2005-20062005-2006

CALIFORNIA END 2005CALIFORNIA END 2005

SELL WHEN?SELL WHEN?

2006-2009 A Bonanza 4 Signs2006-2009 A Bonanza 4 Signs

2004 2004 Los AngelesLos Angeles

TimesTimesOwners areOwners are

taking ataking aProfit &Profit &

Moving outMoving outof California!of California!

“Hello, my name is Charles Ponzi and I approve of the Housing Bubble.”

Face it, the Housing Face it, the Housing Bust is here!Bust is here!

NASDAQ SELL @ TOP 2000?NASDAQ SELL @ TOP 2000?

"We've had a real bubble to some

degree. I would be surprised if there

aren't some significant downward

adjustments..."

DEAL OR NO DEAL??DEAL OR NO DEAL??

Take A Profit?Take A Profit?

Sell=RedSell=Red Buy=BlueBuy=Blue

2003 Where are the 2003 Where are the Bubbles?Bubbles?

2006=Buyers Market? 2006=Buyers Market? My estimation is 2009-11My estimation is 2009-11

Recession=Car Sales DownRecession=Car Sales Down

Housing = Consumer Housing = Consumer (Sell into Greed/Buy into Fear)(Sell into Greed/Buy into Fear)

Bargains Ahead?

Projected declines in median existing home prices for

selected metopolitan areas.

SOURCEMOODY’SECONOMY

GUIDE

3 Sell

Peaks

2004

1979

1989

Market Momentum San DiegoMarket Momentum San Diego

Existing Home Sales

-60

-40

-20

20

40

60

80

100

120

Jan-88

Jan-89

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06M

arke

t Mom

entu

m R

eadi

ng

Above "0" line, the trend is up

Below "0" line, the trend is downJuly 31, 2006 = -20

COST OF OIL = RECESSIONCOST OF OIL = RECESSION

ARE WE LIKE JAPAN?ARE WE LIKE JAPAN?

Although the Fed raised interest rates during Although the Fed raised interest rates during 2004-2006 & only recently stopped doing so 2004-2006 & only recently stopped doing so during their last three meetings, in order to during their last three meetings, in order to

continue the previous trend of rising home prices, continue the previous trend of rising home prices, the Fed would now need to lower rates to less the Fed would now need to lower rates to less

than 0%, much like Japan had to during the than 0%, much like Japan had to during the 1990’s when its real estate bust collapsed 1990’s when its real estate bust collapsed

property values by more than 50%. America is property values by more than 50%. America is about to experience the same economic impact about to experience the same economic impact as Japan. At one point, Japanese banks were as Japan. At one point, Japanese banks were

actually paying people to borrow money resulting actually paying people to borrow money resulting in a negative interest rate. The Fed, three or four in a negative interest rate. The Fed, three or four years from now may find it in a similar position.years from now may find it in a similar position.

Housing Index vs. S&P 500Housing Index vs. S&P 500

RECESSIONS IN REDRECESSIONS IN RED

-50-40-30-20-10

01020304050

Jan-

89

Jan-

90

Jan-

91

Jan-

92

Jan-

93

Jan-

94

Jan-

95

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Above "0" line: Market forces are friendly.SoCal housing prices are likely to rise.

July 31, 2006Crash Index = -48

Below "0" line: Market forces are unfriendly.SoCal housing prices are likely to fall.

CRASH INDEX =1991=2006CRASH INDEX =1991=2006

Market Momentum San DiegoMarket Momentum San Diego

Existing Home Sales

-60

-40

-20

20

40

60

80

100

120

Jan-88

Jan-89

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06M

arke

t Mom

entu

m R

eadi

ng

Above "0" line, the trend is up

Below "0" line, the trend is downJuly 31, 2006 = -20

San Diego Building Permits TrendSan Diego Building Permits Trend

New Home Building Permits

-60

-40

-20

20

40

60

80

Jan-89

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06M

arke

t Mom

entu

m R

eadi

ng

Above "0" line, the trend is up.

Below "0" line, the trend is down.

July 31, 2006 = -28

Nods=Up=More Foreclosures!!Nods=Up=More Foreclosures!!

Notice of Defaults

-30

-20-10

10

20

3040

5060

70

Jan-84

Jan-86

Jan-88

Jan-90

Jan-92

Jan-94

Jan-96

Jan-98

Jan-00

Jan-02

Jan-04

Jan-06M

arke

t Mom

entu

m R

eadi

ng

Above "0" line, the trend is up

Below "0" line, the trend is down

July 31, 2006 = 60

Foreclosures=Recession StartForeclosures=Recession Start

Foreclosure Sales

-100

-50

50

100

150

200

Jan-84

Jan-86

Jan-88

Jan-90

Jan-92

Jan-94

Jan-96

Jan-98

Jan-00

Jan-02

Jan-04

Jan-06M

arke

t Mom

entu

m R

eadi

ng Above "0" line, the trend is up

Below "0" line, the trend is down

July 31, 2006 = 156

Readers @ Patrick.netReaders @ Patrick.net

Market Timing is Everything!!Market Timing is Everything!!

80-95% of Owners80-95% of OwnersMissed the sale Missed the sale

period period of 2001 to 2006of 2001 to 2006

Signals are sell from 2002-2006Signals are sell from 2002-2006