Housing Market

Our latest National Housing Market Report is out. This one examines data through end of July 2008. You can download the PDF here.

Here's the press release:

Real Estate Report: National Housing Prices Down by 0.8% in July

Report measures current real estate data in major markets around the country. Data shows Las Vegas continuing to lead as the weakest US housing market with real estate prices down another 4% in July. Current real estate data shows some summertime price stability in Midwestern markets Detroit, Cleveland, Indianapolis, and Minneapolis

MOUNTAIN VIEW, CA August 5, 2008 - The Altos 10-City Composite Price Index showed a decline in asking prices of 0.8% in July and 1.3% for the past three months. Prices of properties listed for sale fell in 13 of 26 major markets according to the Real-Time Real Estate Report, published by Altos Research, the premier source for real-time real estate data, and market analysis consultancy Real IQ.

Asking prices fell at the fastest rate in Las Vegas - down 4.0% during July - and 7.5% over the most recent three-month period for an annualized rate of 30%. Listing prices rose at the fastest rate in Detroit - up 4.8% in July - followed by Cleveland where prices were up 2.7%. Prices were also up slightly in the Midwestern markets of Indianapolis and Minneapolis.

"While prices continue to fall in coastal and Western markets, prices appear to have stabilized in Midwestern markets that were previously declining," said Michael Simonsen, CEO and co-founder of Altos Research. "The real test will come in the fall when markets typically experience a seasonal slowdown which will be exacerbated by high job losses and foreclosures."

Asking prices fell at the fastest rate in Las Vegas - down 4.0% during July - and 7.5% over the most recent three-month period for an annualized rate of 30%. Listing prices rose at the fastest rate in Detroit - up 4.8% in July - followed by Cleveland where prices were up 2.7%. Prices were also up slightly in the Midwestern markets of Indianapolis and Minneapolis.

Listed property inventories declined with the 10-City Composite markets showing a decrease of 2.0% in July. Inventory rose in just 6 of 26 markets with the biggest decreases occurring in Detroit and Cleveland.

"Broadly declining inventory is a positive sign in the near-term, particularly for the Midwestern markets which all showed inventory declines," said Stephen Bedikian, partner and research director for Real IQ.

For the Altos 10-City Composite, the average days on market was 111, a slight increase from 109 in June. Thirteen of 26 markets had an average days-on-market of 100 or more. By far, the market with the slowest rate of inventory turnover was Miami at an average of 156 days-on-market, nearly a full month more than the next slowest market - Tampa. Austin led all markets with the fastest rate of inventory turnover at an average of 78 days-on-market.

Data in the Real-Time Housing Market Report is based on analysis of over one million properties currently listed for sale in 31 metropolitan markets across the country. The report is the most timely source of housing market data on current market activity.

The report examines housing pricing, inventory levels and market conditions in 31 major U.S. metropolitan statistical areas (MSAs): Atlanta, Austin, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Houston, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa, and Washington, DC. The Real-Time Real Estate Report is released every month.

MacroMarkets released the monthly Case Shiller Index today. Case Shiller tracks repeat sales of single family homes. Like most real estate data (except ours of course) the Case Shiller lags the actual market by several months. This is data for March 2008.

CSI March 07 CSI Feb 08 CSI March 08 Feb 08 v Mar 08 Mar 07 v Mar 08 Boston 168.52 160.31 158.54 -1.10% -5.90% Chicago 167.04 153.33 150.35 -1.94% -10.00% Denver 134.20 127.50 127.43 -0.05% -5.00% Las Vegas 228.55 177.18 169.31 -4.44% -25.90% Los Angeles 264.58 214.83 207.11 -3.59% -21.70% Miami 276.89 218.74 208.88 -4.51% -24.60% New York 212.39 198.46 196.58 -0.95% -7.40% San Diego 233.28 190.34 185.44 -2.57% -20.50% San Francisco 211.09 174.54 168.38 -3.53% -20.20% Washington DC 237.14 207.05 202.34 -2.27% -14.70% 10-City Composite 219.67 190.58 186.06 -2.37% -15.30%

So what does the national real estate market look like right now? Here's the Altos 10-City Composite as of the end of May 2008. You'll be seeing this data in the Case Shiller Index in three months.

