Q3 2008 Charleston Market Report

8/9/2019 Q3 2008 Charleston Market Report

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In This Issue Q3 2008 CMR Song Dedication Announcements and Me Advertising Rocky D Election Commentary - The Ponzi Economy Cartoons Real Estate Leading Indicators Charleston Residential Real Estate Stats/Highlights National RE Indicators Stock Market

Song DedicationThis Q3 2008 edition of The CMR is dedicated to "BIG MOMMA" aka The U.S. Government and the song "Runnin on Empty" by Jackson Browne!

The Charleston Market Report

" An Analysis of Real Estate and Economic Trends"

http://www.charlestonmarketreport.com/




Click here to Play.

Looking out at the road rushing under my wheelsLooking back at the years gone by like so many summer fieldsIn sixty-five I was seventeen and running up one-o-oneI dont know where Im running now, Im just running on

Running on - r unning on emptyRunning on - ru nning blindRunning on - ru nning into the sunBut Im runn ing behind

Gotta do what you can just to keep your love aliveTrying not to confuse it with what you do to surviveIn sixty-nine I was twenty-one and I called the road my ownI dont know when that road turned onto the road Im on


Everyone I know, everywhere I go

People need some reason to believeI dont know about anyone but meIf it takes all night, thatll be all right If I can get you to smile before I leave

Looking out at the road rushing under my wheelsI dont know how to tell you all just how crazy this life feelsI look around for the friends that I used to turn to to pull me throughLooking into their eyes I see them running too


Honey you really tempt me

You know the way you look so kind Id love to stick around but Im running behind You know I dont even know what Im hoping to find Running into the sun but Im running behind

Announcements and Me Advertising

Hello Bailout Nation World,

First I would like to make a recommendation to someone who deserves it. If you are looking for a property manager I recommend calling Ute Appleby at 843.345.2625.Her company is Peridot Properties and you can click here for her website. She manages a property I own in Charleston and she has done an outstanding job. So if youneed someone who is reasonable with fees, will get the job done and will be tough when necessary with tenants I highly recommend giving Ute a call. Thanks Ute foryour hard work!

I apologize that the Q3 2008 CMR is a little late but things have been a bit crazy as I am sure you many of you can understand. These quarterly reports are also very timeconsuming to put together. Maybe one day I will hire someone to help put these reports together. I just do not feel comfortable sending out an uninformative report

because it is not my style. Keep in mind that even when The CMR runs a little late real estate trends do not change at a rapid pace like the stock market. Based on marketconditions the past few weeks The CMR would need to be sent out daily to keep up with the "Denise Richards - It's Complicated Economy" and the "Schizo Stock Market." Unfortuately I have to make a living and that is just not in the cards right now.

Speaking of making a living...I now offer advertising opportunities on The CMR and my blog, Trendocracy. If you want to advertise on either of these sites it would needto be for a minimum of 6 months. The current rate is $450 per year or $225 for 6 months. I came up with this rate because that is what the market is paying right nowwith current advertisers. You see I am a capitalist and if you advertise it helps me cover the costs of running this website and maybe I have a little leftover for some beeror Firefly Vodka on the weekend. :) If you are a local biz tied to the real estate or finance world The CMR is a very targeted website of professionals and investors in thisbiz. The ad rates are very cheap and I expect my web traffic to go up tremendously due to some opportunities that are in the planning stages right now. So get in nowwhile the rates are CHEAP! Once web traffic increases, which it will, the rates will go up. That is how supply/demand and capitalism is supposed to work.



My blog, Trendocracy, was recently ranked in the top 20 of all economic blogs on the internet according to Technorati. I find this incredible because I do not blog asoften as the others on the list and I am NOT even an economist. LOL! The coolest aspect of this list is that I am beating that liberal Robert Reich, who was Secretary of Labor under Clinton and Nouriel Roubini, one of the top economists in the world. Not bad for a Chucktown boy huh? So if you are interested in some internet advertisingfeel free to email me at [email protected] and we can discuss it.

Also do not forget about my custom consulting services for individual properties and developments. Click here for my brochure, which goes into more detail about thecustom consulting that can be done.

I see tremendous opportunities and high risk in the local real estate market right now. So the outcome of your investments depends on what and where you are buying.What is unbelievable to me and I continue to witness daily is how many developers refuse to get Market Analysis Studies on multi million dollar projects. The fees Icharge are a small price to pay for risk management in order to make sure the project is viable and/or priced correctly based on various important variables. Whether youare an individual or developer I can not stress enough the importance of getting an independent third party analysis before you commit to your particular property orproject. I see so many developments in Charleston that are being marketed or being built that are completely mispriced. Either take some money out of your budget anddo some due diligence or you run the risk of ending up in bankrupcy or selling to one of my investors for pennies on the dollar. The choice is yours and my groupcan help you with either aspect of the process. I would prefer to help you before a distressed sale occurs.

Rocky D As some of you know I went on Rocky D's show a couple of weeks ago on 1250 AM. Rocky D is a trip. Unfortunatley I do not have a recording of the radio programbecause WTMA does not make them. Sorry. He reminds me of the comedian Sam Kennison with a very sharp political wit. I respect Rocky D because he is not afraid tostate his opinion and is brutally honest on the radio. I like his show because he touches on local and national issues just like The CMR. We discussed the currenteconomic problems the courntry is facing, Barney Frank aka Elmer Fudd, and we took a few calls from listeners. If you consistently read this newsletter you did not missmuch I have not already stated in the past. I had a great time doing the show since I have never done live radio before. If Rocky D asks me to come back on the air in thefuture I would go if my schedule permits it. I also realized how much easier it is to convey a message regarding complicated issues by writing this report versus going onthe radio.

