.38 188.2969 Macon, GA 2,056 2.00 50 11.32 52.4170 Fort Collins-Loveland, CO 2,543 2.00 50 19.67 49.2471 Milwaukee-Waukesha-West Allis, WI 12,578 1.92 52 23.54 92.5072 Savannah, GA 2,698 1.87 53 37.86 161.4373 Akron, OH 5,710 1.85 54 -30.86 -19.1874 Ann Arbor, MI 2,661 1.81 55 -4.49 58.7775 Trenton-Ewing, NJ 2,539 1.81 55 4.66 81.3676 Cincinnati-Middletown, OH-KY-IN 16,358 1.80 56 -2.23 24.7777 Green Bay, WI 2,391 1.78 56 126.64* 519.43*78 Saginaw-Saginaw Township North, MI 1,555 1.75 57 -18.80 17.2779 Kansas City, MO-KS 15,067 1.75 57 10.86 49.5980 Youngstown-Warren-Boardman, OH-PA 4,568 1.74 57 -8.69 28.9381 Worcester, MA 5,491 1.74 58 -13.45 78.63

82 Tallahassee, FL 2,737 1.72 58 50.80 134.1383 Kalamazoo-Portage, MI 2,483 1.72 58 5.48 100.0884 Greenville-Mauldin-Easley, SC 4,585 1.71 59 47.90 1,656.70*85 Birmingham-Hoover, AL 8,174 1.64 61 267.21* 245.92*86 Seattle-Tacoma-Bellevue, WA 22,772 1.62 62 43.15 180.2087 New Haven-Milford, CT 5,633 1.61 62 -10.79 48.5988 Little Rock-North Little Rock-Conway, AR 4,748 1.61 62 9.50 77.50

89Myrtle Beach-Conway-North Myrtle Beach,SC 2,707 1.61 62 279.66* 2,137.19*

90 St. Louis, MO-IL 19,465 1.58 63 -10.07 26.08


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91 Chattanooga, TN-GA 3,497 1.53 65 7.07 152.3192 Bridgeport-Stamford-Norwalk, CT 5,361 1.53 65 -8.73 119.7193 Charlotte-Gastonia-Concord, NC-SC 10,732 1.51 66 9.49 13.4094 Dallas-Fort Worth-Arlington, TX 35,520 1.50 67 2.86 -4.5895 Brownsville-Harlingen, TX 2,151 1.50 67 29.27 131.0496 Tulsa, OK 5,843 1.47 68 22.32 65.29

97Nashville-Davidson--Murfreesboro--Franklin,TN 9,253 1.45 69 -1.92 75.48

98Virginia Beach-Norfolk-Newport News, VA-NC 9,794 1.44 70 49.85 363.73

99 Columbia, SC 4,461 1.44 70 64.98 362.76100 Eugene-Springfield, OR 2,143 1.43 70 78.88 179.40101 South Bend-Mishawaka, IN-MI 1,997 1.43 70 -7.25 7.31102 Mobile, AL 2,536 1.42 70 44.83* 16.92*103 Richmond, VA 7,177 1.41 71 39.12 682.66104 Albuquerque, NM 4,970 1.41 71 84.90* 124.38*105 York-Hanover, PA 2,448 1.41 71 50.09 603.45106 Manchester-Nashua, NH 2,270 1.40 71 1.79 301.06107 Fort Wayne, IN 2,486 1.40 72 -24.37 -6.51108 Baltimore-Towson, MD 15,064 1.36 73 27.92 88.72109 San Antonio, TX 9,934 1.31 76 23.66 29.91

110 Boston-Cambridge-Quincy, MA-NH 23,828 1.31 76 -19.43 126.27111 Houston-Sugar Land-Baytown, TX 28,338 1.30 77 -11.39 13.71112 New Orleans-Metairie-Kenner, LA 5,741 1.30 77 31.28 147.88

113Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 31,020 1.30 77 14.75 101.14