As a bonus, let's look at the Denver chart. The Denver metro actually defied the national carnage until October of last year. Case Shiller picked that up too and you can see that Denver is the smallest of the declines in the sample. We've actually seen a small uptick in Denver pricing this spring. (Don't be fooled by the scale on this chart. With the tight scale, it looks like a rocket, but it's only a few thousand dollars difference.)

See also:

• This post about trading real estate derivatives on the Case Shiller Index and our real time data.
• To inquire about our Weekly National Market Report: email us

Back in New York this week for the Real Estate Derivatives World shindig hosted by Terrapinn. I know. Paaartay!

It's actually exciting for us as we're beta testing new data products we've designed especially for the real estate derivatives traders. Here's a quick glimpse of the Altos 25-City Composite Price, which tracks the Radar Logic 25 markets and the Altos 10-City Composite Price, which tracks housing markets covered with the Case Shiller national Index.

Full product launch and details soon. If you're interested in the housing futures markets, we should be talking.

Link: Altos Real Estate Derivatives Data

The New York Times last week carried a story on the tale of two housing markets.

AUSTIN, Tex. — The real estate market these days is a tale of two Americas, and one of them is not doing too badly.

In the America of big-city housing markets, especially on the coasts and in the struggling industrial Midwest, the huge run-up in values in recent years has given way to big drops in prices and sales volume. Millions of people owe more than their houses are worth.

But in the other America, specifically in cities like Austin; Grand Forks, N.D.; Yakima, Wash.; and Salem, Ore., the available evidence suggests the real estate market is holding up. Prices there never boomed as crazily as they did in the big cities, and now, even though volume is down almost everywhere, prices in many of these towns are firm or rising.

We'll leave aside the fact falling prices in the struggling industrial towns and the falling prices on the coast are barely related to each other and focus instead on the last statement.

Are home prices in Austin, Texas indeed holding up? Let's look:

From our perspective, Austin is indeed holding up better than some of the most bubbly markets, like Phoenix and San Diego.

Keep in mind though that in every market, the answer is: it depends. It depends on your price point, it depends on your neighborhood. In fact if we dive into Austin a little deeper, we find where that even though the prices haven't adjusted deeply, we can see where market demand is indeed cooling.

Days on market is climbing steadily across all price points. Despite a seasonal improvement in market time, The high end of Austin is on the market for a pretty long time right now. Buyers are in no hurry.

Furthermore, in Austin, when you look at the price quartiles, you can see the top of the market is squeezing but the bottom remains reasonably solid. This often implies, as the Times suggests, that the underlying economy is strong, immigration is positive, and people aren't so worried about their jobs. Here's the chart of home prices in Austin, by quartile. Note the slight squeeze at the top end of the market.

So I'll conclude with a cautious agreement with the Times. Yes indeed there are markets so far escaping major carnage. Many of these markets didn't have the incredible upside in the past few years, so that stands to reason. Finally though, nearly all markets are showing signs of weakness. The key worry for all these markets is that they're following the economy, not leading it. If a recession evolves into full bloom, I don't see how anyone is spared.

Links:

Austin Real Estate Report

San Diego Real Estate Report

Phoenix Real Estate Report

In the Dallas real estate market? D Magazine's Dallas Dirt blog is a great read. Among the insidery local rumors and excellent house porn, Candy Evans has been tapping our AltosCharts lately for some insightful interpretation of the housing market trends at the local level for all y'all Texans.

[aside: as a snobby Californian, this is what I instinctively think of when I think Dallas homes. But this makes me want to move there.]

Link: Our free Dallas Real Estate Research

Last week we published the February editition of our National Housing Market report [PDF download]. I was traveling and forgot to add it to the blog, so here it is. We've expanded the coverage this month and added a few more cities ebyond the initial 20 covered by the Case Shiller Index. We'll add a few more important cities in the upcoming versions of the reports too.

Here are the highlights from this month's report.

• Listing prices declined in 19 of 22 markets during January. Prices only increased in the New York metro area during January and were flat in Dallas and Phoenix.

• The largest monthly decline of 3.6% occurred in San Francisco. Over the three month period, listing prices in San Francisco have fallen by 6.1% from $708,551 to $665,100. The other California markets of Los Angeles and San Diego logged declines of more than 2% for the month of January.

