The Peacock Syndrome

It’s happening again!  Real Estate Agents and Brokers are starting to walk with their heads up, chests out, and proclaiming the market is coming back. Well, there’s always something behind the glorious display of a peacock’s feathers.  What’s behind the feathers of the Real Estate Peacock ain’t pretty at all right now.

There’s a second wave of mortgages coming that hasn’t reset yet.

The 2nd Wave is about to start.

From this chart you can see that we have another 2.5 years of Alt-A and Option Arms resetting.  Looking closely, these resets are even more voluminous than the subprime (which are still resetting along with all the other mortgage flavors).

I’m sure everyone has forgotten the Whitney Tilson piece that 60 Minutes did this past December as well:

Next we have the Commercial Real Estate Market wave which, IMHO, is being ignored because we’ve had enough bad news to last us a lifetime.  However, Deutsche Bank has an excellent preso which I’ve included below, showing just what is coming down the road.  The commercial real-estate road is full of potholes that are so big they even have names – Multifamily, Industrial, Hotel, Office, Retail, & Multi Property.  I could post an entire blog about each one of these but just go through the presentation and you’ll see the road ahead has many bumps:

You can read all the articles & presentations, watch all the videos, and look through 1000s of charts but just hop in your car and start driving around.  Look at the office space vacancy; the restaurant parking lots that are close to or are empty;  just drive around and see behind the feathers of the peacock.

To see where we’re actually at doesn’t require a whole lot of intelligence, just some observation, listening, and a whole lot of common sense.