114 Olympia, WA 1,300 1.29 77 16.49 111.73115 Boulder, CO 1,596 1.29 77 27.88 42.63116 Reading, PA 2,065 1.29 78 31.36 199.28117 Austin-Round Rock, TX 8,002 1.25 80 39.48 54.60118 Hagerstown-Martinsburg, MD-WV 1,394 1.23 81 56.28 155.78119 Augusta-Richmond County, GA-SC 2,778 1.23 81 12.52 42.17120 Anchorage, AK 1,710 1.22 82 15.54 71.00

121 Providence-New Bedford-Fall River, RI-MA 8,236 1.22 82 -17.24 144.32122 Springfield, MA 3,439 1.21 82 -20.60 74.57123 Greensboro-High Point, NC 3,782 1.21 83 -3.89 22.39124 Bremerton-Silverdale, WA 1,221 1.21 83 19.35 89.01125 Springfield, MO 2,218 1.21 83 14.15 98.21126 Killeen-Temple-Fort Hood, TX 1,748 1.20 83 33.23 146.20127 Montgomery, AL 1,866 1.19 84 112.77* 318.39*128 Honolulu, HI 3,985 1.19 84 141.96 672.29129 Louisville/Jefferson County, KY-IN 6,302 1.15 87 47.07 97.12130 Winston-Salem, NC 2,375 1.15 87 -2.98 23.50

131New York-Northern New Jersey-Long Island,NY-NJ-PA 84,054 1.14 88 7.19 68.09

132 Knoxville, TN 3,517 1.14 88 -0.71 94.52133 Norwich-New London, CT 1,326 1.14 88 -12.24 55.63134 Madison, WI 2,790 1.13 88 118.14* 209.31*135 Barnstable Town, MA 1,749 1.12 89 -16.67 130.43136 Des Moines-West Des Moines, IA 2,643 1.12 89 28.99 74.46137 Hartford-West Hartford-East Hartford, CT 5,502 1.12 89 -12.74 48.78138 Allentown-Bethlehem-Easton, PA-NJ 3,628 1.09 92 52.50* 255.69*139 Columbus, GA-AL 1,394 1.09 92 19.35 84.15140 Appleton, WI 973 1.08 93 82.55* 62.71*


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141 Jackson, MS 2,347 1.07 94 198.98* 240.64*142 Davenport-Moline-Rock Island, IA-IL 1,742 1.06 95 37.06 97.95143 Fort Smith, AR-OK 1,296 1.05 95 24.02 120.78144 Raleigh-Cary, NC 4,300 1.01 99 -3.24 11.28145 Roanoke, VA 1,359 0.97 103 351.50* 1,537.35*146 Poughkeepsie-Newburgh-Middletown, NY 2,394 0.97 103 -15.29 263.28147 Clarksville, TN-KY 1,048 0.96 104 -0.66 70.41148 McAllen-Edinburg-Mission, TX 2,379 0.96 104 20.03 674.92149 Amarillo, TX 907 0.92 108 6.83 29.02

150 Waco, TX 817 0.89 112 2.25 54.15151 Huntsville, AL 1,469 0.88 114 78.06* 1,832.89*152 Oklahoma City, OK 4,582 0.88 114 -7.94 13.25153 Laredo, TX 608 0.88 114 48.29 221.69154 Wichita, KS 2,196 0.85 118 29.33 231.72155 Topeka, KS 860 0.83 120 63.81 246.77156 Pittsburgh, PA 9,220 0.83 120 -7.92 129.13157 Baton Rouge, LA 2,650 0.83 121 139.39* 223.17*158 Corpus Christi, TX 1,383 0.79 127 8.05 54.01159 Springfield, IL 745 0.77 129 -17.86 -3.87160 El Paso, TX 1,905 0.75 133 35.30 51.79

161 Sioux Falls, SD 671 0.73 136 101.50* 11,083.33*162 Lancaster, PA 1,410 0.73 137 21.34 308.70*163 Shreveport-Bossier City, LA 1,227 0.71 140 101.81 361.28164 Yakima, WA 583 0.70 142 24.57 4.86165 Peoria, IL 1,128 0.69 144 -25.00 4.06166 Rochester, NY 2,602 0.59 170 -31.97 -23.65167 Cedar Rapids, IA 631 0.57 176 -4.97 24.21168 Champaign-Urbana, IL 542 0.56 180 26.05 45.31169 Erie, PA 646 0.55 183 15.56 80.45170 Lafayette, LA 604 0.55 183 112.68* 268.29*171 Durham, NC 1,160 0.54 184 -44.39 -27.55