• Property inventories declined in most markets except in the Northwestern markets of Seattle and Portland. Inventories tightened sharply in the Midwestern markets of Cleveland and Detroit with decreases of 10.4% and 5.4% respectively during January. Seasonal declines in listing inventories are typical during the winter months.

• Markets with the longest time-on-market are Miami and Minneapolis at an average of 144 days-on-market. Miami’s days-on-market only increased slightly from the previous month’s 143 days while Minneapolis jumped over 5% from 136 to 144 days. Sixteen of 22 markets had an average days-on-market of over 100.

• Denver led all markets with the fastest rate of inventory turnover at 61 days, followed closely by Dallas and San Diego at 80 days. The sharp decrease in Denver’s days-on-market indicator – almost 39% during the past three months – coupled with an inventory reduction of over 11% during the same period, should be a positive for listing prices in the coming spring selling season.

Last month we started publishing the Real-Time National Housing Market Report with Steve at Real IQ. The January 2008 edition was published yesterday. You can download the full report here.

The report was picked up today morning by the Dallas Morning News. Dallas is notable because we've watched demand stay at less-bad-than-most.

Here's the press release that accompanied this months report.

HOUSING PRICES CONTINUED TO DECLINE IN DECEMBER

Time-on-Market Increased as Housing Market Demand Falls Faster than Supply

MOUNTAIN VIEW, CA – January 9, 2008 – Prices of properties listed for-sale fell in 16 of 20 major markets according to the Real-Time Housing Market Report, jointly published by Altos Research, the premier source for real-time real-estate market research, and market analysis consultancy Real IQ™.

Prices fell at the fastest rate in San Francisco, down 4.6% during the 4th quarter. Prices also fell by more than three percent in the Las Vegas, San Diego, Los Angeles and Detroit markets during the most recent three month period.

Data in the Real-Time National Housing Market Report is based on analysis of over one million properties currently listed for-sale in 20 metropolitan markets across the country. The report is the most timelysource of housing market data on current market activity.

The report also found that the time-on-market increased in virtually all markets. Miami experienced the longest time-on-market span with an average days-on-market of 143 in December. Minneapolis and Detroit both had the second highest average days-on-market at 136.

“Sellers continue to adjust their price expectations downward but not quickly enough to keep pace with declining demand,” said Stephen Bedikian, partner and research director for Real IQ. “Until we see
declines in both inventory levels and days-on-market, we won’t have any confidence that supply and demand are balancing out.”

For-sale listed property inventories declined in most markets during the past three months except in the Florida markets of Tampa and Miami which posted inventory increases of 10.5% and 4.0% respectively.

Inventories declined dramatically in Boston with a decrease of 21.7%. Inventory also fell more than 15% in Minneapolis, Denver and Seattle. “Declining inventory levels are essential to a recovery in the housing market,” said Michael Simonsen CEO and co-founder of Altos Research. “However, if the economy continues to slow or enters a recession, we may see inventories balloon again in the Spring and downward pricing pressure on sellers will intensify.”

The report examines housing pricing, inventory levels and market conditions in 20 major U.S. metropolitan statistical areas (MSAs): Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa, and Washington, DC. The first report was published December 7, 2007 and will be released every month.

We've had some really nice attention in the press and blogosphere the past week or so. Here's a quick summary so you can see what people are saying about Altos.

O'Reilly Radar: Tim O'Reilly highlights our real-time data products for Wall Street and the housing derivatives markets. I'll be presenting on this topic at the O'Reilly-sponsored Money:Tech conference in New York February 6-8.

In SFGate.com / San Francisco Chronicle Carol Llyod finds her friends in the market for a home in San Francisco - everyone is surprised how hot the market is. I love this kind of analysis. The data reveal so much more than the headlines can capture. Carol - have your friends email me and I'll set them up with the neighborhood level and insights that we do in our detail reporting.

Dustin thinks we're going to get acquired. And Robbie gives us a nice plug on Rain City Guide.

The bloggers at Redfin have been especially prolific lately. I like the approach Redfin uses for their blogging work. They've got a team of bloggers, each with an intelligent voice, tackling the local real estate markets they're in. None of it is too controversial, but it's solid content, targeted well for their customers.