Election Comment I am extremely happy the 2008 elections are now over. I did not vote for McBama. I call both candidates McBama because I really do not see much difference in the twoor their respective parties. I am making this quick political statement because the election does have an impact on the economy so it is fair game for thisnewsletter/website. One of the great benefits of this country of ours is the freedom to vote so even though I may not agree with many of your favorite candidates I respect

your voting decisions since we all have different influences and causes. I am neither a Republicrat or a Demopublican because I firmly believe both parties are equallyresponsible for destroying certain aspects of this great country over the past 50 years. They are the only two parties who have been in power yet all they do is blame eachother year after year for the problems and most Americans fall for this political shell game. If you do not believe me I recommend you read a book called Running onEmpty. I generally vote for whatever candidate makes the most sense. Unfortunately, most candidates I saw running for office in Washington DC made ZERO sense tome. The political system is corrupt and broken so how can anyone be passionate about either candidate or party?

If you continue to vote Republicrat or Demopublican at the Federal level you continue to manifest the root of the problem which is the corrupt and ineffieient manner inwhich both parties operate our country. They are influenced by power and money. Basicly, DC is bought and paid for by the highest bidders.

What I hope happens in the future is that a Third Party emerges who is really for the people and by the people of the United States. It is wishful thinking because I do notsee the Main Stream Media allowing it to happen. Unfortunately this is the source that influences most Americans decision making process. Until that day comes I just

mailto:[email protected]




pray the egomaniac politicians in DC get some religion and start looking out for their fellow constituency instead of themselves. I am for SMALLER government, astrong military and the Fair Tax. Neither political party represents these issues.

I actually voted for Bob Barr of the Libertarian Party for President. I wrote in Mickey Mouse for the Senate race between Lindsey Graham and the Democrat (Forgot hisname) he was running against. I figured Mickey Mouse would do a better job than Senator Graham since he has been a complete disaster and is a George W. wannabe.Senator Graham is so bad he did not even come to SC to campaign because he had no competition in the election and he was afraid to face his constituents. I voted forHenry Brown for Congress just to keep the Libs from getting to powerful. I am not happy about Henry and Lindsay voting in favor of the Bailout Boondogle. Thepolitician I am most impressed with is Senator Demint who voted against the Bailout and just seems to exude a ton of common sense. How refreshing!

I wish President Elect Obama the best of luck since he is about to become our President. Even though I disagree with many of his policies and ideas I feel I have to givehim a chance to lead before I become critical. He has an enormous challenge ahead of him with the current state of the economy. I hope and pray he brings in PaulVolker as Sec. of Treasury because I believe he has the experience and knowledge to implement the proper steps to put the USA back on a road to recovery. Obama willnot be able to keep many of the campaign trail promises he made. If he does we are in deep doo doo. If he hires the right economic team he will quickly realize we cannot tax and spend our way out of a severe recession.

The most impressive aspect of Obama's victory was the masterful marketing campaign he and his team implemented over the past two years. He raised more money thanhis competitors and had the brilliant one word slogan, "Change" that really summed up what this country wanted to hear after the Bush Administration fleeced thiscountry by transfering inherited budget surpluses into a massive deficit over the past eight years. I am leary of Obama due to his lack of experience and liberal ideology.This country is equally divided and someone with the charisma of Obama needs to bring the citizens and politicians of this country together before we destroy ourselevesfrom within. The easy part for Obama was winning the election and chanting "Change" but the hard work will be rescuing this country out of a severe recession andtattered international image among many of our neighbors. I wish Obama luck and we all need to pray he acts in our best interests. If he takes a liberal economicapproach to try and implement "change" to America it will be a disaster. Time will tell.

God bless America!!!

Commentary - The Ponzi Economy Charles Ponzi (March 3, 1882–January 18, 1949) was an Italian immigrant to the United States who became one of the greatest swindlers in American history. Hisaliases include Charles Ponei, Charles P. Bianchi, Carl and Carlo. Although many people have never heard of Ponzi himself, the term "Ponzi scheme" is a widelyknown description of any scam that relies on a "pyramid" of "investors" who contribute money to a fraudulent program.

He started his own company, the Securities Exchange Company, to promote the scheme. Some people invested, and were paid off as promised. The word spread, and

investment came in at an ever-increasing rate. Ponzi hired agents and paid them generous commissions for every dollar they brought in. By February 1920, Ponzi's totaltake was US$5,000, a large sum for the time.

By March he had made $30,000. A frenzy was building, and Ponzi began to hire agents to take in money from all over New England and New Jersey. At that timeinvestors were being paid impressive rates, encouraging yet others to invest. By July 1920 he had made millions and at the height of his Ponzi Scheme he was bringing inan income of $1,000,000 per week. People were mortgaging their homes and investing their life savings. Most did not take their profits, but reinvested. Ponzi wasbringing in cash at a fantastic rate, but the simplest financial analysis would have shown that the operation was running at a large loss. As long as money kept flowing in,existing investors could be paid with the new money, but colossal liabilities were accumulating.

Ponzi lived luxuriously: he bought a mansion with air conditioning and a heated swimming pool, and brought his mother from Italy in a first-class stateroom on an oceanliner. He was a hero among the Italian community, and was cheered wherever he went.Source Wikipedia

After reading this introduction of Mr. Ponzi some of you may be asking what does this have to do with our economy. My answer is that various aspects of this man's lifeand scheme are at the root of our economy's current problems. The similarities to Mr. Ponzi and the current economic conundrum include swindlers, debt, speculation,false profits, money, frenzies, power, leverage, lies, financial idiots and an unfortunate collapse. The one common element that is missing right now is prison time. Solets jump into breaking down this complicated analogy and try to forecast what the future holds.

As I have mentioned in past CMR newsletters the root of this bust is leverage used in the credit markets and its role within real estate and securities. One of the reasons Isaw this train wreck coming a couple of years ago is that I am one of the few guys in the country with a clear understanding of real estate, Wall Street and the law of supply and demand.

The finance definition of leverage is:

1. The amount of debt a company has. A highly-leveraged company has a relatively large amount of debt when compared to the level of assets it owns. Althoughbecoming highly leveraged can create significant profits if things go according to plan, it can severely hamper a company that is caught in a slowing market orexperiences unanticipated competition.

2. To purchase stocks or other investments by using borrowed funds (on margin). An investor who borrows money from his or her broker to purchase stocks usesleverage in order to increase his or her potential gain. However, if the investment declines in value, then the amount of money the investor loses likelyincreases well.

