Who Can I Believe?

I've always been an optimist. There's nothing to be gained from being pessimistic. Of course, there's nothing to be gained from being an optimist either. It just feels better. But, who can an optimistic Realtor® believe these days?

Lawrence Yun, chief economist for the National Association of Realtors is quoted in the latest issue of "Realtor" magazine as saying "...there's good reason to believe the housing market has turned the corner." But, last night on CBS's "60 Minutes," an interesting piece with Scott Pelley questioned whether there was "A Second Mortgage Disaster on the Horizon."

Whitney Tillson, an investment fund manager with Amherst Securities, specializing in mortgages, told Pelley we're at the beginning of a second wave of mortgage defaults. When rates are reset for Alt-A and Option ARM mortgages written during the boom years, the result could be even more defaults and foreclosures than we've seen with the subprime market implosion.

According to Tillson , there were about $1 trillion in subprime mortgages, and there are about $1 trillion in Alt-A mortgages and another $500 to $600 billion in Option ARM mortgages out there which could be in serious trouble when their interest rates reset within the next several months. He expects a default rate of 50 to 70% on the Atl-A and Option ARMs.

60 Minutes' Pelley wrapped up the piece talking with Sean Egan who runs a credit rating firm, and is one of six people who "Fortune" magazine says predicted the fall of Wall Street's financial giants. Egan predicts that 2009 is going to be "miserable," and 2010 to be even worse. The housing market is "core" to the recovery of our financial woes, Egan says. And, he is looking at three... four... maybe five years before the supply overhang of housing is worked through.

So, who can Joe Homebuyer, Suzie Homeseller and an optimistic Realtor® believe?