Altos Links:

National Data for the Housing Derivatives and Case Shiller markets

San Francisco housing market

When we started this company, one of the things we envisioned was creating a National Housing Market Report -- one that would be a right-now alternative to the laggard OFHEO reports and even the Case Shiller releases. Well today is the day, folks. The Altos Research Real IQ National Housing Market Report is here!

In it we look at 20 major metro markets, publish some key stats about pricing and supply and demand trends and we draw some conclusions about what's happening out there. The U.S. metropolitan statistical areas (MSAs) covered in the report include: Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa, and Washington, DC.

We're working in conjunction with Stephen Bedekian from Real IQ. Stephen is an industry leader, writer, and consultant and he helped bring this project together. This being the first issue, it took us a few extra days of editing. In future months, we'll be aiming to publish the report just a few days after month's end.

The latest version of the report is available for download on our financial institutions page. Or you can download the PDF here.

The Press Release headline this month isn't any shocking news - Surprise! Prices are still under pressure! But we're laying the foundation here to be the first to identify the eventual bottom of the market. From the press release:

REPORT: HOUSING PRICES
CONTINUE DECLINE IN NOVEMBER

Time-on-Market
Increased as Housing Market Demand Falls Faster than Supply

MOUNTAIN VIEW, CA
- December 13, 2007 – The listing prices on properties in 18 of 20 major markets across the U.S. fell during the month of November. San Diego experienced the steepest decline with listing prices falling 5.8 percent as the recent wildfires exacted a toll on demand. This information was presented in the newly-launched Real-Time National Housing Market Report*, published by Altos Research, the premier source for real-time, real-estate market research and Real IQ™, a market analysis consultancy.

The Real-Time National Housing Market Report is based on an analysis of data from over one million properties currently listed for sale in 20 metropolitan markets across the country and represents the most timely source of housing market data on current market activity.

“Real estate information tends to be highly latent and subject to a lot of revisions,” said Michael Simonsen CEO and co-founder of Altos Research. “It takes several months before the S&P/Case Shiller Index or the
OFHEO data is released for a given month. When you're making investment decisions or trading derivatives these lag times are simply killers.”

Another key trend noted in the new report was an increase in the time-on-market duration for homes on sale in virtually all markets. Miami experienced the longest time-on-market span with an average days-on-market of 137 in November. Minneapolis had the second highest average days-on-market at 125.

Listed property inventory levels displayed seasonal declines in many markets with the exception of Las Vegas where for-sale property listings increased 6.6% over the past three month. “While inventory levels declined in most major markets, the decline in supply could not keep pace with the rapid fall in demand,” said Stephen Bedikian, partner and research director for Real IQ. “We expect time-on-market will continue to lengthen and apply pressure on homeowner pricing decisions until buyers regain confidence and demand levels off. So far that point is not in sight.”

*The first report was published December 7, 2007 and will be released every month. Report downloads are available from Altos Research.

If you've watched the Case Shiller Index numbers this year, you might have noticed that Denver, Colorado is the lone market still registering positive housing price gains for 2007. (BTW: if you prefer Uncle Sam's OFHEO numbers, you'll have just this week discovered that the US housing market is under pressure.)

We've been watching Denver too, because that a market that's been bucking the trend. We recently opened our subscription service for real estate professionals in Denver, as well as home buyers and sellers there.

Here's what the median price looks like for the Denver MSA, in a rolling average over the past several months.

You can see from the chart, home prices in the Denver area have so far missed the bursting that's hitting most of the rest of the country. Up just fractionally, but steadily this year.

Why the resilience? A couple reasons probably: 1) Colorado real estate didn't have as much upside in the last few years to begin with. 2) The economy and investment levels are still strong. 3) Denver is just a little bit of a laggard economically behind the coastal cities. That implies the burst simply hasn't hit Denver yet.

Looking at the rolling average smooths out weekly noise, so the trend is easier to see. But using a three month rolling average, it'll lag the real-time market a bit. The next chart is the weekly sample.

In this image we're just starting to see the weeklies break below the 90-day rolling average. Too early to make a big bet, perhaps, but a noticeable change nonetheless.

Plus, if you look at the city of Denver the change is much more pronounced. Zowie! That's quite a drop. (caveat: don't discount the seasonal impact that's surely happening in some capacity here.)