Let's take a walk down memory lane and discuss how the "Ponzi Economy" got started. It is my opinion the every Ponzi Scheme needs an architect and the modern day

Charles Ponzi is Henry Paulson, the current Secretary of Treasury for the United States. Who is Henry Paulson? I took this straight from Wikipedia:

Early in his career, Paulson was Staff Assistant to the Assistant Secretary of Defense at The Pentagon from 1970 to 1972.[7] He then worked for the administration of U.S.President Richard Nixon, serving as assistant to John Ehrlichman from 1972 to 1973, during the events of the Watergate scandal for which Ehrlichman was convicted to aprison sentence.

He joined Goldman Sachs in 1974, working in the firm's Chicago office under James P. Gorter. He became a partner in 1982. From 1983 until 1988, Paulson led theInvestment Banking group for the Midwest Region, and became managing partner of the Chicago office in 1988. From 1990 to November 1994, he was co-head of

Investment Banking, then, Chief Operating Officer from December 1994 to June 1998;[8] eventually succeeding Jon Corzine (now Governor of New Jersey) as its chief

executive. His compensation package, according to reports, was US $37 million in 2005, and US $16.4 million projected for 2006.[9] His net worth has been estimated at

over US $700 million.[9] Paulson has personally built close relations with China during his career. In July 2008 it was reported by The Daily Telegraph that: "Treasury

Secretary Hank Paulson has intimate relations with the Chinese elite, dating from his days at Goldman Sachs when he visited the country more than 70 times."[10]

In 2004, at the request of the major Wall Street investment houses, including Goldman Sachs, then headed by Paulson, the U.S. Securities and ExchangeCommission agreed unanimously to release the major investment houses from the net capital rule, the requirement that their brokerages hold reserve capital

that limited their leverage and risk exposure. The complaint that was put forth by the investment banks was of increasingly onerous regulatory requirements -- in thiscase, not U.S. regulator oversight, but European Union regulation of the foreign operations of US investment groups. In the immediate lead-up to the decision, EUregulators also acceded to US pressure, and agreed not to scrutinize foreign firms' reserve holdings if the SEC agreed to do so instead. The 1999 Gramm-Leach-BlileyAct, however, put the parent holding company of each of the big American brokerages beyond SEC oversight. In order for the agreement to go ahead, the investmentbanks lobbied for a decision that would allow "voluntary" inspection of their parent and subsidiary holdings by the SEC.

During this repeal of the net capital rule, SEC Chairman William H. Donaldson agreed to the establishment of a risk management office that would monitor signs of future problems. This office was eventually dismantled by Chairman Christopher Cox, after discussions with Paulson. According to the New York Times, "Whileother financial regulatory agencies criticized a blueprint by Mr. Paulson, the Treasury secretary, that proposed to reduce their stature — and that of the S.E.C. — Mr. Cox

did not challenge the plan, leaving it to three former Democratic and Republican commission chairmen to complain that the blueprint would neuter the agency."[11]



According to the SEC's Office of the Inspector General, the commission’s division of trading and markets “became aware of numerous potential red flags prior to BearStearns’s collapse, regarding its concentration of mortgage securities, high leverage, shortcomings of risk management in mortgage-backed securities and lack of

compliance with the spirit of certain” capital standards. But the division was unresponsive, and “did not take actions to limit these risk factors.”[10][11]

Changes to the net capital rule are thought to be an important factor in the credit market meltdown of 2008 .

So what is the net capital rule? Again from Wikipedia:

On April 28, 2004, this rule was unanimously abolished by the Commission[1] for the largest investment houses in the United States, that is, for banks whose assetsexceeded $5 billion. This SEC decision allowed the firms to invest without restriction, resulting within a few years in massive borrowings relative to dwindlingassets (in Bear Stearns' case, a ratio of 33 to 1). The premise of the original rule was antithetical to the premise of the exemption created in 2004. The originalregulatory premise namely that investors are prone to be driven by competition to exacerbate their level of risk exposure and cannot be relied on to curtail that exposurewithout a requirement to hold adequate assets in reserve. Indeed, many of these firms quickly created over-leveraged positions in poor quality, highly riskyinvestment instruments in the credit markets, resulting in a collapse of confidence in September 2008, including bankruptcies and bailouts.

In late September 2008, the commission decided to end the 2004 program of voluntary regulation.

Folks, these actions set the stage for the massive growth of the real estate and stock market that occurred from 2004-2007. This bubble was created by the decision toallow Wall Street to start a casino type atmosphere built on leverage that was virtually UNREGULATED and the compression of interest rates by The Fed. Then WallStreet and the US Government stood by as the economy caught on fire, the securitiztion of mortgages grew (which equaled easy credit) and the expansion of CreditDefault Swaps went out of control. The problem was nobody cared because of the trickle down effect in real estate and the stock market resulted in massive profits forthe players directly involved. The economy appeared strong and local, state and federal governments reaped the rewards of increased tax revenue. Nobody would darewant to see this gravy train stop.

History has shown that we regulate banks because when they break down then the economy often breaks down. The United States really does not have a completecapitalist or socialist system. The government has always tended to lean one way or another and currently "Big Mamma" is leaning very hard towards the Socialist side.At the end of the day in order for us to benefit from a more capitalistic system then regulation and risk management is required in order to monitor the system and makesure it operates properly. Based on what I cut and pasted above from Wikipedia I have demonstrated that this regulation and risk management was DISMANTLED byPaulson and the Chris Cox from the SEC. Why??? Well remember that the guys at the top of every Ponzi Scheme make the DINERO.

Paulson took over as Secretary of Treasury in June 2006. The real cracks in the economy did not show up until 2007 when Bear Stearns collapsed and the credit marketsbegan to seize up. Here is a look at the leadership, brilliance and lies coming straight from his mouth regarding the economy.