172 Harrisburg-Carlisle, PA 1,253 0.54 184 52.06* 99.21*173 Duluth, MN-WI 733 0.54 187 -10.17 42.61174 Buffalo-Niagara Falls, NY 2,780 0.53 187 -27.64 25.51175 Portland-South Portland-Biddeford, ME 1,334 0.52 191 -1.98 532.23176 Omaha-Council Bluffs, NE-IA 1,827 0.52 192 -30.08 -39.44177 Spartanburg, SC 618 0.51 195 -41.31 69.78178 Binghamton, NY 566 0.51 195 20.17 319.26179 Evansville, IN-KY 811 0.51 197 -32.98 4.11180 Gulfport-Biloxi, MS 539 0.50 199 783.61* 3,070.59*181 Spokane, WA 979 0.50 199 -14.57 -2.97182 Scranton--Wilkes-Barre, PA 1,276 0.49 202 -21.23 85.74

183 Lexington-Fayette, KY 889 0.44 228 -10.02 91.59184 Wilmington, NC 800 0.41 245 -32.09 19.94185 Beaumont-Port Arthur, TX 649 0.40 248 -19.48 -33.64186 Longview, TX 335 0.40 253 90.34 1,016.67187 Kingsport-Bristol-Bristol, TN-VA 537 0.37 271 9.82 208.62188 Huntington-Ashland, WV-KY-OH 484 0.37 273 56.13 146.94189 Hickory-Lenoir-Morganton, NC 527 0.34 298 -43.88 -40.99190 Albany-Schenectady-Troy, NY 1,220 0.32 311 -49.50 26.29191 Lubbock, TX 378 0.32 312 -7.35 800.00192 Lynchburg, VA 325 0.30 332 269.32* 884.85*


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193 Houma-Bayou Cane-Thibodaux, LA 225 0.28 363 378.72* 650.00*194 Kennewick-Richland-Pasco, WA 230 0.27 372 -61.67 -64.72195 Asheville, NC 455 0.23 439 -39.66 -33.19196 Tuscaloosa, AL 212 0.22 448 130.43* 631.03*197 College Station-Bryan, TX 167 0.19 519 7.05 -10.22198 Fayetteville, NC 289 0.19 522 -76.47 -79.87199 Syracuse, NY 526 0.18 543 -48.83 44.11200 Charleston, WV 226 0.16 643 43.04 58.04201 Lincoln, NE 140 0.11 880 -80.11 -80.23

202 Utica-Rome, NY 70 0.05 1,943 -51.39 0.00203 Burlington-South Burlington, VT 45 0.05 1,972 9.76 246.15

*Actual increase may not be as high due to data collection changes or improvements

**Collection of records classified as NOD began in August 2009 because of change in state law

Collection of some records previously classified as NOD in this MSA was discontinued starting in January 2009

Collection of some records previously classified as NOD in this MSA was discontinued starting in September 2008

About RealtyTrac Inc.

RealtyTrac (www.realtytrac.com

) is the leading online marketplace of foreclosure properties, with more than 1.5million default, auction and bank-owned listings from over 2,200 U.S. counties, along with detailed property, loanand home sales data. Hosting more than 3 million unique monthly visitors, RealtyTrac provides innovativetechnology solutions and practical education resources to facilitate buying, selling and investing in real estate.RealtyTracs foreclosure data has also been used by the Federal Reserve, FBI, U.S. Senate Joint Economic Commitand Banking Committee, U.S. Treasury Department, and numerous state housing and banking departments to helpevaluate foreclosure trends and address policy issues related to foreclosures.

No Fear in the New Year

By Jon Gordon (www.jongordon.com)

I enjoy this website and the newsletters Jon Gordon periodically sends out. I can also relate to this story after som

similar crap happened to me in 2006 after telling the truth in the newspaper about where the economy and housingmarket was heading. Enjoy.