Keep an eye on Denver. I'll be fascinated to see if that town is able to demonstrate real staying power, or if it's just a few months behind.

Links:

Free research for the Denver housing market

Free research for the Aurora housing market

etc.

This post is written by our client John Keith a real estate broker in Boston, Massachusetts. We first met John when Scott sat next to him at the opening keynote of the Inman Connect conference in San Francisco this summer. At the time, we were just opening up our coverage in Boston and John jumped at the chance to work with us. We're glad he did.

John's blog is excellent. He's been very effective integrating the Altos market analytics information into his posts. So we asked him to write a post for us about how he uses the Altos Research services in his business, his blog, and with his clients.

John also generously included an endorsement, which I'm more than happy to include here. Note: I've done a tiny little bit of editing, and I added the images. Everythig else comes directly from John. Enjoy:

About John Keith

I am a Boston real estate agent. I have a blog devoted to Boston Real Estate, at bostonreb.com.

My blog has a main page with daily updates of news and information about the Boston real estate market. In addition, on this page, visitors can search through all the condos and single-family homes listed for sale in our local Multiple Listing Service. Also, visitors may click through to pages of information I have written that are of specific interest to buyers, sellers, investors, etc.

I signed-up as an Altos Research client several months ago. I thought it would be a great way to provide another much-needed service to my site's visitors. More importantly, I figured it would make me be seen as an "expert" on the Boston real estate market. Therefore, visitors would be more likely to inquire about using me as their real estate agent, increasing my business (and my revenue).

After being an Altos Research client for several months, I have seen very positive results and can say I'm very happy I have made the investment.

How I Leverage Altos Research in My Blog and Business
Now that I have access to them, I've tried a couple different ways of using the reports and graphs.

Right now, I have it set up so that there is one main graph on my blog's main page, for the city of Boston as a whole. It updates automatically, once each week's reports are finalized at Altos (every Monday evening).

I also have a link on my blog's main page directing visitors to another page where they can download any of the Altos weekly market reports (I subscribe to eleven Boston ZIP codes).

This past week, I added separate neighborhood-specific pages to my blog. [ed: here's The Fenway, for example.] These pages have blog entries devoted to each major Boston neighborhood. The idea is, visitors to my site will start on the main blog page, then click through to read more about specific neighborhoods.

I have an AltosChart on each of these neighborhood- specific pages, set up to show market data just for that neighborhood, by ZIP code. Probably some time in the near future, I'll be adding a link on these pages to each neighborhood's Altos market report (using each neighborhood's ZIP code).

I'm also about to set up an MLS search, preset by neighborhood, showing just listings in that specific neighborhood.

I expect this to have great results. The majority of visitors will continue to begin their visit on my main page, but then they will want to visit the page focused on just their neighborhood(s) of interest. By having the MLS search and AltosCharts on each neighborhood's page, I'm providing visitors with useful information.

How Strong the Call-To-Action?
It's an open question as to how much information and data to provide to everyone - whether or not to have the Altos Research reports available to everyone, or whether I should force visitors to contact me for access to the reports (a "call to action", it's called).

Certainly, by making people contact me, I'm creating a two-way relationship - it encourages communication, which, hopefully, would lead to new business.

However, I also believe in making as much information as possible available to as many people as possible.

Most people visit my website multiple times, over a period of days, weeks, and/or months prior to contacting me to be their real estate agent. They already know me quite well from my blog, before they make an inquiry. So, there may be little to lose by having the reports readily available to the casual visitor.

Each week, I upload all the updated reports (by neighborhood and city-wide) to my servers. I receive reports for eleven ZIP codes, which covers the majority of the "downtown Boston" market.

There are actually 29 ZIP codes in the city of Boston, and I've considered getting reports for each of them. I would like to be "complete", even though I don't handle real estate sales in the other neighborhoods. This would increase traffic to my site, which would increase my exposure to potential clients and make me seen as the expert in ALL of Boston.

Measuring My Return on Investment
I think the cost of the reports is easily justified. First, I enjoy reading the reports, myself. It presents data in ways I don't collect, myself. As well, it provides useful information to my existing clients. And, it provides useful information to potential clients.

Again, it makes me become known as an "expert" in Boston real estate - as the primary source for data and information on the Boston real estate market.