April 20, 2007: 'I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained .'http://www.reuters.com/article/gc06/idUSWBT00686520070420

July 12, 2007: 'This is far and away the strongest global economy I've seen in my business lifetime.''http://money.cnn.com/2007/07/18/news/economy/powerplay_economy.fortune/index.htm

August 1, 2007: 'The market has focused on this. There's a wake-up call, and there's an adjustment to this repricing of risk, but I see the underlying economy as beingvery healthy.'http://www.reuters.com/article/topNews/i dUSBJC00005820070801

February 28, 2008: 'I'm seeing a series of ideas suggested involving major government intervention in the housing market and these things are usually presented or sold as a way of helping homeowners stay in their homes. Then when you look at them more carefully what they really amount to is a bailout for financial institutions or WallStreet .'http://blogs.wsj.com/deals/2008/02/28/

March 16, 2008: 'We've got strong financial institutions . . . Our markets are the envy of the world. They're resilient, they're...innovative, they're flexible. I think we movevery quickly to address situations in this country, and, as I said, our financial institutions are strong.''http://www.realclearpolitics.com/article s/2008/03/secretary_paulson_on_fox_news. html

May 7, 2008: 'The worst is likely to be behind us. .There's no doubt that things feel better today, by alot, than they did in March.''http://www.forbes.com/markets/feeds/afx/ 2008/05/07/afx4978703.html

May 16, 2008: 'The fiscal stimulus will provide support to the economy as we weather the housing correction, capital markets turmoil and higher energy and food prices..Although we are still working through housing and capital markets issues, and expect to be doing so for some time, we also expect to see a faster pace of economicgrowth before the end of the year. .In my judgment, we are closer to the end of the market turmoil than the beginning. Looking forward, I expect that financial marketswill be driven less by the recent turmoil and more by broader economic conditions and, specifically, by the recovery of the housing sector .'http://www.cbsnews.com/stories/2008/05/16/business/main4103698.shtml

July 15, 2008: 'If you've got a squirt gun in your pocket, you may have to take it out. - If you've got a bazooka, and people know you've got it...you're not likely to take it out .'http://network.nationalpost.com/np/blogs/fpcomment/archive/2008/07/16/henry-paul son-s-bazookanomics.aspx

July 20, 2008: 'I think it's going to be months that we're working our way through this period, clearly months. .Of course the list [of difficulties] is going to grow longer given the stresses we have in the marketplace, given the housing correction - but again, it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.' http://cbs5.com/national/henry.paulson.economy.2.775329.html

August 10, 2008: 'We have no plans to insert money into either of those two institutions [FNM and FRE].' http://www.bloomberg.com/apps/news?pid=20601087&sid=aULVZ2mAF9es&

September 7, 2008: 'In July, Congress granted the Treasury, the Federal Reserve and FHFA new authorities with respect to the GSEs, Fannie Mae and Freddie Mac.Since that time, we have closely monitored financial market and business conditions and have analyzed in great detail the current financial condition of the GSEs -including the ability of the GSEs to weather a variety of market conditions going forward. As a result of this work, we have determined that it is necessary to take action. .Based on what we have learned about these institutions over the last four weeks - including what we learned about their capital requirements - and given the condition of financial markets today, I concluded that it would not have been in the best interest of the taxpayers for Treasury to simply make an equity investment in these enterprisesin their current form.' http://www.ustreas.gov/press/releases/hp1129.htm

September 15, 2008: 'Moral hazard is something I don't take lightly. . I never once considered that it was appropriate to put taxpayer money on the line in resolvingLehman Brothers.' http://www.iht.com/articles/ap/2008/09/15/business/NA-US-Paulson-Markets.php

September 19, 2008: 'We're talking hundreds of billions of dollars - this needs to be big enough to make a real difference and get at the heart of the problem. This is theway we stabilize the system. . If these efforts result in a net cost to the taxpayer, it's a better bet than the alternative. . I am convinced that this bold approach will cost American families far less than the alternative - a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion.' http://money.cnn.com/2008/09/19/news/economy/paulson_plan_cost/index.htm

Se tember 23 2008: 'We need to work as uickl as ossible; we need to et somethin done. We believe that our lan, and the lan that we develo ed with

http://www.reuters.com/article/gc06/idUS

http://money.cnn.com/2007/07/18/news/eco

http://www.reuters.com/article/topNews/i

http://blogs.wsj.com/deals/2008/02/28/

http://www.realclearpolitics.com/article

http://www.forbes.com/markets/feeds/afx/

http://www.cbsnews.com/stories/2008/05/1

http://network.nationalpost.com/np/blogs

http://cbs5.com/national/henry.paulson.e

http://www.bloomberg.com/apps/news?pid=2

http://www.ustreas.gov/press/releases/hp

http://www.iht.com/articles/ap/2008/09/1



http://www.iht.com/articles/ap/2008/09/1

http://www.ustreas.gov/press/releases/hp


http://cbs5.com/national/henry.paulson.e

http://network.nationalpost.com/np/blogs

http://www.cbsnews.com/stories/2008/05/1

http://www.forbes.com/markets/feeds/afx/

http://www.realclearpolitics.com/article

http://blogs.wsj.com/deals/2008/02/28/

http://www.reuters.com/article/topNews/i


http://www.reuters.com/article/gc06/idUS



congressional leaders and worked so hard, is a plan that works. And we need a plan that works.' 'http://www.bloomberg.com/apps/news?pid=20601087&sid=arQOMRk_d_s0&

October 8, 2008: 'We have no time to waste in implementing the new law. . One thing we must recognize - even with the new Treasury authorities, some financialinstitutions will fail. . But patience is also needed because the turmoil will not end quickly and significant challenges remain ahead. . Neither passage of this new law nor the implementation of these initiatives will bring an immediate end to current difficulties.' http://www.treas.gov/press/releases/hp1189.htm In a matter of 1.5 years "Ponzi Paulson" has gone from categorizing the economy as "strongest global economy" to a "manageable situation" to "We're talking hundredsof billions of dollars - this needs to be big enough to make a real difference and get at the heart of the problem. This is the way we stabilize the system ."Source: The Big Picture

Say What??? Are you freakin kidding me? Meanwhile I have to watch the Republicrats and Demopublicans praise this guy as an American Hero during CongressionalTestimony and then buy into his $700 Billion Bailout Boondogle, which was shoved down Congress' throat at the last minute. Amazing! Well if you want to know thetruth McBama and most our fearless leaders in the Congress and Senate also voted for this bailout without even reading the bill in its final format.