Nine years ago I looked out into the Atlantic Ocean on New Years Day with fear in my heart and uncertainty in mlife. I had been fired from a "dot.com" company two weeks earlier with only two weeks of severance, no insurance my two young children and only two months of savings in the bank. My wife and I had just invested every dollar whad and even took out a second mortgage on our home and $20,000 on a credit card to open what would be the firstMoe's Southwest Grill in Florida. The restaurant was set to open January 13th and we had no earthly idea how wewould pay our home mortgage and other bills since I planned on keeping my salary and job while my managers buthe restaurant business. Now, it was New Years Day and I had no job, no salary and a restaurant opening that at wowould fail miserably or at best take a year to be profitable.


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I thought of all this as I prepared to jump into the icy cold water-to take a symbolic plunge that this would be the yeofNO FEAR. Regardless of the circumstances I was facing, this would be the year where I would trust and go for This would be the year I would be bold in actions and faith and humble in spirit. No longer could I do it alone. Nowneeded a miracle and I decided to act as if my future depended on me and pray like it depended on God.

By jumping into the ocean I was declaring that no longer will I allow fear to cut off the flow of abundant and positienergy in my life. No longer will I allow fear to paralyze me. Instead of fear I would trust.

Now, nine years later, as I write this I am preparing to jump into the ocean once again on New Years Day. It has

become my yearly ritual - to remind myself to follow my passion, live life to the fullest, surrender and to stay

one step ahead of the fear that hovers around me.

And as I take my leap into the ocean I want to invite you to jump in with me. Perhaps not in the ocean but in thedepths of your mind. This jump doesn't necessarily require water but rather a leap of faith in your belief system andshift in your mindset. The antidote to fear is trust and it is only a thought away.

No one is going to push you over the chasm of struggle to the life that you want. God will nudge you but you musttake the leap. You must make this jump in your mind and then with your actions. You must make this jump with tru

determination and faith. After all, they don't call it a leap of fear. They call it a "leap of faith" for a reason.

You will always feel fear. Everyone will. But your trust must be bigger than your fear.The bigger your trust tsmaller your fear becomes. And the more you trust the more you become a conduit for miracles . I know. Aconsulting project presented itself out the blue and we were able to pay our mortgage. A check came in the mail, thright opportunities came our way and somehow, some way my family and I were carried.

I know that 2009 was not a great year for many people but I believe New Years Day represents a fresh start and itpresents a new opportunity to create the life you were born to live. All you have to do is jump in with all that you aand all that you wish to become.

Here's to an amazing 2010!

What the Deflationists Are Missing

I have written a ton on whether we will see inflation or deflation creep its way into our economy in the future. Her

are two different perspectives by very smart individuals.

An interesting article by Ambrose Evans-Pritchard came my way the other morning. Its worth a read, if for no othereason than that he paints an appropriately dark picture of the current state of the U.S. economy. You can read it he

http://tinyurl.com/y93go5c

While I very much share Mr. Evans-Pritchards view that the global economy is far from out of the woods, our viewdiverge in that he sees devastating deflation speeding our way down the tunnel. Readers of any duration know that here at Casey Research see devastating inflation.

While we could both be right, with deflation first and inflation later, Im not so convinced.

For starters, there is already a massive inflation operation being run by the Fed, evidenced in a historic spike in themonetary base over the last two years.


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And the Obama administration is far from done.

The Democrats reinvigorated focus on jobs the single most important factor in this Novembers elections willsoon translate into a flurry of new initiatives designed to put people back to work, most of it funded at taxpayer

expense.

To believe in the deflationary case would seem to require believing that Obama and his minions are ready to forgoany further political aspirations by collectively putting their feet up on their desks for the balance of their sole term the apex of global power.

Given Obamas meteoric rise to power evidence that he possesses a certain drive and competence in the game ofpolitics that seems highly unlikely. And so it seems safe to assume well soon witness a redoubling of his efforts keep interest rates down to make it easy and cheap for strapped consumers and businesses to keep borrowing ato otherwise flood the economy with money.