As of now, only a couple of other Boston real estate agents offer the Altos Research reports, which is fine by me, but I expect more agents to begin offering the reports to clients, which will increase competition. I'm glad I'm doing it, first.

A paper in the Journal of Emergency Management came across my desk today. Measuring the Efficacy of a Wildfire Education Program in Colorado Springs

Timely, considering the state of Southern California right now and of Tahoe earlier this summer.

The program sounds like a fascinating way to increase awareness of the fire risk (awareness being the key factor in reducing the controllable variables). Preparation for disasters like this is of course subject to the Black Swan effect:

...most people are uncomfortable making risk estimates of uncertain events such as wild fires... They may think, "There has never been a wildfire where I live, so it is very unlikely that there will be one in the future."

So what can public policy do to motivate people to better manage their exposure? In Colorado Springs, they evaluated every parcel, 35,000 of them, and gave each a rating. Now the city can tell me I have a very-high-risk property and get me thinking about trimming the pine boughs back from my cedar-shingle roof. Then they publish that information. When I go to buy a home in the area, I can factor that into my purchase. That's positive.

But is it effective? And how do we measure changes in risk perceptions? The authors of the paper took a novel approach.

Rather than simply measuring changes in risk perceptions, we examine the effect of the program on the housing market. This provides a more complete picture of how the CSFD approach to education affects homeowner attitudes toward wildfire risk.

A market-based approach. Nice. Incent homeowners to fix the easy stuff that makes up most of the wildfire risk. Very cool.

And the results?

Perhaps the most striking result is that pre-assessment home prices and wildfire risk were positively correlated. In other words, houses with higher wildfire risk also had higher sales prices. The reason for this is [otherwise desirable features also increase fire risk]...building on a ridge may increase the wildfire risk, it also provides better views.

In contrast, post-assessment there is no such correlation. Post-assessment wood roofs and wood siding now have a negative impact on price. As a result, people are migrating to safer building materials.

Good stuff. Too bad it's a lesson a bit too late for the disasters this week. We'll keep an eye on the data to see if we can discern any immediate impact on home prices in San Diego from the fires. Will report back soon.

The Journal today shows off its peerless graphic design team with a fantastic illustration of the past three years of subprime mortgage lending.

The accompanying article reveals little that the bubblistas haven't been crowing about for years, but a few bits bear repeating here. The first reiterates my view that the housing market correction has many years before recovery.

The data also show that some of the worst excesses of the subprime binge continued well into 2006, suggesting that the pain could last through next year and beyond, especially if housing prices remain sluggish. Some borrowers may not run into trouble for years.

[As an aside, am I the only one who noticed how many of this year's Inc. Magazine 500 fastest growing companies were mortgage lenders?]

The second gets to a less commonly asked question about the whole subprime blowup--who really is the "victim" here? Does anyone really deserved to be bailed out by the feds?

Last September, Darla Ball, a printer and copier saleswoman, purchased a $460,000 home in Las Vegas using an adjustable-rate subprime loan with an initial rate of 8.2%. At the time, she says, she expected to refinance before her interest rate resets to 14% next year, which will raise her monthly payments to $8,000 from $3,700. But in the past year, she says, prices of comparable homes in her subdivision have fallen to $310,000, which means she would not qualify for a new $460,000 mortgage, unless home values go back up to that level, an unlikely scenario. She says she has stopped paying her mortgage and is trying to negotiate with her lender. "I'm going to lose my home anyway," she says, "so why pay?"

Let me get this straight, Darla. You knowingly took a deal from a lender willing to front you the cash, despite your already bad credit, with super low payments to get yourself into your dream home. Now you're living there and NOT EVEN PAYING? Bad luck, sure. A risky investment that didn't pay off, that happens. I'm sure you didn't at the time have a deep appreciation for the highly leveraged scenario you put yourself in. God knows we've all made risky investment decisions that in retrospect were crazy-stupid. (As they say, experience is not something we get until just after we need it.)

What riles me is that this is a perfectly legal deal with two parties taking risk in exchange for an enticing return. Is this really a situation that deserves to be bailed out? So-called predatory lending gets a lot of headlines. No doubt fraud has been comitted in many cases. It's just a bit hard to must a ton of sympathy for any of the participants. [Another aside: Make sure you read Michael Lewis' hilarious satire of this position on Bloomberg.]