It gets better and more bizarre. As President elect Obama and the Democratic controlled Congress plan on raising taxes to help cover an eventual increase in governmentand bailout commitments the Washington Post reports that in addition to a bailout for the banks The Treasury Department secretly changed a tax law that could costtaxpayers approximately $140 billion.

" Did the Treasury Department have the authority to do this? I think almost every tax expert would agree that the answer is no," said George K. Yin, the former chief of staff of the Joint Committee on Taxation, the nonpartisan congressional authority on taxes. "They basically repealed a 22-year-old law that Congress passed as abackdoor way of providing aid to banks."

Section 382 of the tax code was created by Congress in 1986 to end what it considered an abuse of the tax system: companies sheltering their profits from taxation byacquiring shell companies whose only real value was the losses on their books. The firms would then use the acquired company's losses to offset their gains and avoidpaying taxes. Attorneys representing banks celebrated the notice. The week after it was issued, former Treasury officials now in private practice met with Solomon, thedepartment's top tax policy official. They asked him to relax the limitations on banks even further, so that foreign banks could benefit from the tax break, too.Source:Washington Post

The Bailout Boondogle Bill simply makes no sense to me because this model does not work and I have the proof. Fannie Mae and Freddie Mac or Phoney Mae andFraudy Mac as I like to call them are GSEs (Government Sponsored Entities). The bailout is very risky because the agenda is for the government to buy up toxic debt in adeflationary environment. This means the government will pay too much for the distressed assets when it decides to pull the trigger. Privatizing profits and socializing

risk is a very dangerous business model. The Ponzi Economy has led to GSE mania as the goverment now has its hands and our money in banks, insurance, Amtrak, thePostal Service, education, and mortgages. Where does it end Bailout World? Right now "Big Momma" has her sites set on nationalizing health care, auto manufacturersand maybe even pensions. How about bailing out bars, restaurants, dry cleaners, real estate companies, retailers, etc. Why is our government utilizing a broken businessmodel to nationalize these various industries when based on history it is proven it does not work?

The result of the Ponzi Economy collapse is a global deleveraging process and deflation. We are now witnessing increasing interest rates, higher unemployment anddecreasing tax revenue at the local, state and federal levels. Do not underestimate the speed and time of this decline in our economy. We are now looking at several yearsbefore the housing market and credit markets return to normal.

The future economy is going to have major challenges. Potential improvement depends a great deal on the future President, House and Senate which are now controlledby Democrats. This is very scary to me if you understand the economic views of liberals. The liberal economic policies will exacerbate the current problems becausethey are based on bigger government and higher taxes. This is the opposite strategy which needs to be implemented during a severe recession. If the Democrats decide toincrease taxes on small business owners, who are the main engine of our economy, it will be a complete disaster.

Now that Bailout Mania is in full effect the ramifications are huge and downright scary. The total amount of goverment bailout money that has been announced to thispoint is $2.7 trillion. Yes, $2,700,000,000! That is a bunch zeroes and it was caused by the zeroes in DC. The comparisons of this economic contraction to the GreatDepression are constantly in the headlines. Actually the Ponzi Economy bust has surpassed the Great Depression in terms of debt because prior to the 1930s the total debtin the US was between 150% and 160% of GDP. Now it's close to 350%!


http://www.treas.gov/press/releases/hp1189.htm

http://www.treas.gov/press/releases/hp1189.htm




Chart:Money and Markets

Charles Ponzi actually spent time in prison after his fraudulent scheme was detected. The irony is that culprits and enablers of the Ponzi Economy which include Paulson,Bush, certain members of the House and Senate, Mozillo from Countrywide and others in DC and Wall Street have been given a free pass. They either have millions toretire on, receive huge bonuses or get re-elected. Who says crime does not pay?

Cartoons



Tri-County Real Estate Indicators



Tri-County Residential Stats

Single Family Residential



West Ashley

James Island

Folly Beach

Month YearMonthly

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

CurrentInventory

MonthsInventory

April 2008 56 $290,694 $280,812 $138 $263,737 99 96.60% 618 11.03

May 2008 87 $274,544 $264,960 $137 $250,000 101 96.50% 608 6.98

June 2008 55 $282,425 $268,175 $144 $245,000 103 94.95% 586 10.65

July 2008 69 $272,242 $263,613 $138 $227,500 93 96.83% 602 8.72

August 2008 50 $265,942 $260,317 $140 $214,625 99 97.88% 611 12.22

September 2008 56 $320,008 $306,565 $132 $238,024 63 95.79% 615 10.98

Month Year MonthlySales

Avg List $ Avg Sale $ Median Sold $ Avg DOM % Sold/List CurrentInventory

MonthsInventory

April 2008 48 $332,033 $319,619 $284,500 76 96.26% 392 8.16

May 2008 27 $308,232 $298,395 $290,000 92 96.80% 406 15.03

June 2008 49 $313,763 $299,035 $250,000 93 95.30% 394 8.04

July 2008 25 $295,422 $281,783 $260,000 95 95.38% 393 15.72

August 2008 31 $318,093 $305,609 $283,870 83 96.07% 388 12.51

September 2008 29 $354,063 $343,964 $256,000 92 97.14% 391 13.48



Johns Island

Edisto Beach

North Charleston

Mt. Pleasant-N. of Hwy 41

Mt. Pleasant-S. of Hwy 41

Sullivans Island

Isle of Palms

Month YearMonthly

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

CurrentInventory

MonthsInventory

April 2008 2 $1,372,500 $1,188,075 $1,188,075 169 86.56% 124 62.00

May 2008 0 0 0 0 0 0.00% 125 0.00

June 2008 4 $1,073,475 $966,468 $974,687 79 90.03% 118 29.50

July 2008 3 $664,631 $620,333 $650,000 86 93.33% 120 40.00

August 2008 1 $1,065,000 $975,000 $975,000 167 91.54% 113 113.00

September 2008 2 $694,500 $632,075 $632,075 72 91.01% 110 55.00

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 17 $358,443 $339,788 $233,000 82 94.79% 253 14.88