In a deflation, the value of the money increases which is actually a pretty desirable thing, if you ask me. Inflationby contrast, means that pretty much everything you own in the local currency steadily loses value forcing investointo a perpetual game of catch-up. Its hard for me to calculate how the government can dramatically increase themoney supply and yet have each of the currency units become increasingly more valuable over a sustained period otime.

Arguing against that point, Evans-Pritchard makes the case that the U.S. government is making much the samemistakes that were made in the first part of the Great Depression, i.e., being overly tight with the money. And that tvelocity of money is falling.

There are a couple of key differences between now and then, however. First, the Fed didnt actually know what the

money supply was back then. They literally had no monitoring tools in place, mostly because no one thought it wasimportant enough to track. Second, they didnt have fiat monetary powers. Today, neither of those factors apply.

Everyone knows what the money supply of the U.S. is and watches it keenly. Including our foreign creditors. And sit is not surprising to see the Fed publicly talking about tightening up a bit. But its just talk at this point.

With the economy continuing to struggle, the only reasonable assumption that can be made is that the Fed incahoots with the entirely politicized Treasury will keep shoveling money onto the economic embers, and continuedo so until economic activity again flares up.


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That will, of course, require increasing the quantity of money that actually makes it into the economy but thatshould be childs play for Team Obama with direct hiring and spending, continuing to buy mortgages and otherloans to suppress interest rates, forgiving the bad debts of banks, or changing accounting rules so that banks canpostpone reckoning day. And thats just for starters, all of it packaged nicely in the name of the public good.

And once the money starts to flow, there willbe a pick-up in economic activity, which will beget yet more moneymoving around. At first, this money will be a palliative for the economic worries, but then comes the inflation asmall trade-off, the politicians will decide, if it buys them enough of a recovery to make it through the Novemberelections and get the president the second term you know he so strongly desires.

There is something else that I think the deflationists are missing, and that has to do with confidence in the currencythe U.S.s many creditors come to agree with our point of view that the dollar is being led to the altar as a sacrificlamb to political expediency then theyll further reduce their purchases of our Treasuries and start trading theirdollars for stronger currencies and tangible assets, including precious metals.

At that point, interest rates will have to begin rising to attract new buyers. As you can see in the chart of long-termTreasury bond rates, a significant move off recent lows has already occurred, and rates are looking poised for abreakout to the upside.

Of course, the higher those rates ratchet, thmore it will cost the U.S. government to carry its massive debt. While rising rates will continue to drive demand to short end, suppressing those rates, in time the sheer quantity of paper that will have to be rolled over, and the risingtide of inflation, assures that short-term rates will have to rise too. At that point, the train begins to leave the track.

As the train wreck approaches, the government is going to have to find creative new ways to fund its social contracwith impatient voters. Perhaps, for instance, pegging everyday fines and assessments to the amount of income aperson makes. Executed brashly, such policies might even allow the government to charge a person of means, say,$290,000 for a speeding violation.

I know what youre thinking: Cmon, lets be realistic thatcould never happen. Think again

Source:www.caseyresearch.com


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DisclaimerThe research done to gather the data in The Charleston Market Report involves examining thousands of listings. Wthis much data inaccuracies will occur. Care is taken in gathering and processing the data and information within threport is deemed reliable. IT IS NOT GUARANTEED. The real estate market is cyclical and will have its ups anddowns. Past performance cannot determine future performance. The purpose of the Charleston Market Report is toeducate you on current and consistent market conditions by reporting leading market indicators with the support oftraditional real estate data.

This information is offered with the understanding that the author is not engaged in rendering legal, tax or otherprofessional services. If legal, tax or other expert assistance is required, the services of a competent professional arerecommended. This is a personal newsletter reflecting the opinions of its author. It is not a production of my

employer. Statements on this site do not represent the views or policies of anyone other than myself.

Investing in real estate is not a get-rich-quick scheme nor is there any guarantee you will make a profit. Every efforhas been made to make this report as complete and accurate as possible. However, there may be mistakes. Thereforthis report should be used only as a general guide and not as the ultimate source for making money in real estate.

january 2010 charleston market report

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