May 2008 8 $471,637 $447,819 $366,000 89 94.94% 252 31.50June 2008 11 $337,654 $316,672 $285,000 78 93.78% 240 21.81

July 2008 9 $359,807 $333,420 $249,000 80 92.66% 263 29.22

August 2008 11 $512,281 $495,134 $413,000 133 96.65% 253 23.00

September 2008 10 $392,690 $373,820 $296,750 229 95.19% 246 24.60

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 1 $379,000 $350,000 $350,000 149 92.34% 120 120.00

May 2008 9 $740,755 $668,333 $524,000 192 90.22% 126 14.00

June 2008 6 $846,666 $769,666 $639,000 239 90.90% 119 19.83

July 2008 0 0 0 0 0 0.00% 121 0.00

August 2008 4 $1,147,475 $1,026,750 $986,000 275 89.47% 121 30.25

September 2008 1 $1,600,000 $1,380,000 $1,380,000 416 86.25% 122 122.00

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 55 $176,652 $171,889 $166,000 93 97.30% 570 10.36

May 2008 56 $178,695 $175,124 $167,272 71 98.00% 576 10.28

June 2008 76 $171,606 $167,731 $162,250 74 97.74% 564 7.42

July 2008 55 $172,437 $168,010 $160,000 58 97.43% 578 10.50

August 2008 48 $158,739 $156,712 $154,520 77 98.72% 572 11.91

September 2008 37 $158,290 $154,524 $159,900 96 97.62% 587 15.86

Month YearMonthly


Current

Inventory

Months

InventoryApril 2008 20 $340,640 $327,398 $274,500 80 96.11% 375 18.75

May 2008 20 $452,417 $438,489 $355,750 166 96.92% 372 18.60

June 2008 40 $503,122 $479,853 $383,000 117 95.37% 357 8.92

July 2008 42 $480,461 $461,693 $385,000 81 96.09% 346 8.23

August 2008 36 $489,297 $466,165 $392,450 102 95.27% 340 9.44

September 2008 16 $550,271 $514,964 $387,312 107 93.58% 334 20.87

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 56 $584,508 $543,855 $437,000 129 93.04% 890 15.89

May 2008 89 $549,721 $518,298 $410,000 141 94.28% 879 9.87

June 2008 87 $490,467 $463,041 $398,000 118 94.40% 863 9.91

July 2008 75 $595,620 $554,499 $408,000 162 93.09% 865 11.53

August 2008 61 $504,387 $476,701 $347,000 97 94.51% 858 14.06

September 2008 42 $448,912 $429,132 $353,750 95 95.59% 854 20.33

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 1 $3,195,000 $2,980,000 $2,980,000 143 93.27% 62 62.00

May 2008 1 $3,250,000 $2,800,000 $2,800,000 683 86.15% 60 60.00

June 2008 1 $3,195,000 $2,900,000 $2,900,000 731 90.76% 57 57.00

July 2008 2 $1,622,500 $1,499,562 $1,499,562 59 92.42% 56 28.00

August 2008 1 $1,650,000 $1,475,000 $1,475,000 179 89.39% 51 51.00

September 2008 3 $1,921,666 $1,666,666 $1,400,000 204 86.73% 47 15.66

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 4 $1,464,750 $1,311,250 $1,115,000 269 89.52% 202 50.50

May 2008 3 $1,644,998 $1,600,000 $750,000 89 97.26% 208 69.33

June 2008 2 $1,149,000 $1,025,000 $1,025,000 732 89.20% 217 108.50

July 2008 3 $2,788,333 $2,537,333 $2,812,000 470 90.99% 221 73.66

August 2008 2 $790,000 $737,500 $737,500 391 93.35% 225 112.50



Wild Dunes

Downtown-Inside of Crosstown

Downtown-Outside of Crosstown

Summerville

Hanahan

Goose Creek

Moncks Corner

Daniel Island

September 2008 4 $716,000 $668,750 $655,000 199 93.40% 223 55.75

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 2 $2,060,000 $1,787,500 $1,787,500 616 86.77% 118 59.00

May 2008 2 $1,082,000 $932,500 $932,500 113 86.18% 121 60.50

June 2008 3 $1,873,000 $1,526,666 $1,300,000 245 81.50% 125 41.66

July 2008 1 $825,000 $765,000 $765,000 423 92.72% 132 132.00

August 2008 4 $1,742,000 $1,403,750 $1,220,000 309 80.58% 128 32.00

September 2008 1 $995,000 $925,000 $925,000 579 92.96% 126 126.00

Month YearMonthly

Sales Avg List $ Avg Sale $ Median Sold $ Avg DOM % Sold/ListCurrent

InventoryMonths

Inventory

April 2008 12 $770,829 $723,265 $700,000 159 93.82% 256 21.33

May 2008 13 $1,457,876 $1,368,115 $849,500 161 93.84% 260 20.00

June 2008 14 $878,492 $801,553 $467,500 95 91.24% 259 18.50

July 2008 13 $1,330,413 $1,205,652 $725,000 224 90.62% 255 19.61

August 2008 11 $1,385,545 $1,318,772 $899,000 146 95.18% 258 23.45

September 2008 4 $1,667,915 $1,426,665 $1,082,000 247 85.53% 263 65.75

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 4 $287,225 $272,375 $273,750 41 94.82% 146 36.50

May 2008 12 $300,158 $283,350 $278,350 119 94.40% 145 12.08

June 2008 8 $325,562 $309,400 $275,000 293 95.03% 138 17.25July 2008 7 $333,313 $314,485 $299,900 22 94.35% 133 19.00

August 2008 5 $221,660 $211,060 $180,000 140 95.21% 124 24.80

September 2008 3 $286,266 $270,166 $277,500 167 94.37% 118 39.33

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 132 $222,879 $216,054 $185,750 87 96.93% 1485 11.25

May 2008 155 $209,178 $204,916 $192,900 94 97.96% 1486 9.58

June 2008 178 $226,375 $221,382 $194,100 96 97.79% 1497 8.41

July 2008 156 $219,739 $214,325 $188,639 95 97.53% 1511 9.68

August 2008 141 $211,488 $206,524 $185,957 71 97.65% 1485 10.53

September 2008 121 $208,088 $203,792 $180,859 99 97.93% 1485 12.27

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 13 $236,751 $229,811 $205,000 96 97.06% 149 11.46

May 2008 14 $188,818 $183,639 $190,750 60 97.25% 161 11.50

June 2008 10 $195,795 $190,534 $179,900 84 97.31% 168 16.80

July 2008 14 $243,606 $235,597 $215,200 87 96.71% 168 12.00

August 2008 16 $232,056 $220,262 $220,400 119 94.91% 172 10.75

September 2008 10 $188,674 $181,522 $177,450 78 96.20% 178 17.80

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 70 $178,382 $177,145 $165,978 71 99.30% 500 7.14May 2008 78 $177,590 $175,393 $166,995 68 98.76% 519 6.65

June 2008 67 $185,534 $182,697 $167,000 68 98.47% 516 7.70

July 2008 65 $178,196 $174,667 $165,000 67 98.01% 555 8.53

August 2008 64 $184,147 $180,851 $165,750 72 98.21% 557 8.70

September 2008 69 $183,127 $179,404 $168,000 81 97.96% 549 7.95

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 18 $177,041 $175,478 $178,787 63 99.11% 152 8.44

May 2008 18 $190,527 $185,485 $158,876 125 97.35% 145 8.05

June 2008 15 $178,721 $176,929 $170,000 82 98.99% 148 9.86

July 2008 14 $160,172 $157,316 $141,808 71 98.21% 154 11.00

August 2008 18 $191,378 $186,256 $171,519 96 97.32% 163 9.05

September 2008 27 $164,918 $165,074 $157,140 75 -99.90% 143 5.29

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 8 $1,228,675 $1,141,862 $613,950 249 92.93% 156 19.50

May 2008 11 $1,166,418 $1,035,536 $649,900 198 88.77% 163 14.81

June 2008 14 $865,036 $809,547 $634,950 87 93.58% 158 11.28



Residential Comments * Unfortunately no bottom yet in the overall market conditions in Charleston.* There are a unique combination of very good deals for buyers who plan to stay in the home for 7-10 years and there are also many overpriced homes sitting on themarket looking for a sucker. Do not be that sucker! The typical CMA or Comparitive Market Analysis performed by agents may not be enough to analyze certain deals.* I do not know when the bottom will hit. It is impossible to know with the dangerous games being played in Washington DC with our tax money.* Sales volume is equally bad between the SFR and Condo/Townhouse market as they are down 31% and 35% YTD. Ouch!* Buidling Permit Trend activity continues to decline which is good news so we can try to get a better handle on the high inventory numbers. Unfortunately we now enterthe slower 6 month period for real estate sales which should have a negative impact on the inventory.* The current inventory #s for the SFR market are not increasing, which is good news. Months Inventory will increase as sales slow during the non seasonal period.* Avg Sale Price and Price per Sq Ft are showing declines due to the current economic storm.* The areas less impacted by the current economic issues are the most affordable areas in Charleston which are Goose Creek and Moncks Corner.

* I still predict housing prices will continue to decline in certain areas as the credit markets remain strained, inventory remains high, sellers are getting more financiallystressed, unemployment is rising, interest rates are rising and consumer confidence is shaken.

Condo/Townhouse

July 2008 12 $740,824 $669,545 $499,500 169 90.37% 147 12.25

August 2008 8 $717,411 $668,918 $582,002 99 93.24% 138 17.25

September 2008 10 $601,690 $591,105 $633,679 148 98.24% 143 14.30



West Ashley

James Island

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 24 $166,114 $164,572 $166,881 101 99.07% 322 13.41

May 2008 19 $160,614 $159,227 $158,250 105 99.13% 305 16.05

June 2008 23 $168,867 $163,855 $162,000 125 97.03% 310 13.47

July 2008 28 $157,091 $156,288 $154,950 130 99.48% 305 10.89

August 2008 17 $153,565 $149,495 $152,000 121 97.34% 282 16.58

September 2008 17 $146,504 $144,651 $142,500 70 98.73% 286 16.82

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 13 $166,157 $157,869 $162,500 96 95.01% 181 13.92

May 2008 11 $194,254 $187,172 $181,000 174 96.35% 177 16.09

June 2008 11 $177,827 $172,186 $169,500 98 96.82% 173 15.72

July 2008 8 $196,687 $191,430 $209,823 75 97.32% 177 22.12

August 2008 8 $196,874 $191,175 $175,000 132 97.10% 173 21.62

September 2008 6 $197,150 $194,108 $163,875 77 98.45% 176 29.33



Folly Beach

Johns Island

Edisto Beach

North Charleston

Mt. Pleasant-N. of Hwy 41

Mt. Pleasant-S. of Hwy 41

Wild Dunes

Summerville

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 4 $429,725 $417,250 $437,500 267 97.09% 161 40.25

May 2008 3 $498,000 $450,833 $350,000 134 90.52% 160 53.33

June 2008 2 $425,000 $396,500 $396,500 139 93.29% 159 79.50

July 2008 2 $444,500 $397,500 $397,500 181 89.42% 160 80.00

August 2008 0 0 0 0 0 0.00% 156 0.00

September 2008 6 $529,983 $511,950 $509,000 56 96.59% 154 25.66

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 6 $142,490 $140,493 $142,990 28 98.59% 76 12.66

May 2008 8 $138,563 $133,438 $129,410 66 96.30% 58 7.25

June 2008 3 $156,626 $149,730 $138,841 55 95.59% 44 14.66

July 2008 4 $209,200 $197,981 $189,250 160 94.63% 41 10.25

August 2008 2 $198,495 $186,699 $186,699 103 94.05% 40 20.00

September 2008 1 $344,900 $323,900 $323,900 38 93.91% 34 34.00

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 2 $223,750 $211,250 $211,250 45 94.41% 53 26.50

May 2008 3 $256,633 $232,333 $200,000 219 90.53% 53 17.66

June 2008 1 $29,500 $24,000 $24,000 86 81.35% 53 53.00

July 2008 3 $245,766 $234,300 $165,000 162 95.33% 49 16.33

August 2008 2 $163,700 $145,000 $145,000 452 88.57% 46 23.00September 2008 1 $309,100 $290,000 $290,000 27 93.82% 48 48.00

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 7 $82,457 $80,435 $76,800 134 97.54% 209 29.85

May 2008 8 $110,719 $108,118 $113,700 122 97.65% 209 26.12

June 2008 16 $127,300 $122,985 $126,750 138 96.61% 220 13.75

July 2008 10 $136,389 $130,862 $131,200 105 95.94% 227 22.70

August 2008 9 $106,149 $102,589 $102,000 76 96.64% 230 25.55

September 2008 15 $133,584 $133,559 $128,525 76 99.98% 231 15.40

Month Year MonthlySales

Avg List $ Avg Sale $ Median Sold $ Avg DOM % Sold/List CurrentInventory

MonthsInventory

April 2008 8 $191,572 $184,400 $180,000 70 96.25% 166 20.75

May 2008 20 $253,674 $242,161 $225,650 191 95.46% 181 9.05

June 2008 16 $234,433 $222,686 $222,000 107 94.98% 176 11.00

July 2008 14 $232,353 $222,495 $207,450 55 95.75% 170 12.14

August 2008 10 $218,603 $209,707 $208,750 130 95.93% 164 16.40

September 2008 14 $234,038 $219,606 $190,000 96 93.83% 167 11.92

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 19 $357,726 $350,894 $190,000 103 98.09% 409 21.52

May 2008 25 $314,561 $303,278 $185,500 137 96.41% 379 15.16

June 2008 20 $260,699 $248,728 $202,500 78 95.40% 380 19.00

July 2008 18 $210,533 $201,561 $198,500 121 95.73% 373 20.72

August 2008 22 $261,304 $244,861 $200,000 163 93.70% 343 15.59

September 2008 19 $315,963 $297,348 $229,900 122 94.10% 318 16.73

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 31 $797,658 $778,819 $824,900 33 97.63% 117 3.77

May 2008 5 $1,173,800 $1,109,150 $850,750 282 94.49% 113 22.60

June 2008 3 $475,966 $455,833 $617,500 151 95.77% 116 38.66

July 2008 2 $347,450 $332,000 $332,000 80 95.55% 124 62.00

August 2008 5 $986,580 $891,000 $617,500 205 90.31% 123 24.60

September 2008 1 $809,900 $809,900 $809,900 0 100.00% 124 124.00

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 16 $155,259 $154,993 $152,945 141 99.82% 316 19.75

May 2008 12 $126,459 $121,545 $130,374 82 96.11% 317 26.41

June 2008 24 $154,508 $155,394 $144,995 84 -99.42% 320 13.33

July 2008 24 $137,540 $135,844 $128,382 102 98.76% 299 12.45

August 2008 26 $153,433 $150,119 $136,195 81 97.83% 292 11.23



Goose Creek

Daniel Island

Source: CTAR

Condo/Townhouse Comments * What is interesting about this segment of the market is that the current inventory numbers have declined but sales have declined even more which has resulted in themonths inventory numbers getting worse in every county except Dorchester.* The dollar volume has really begun to deteriorate since May 2008 versus last years numbers.* Mnay buyers in the Tri-County were flocking to Condo/Townhouses because they offered a more affordable price alternative. This buying trend has deteriorated over

the past 5 months.* When there are a lack of sales in the sub areas remember that Avg Sale $ can be distorted based on the type of condos sold that particular month.

National RE Indicators

September 2008 24 $139,128 $139,206 $129,825 50 -99.94% 294 12.25

Month YearMonthly


CurrentInventory

MonthsInventory

April 2008 12 $130,604 $130,031 $127,449 84 99.56% 121 10.08

May 2008 13 $122,433 $122,645 $126,550 62 -99.82% 108 8.30

June 2008 7 $105,546 $104,574 $113,822 123 99.07% 101 14.42

July 2008 12 $131,023 $131,182 $129,390 104 -99.87% 105 8.75

August 2008 15 $126,683 $125,088 $123,772 15 98.74 108 7.20

September 2008 11 $120,445 $118,500 $126,200 66 98.38% 91 8.27

Month YearMonthly

Sales Avg List $ Avg Sale $ Median Sold $ Avg DOM % Sold/ListCurrent

InventoryMonths

Inventory

April 2008 7 $279,842 $270,003 $242,050 299 96.48% 172 24.57

May 2008 10 $286,390 $276,150 $224,000 110 96.42% 171 17.10

June 2008 6 $273,500 $242,833 $214,500 170 88.78% 163 27.16

July 2008 12 $362,400 $342,304 $233,500 223 94.45% 157 13.08

August 2008 5 $264,600 $252,800 $240,000 414 95.54% 157 31.40

September 2008 4 $272,247 $244,397 $225,000 144 89.77% 156 39.00



FORECLOSURE ACTIVI TY DECREASES 12 PERCENT I N SEPTEMBER

ACCORDING TO REALTYTRAC® U.S. FORECLOSURE MARKET REP ORT

Third Quarter Activity Up 3 Percent From Q2 2008, Up 71 Percent From Q3 2007

New State Laws In California, Other States Impact Numbers



IRVI NE, Calif. – Oct. 23, 2008 – RealtyTrac® (http://www.realtytrac.com/gateway_co.asp?accnt=137300), the leading online marketplace for foreclosure properties, today

released its U.S. Foreclosure Market Report™ for September 2008 and Q3 2008. Foreclosure filings — default notices, auction sale notices and bank repossessions — were reportedon 265,968 properties in September, a 12 percent decrease from the previous month but still a 21 percent increase from September 2007. One in every 475 U.S. housing unitsreceived a foreclosure filing in September.

Foreclosure filings were reported on 765,558 U.S. properties during the third quarter, up more than 3 percent from the second quarter and up 71 percent from the third quarter of 2007.

RealtyTrac publishes the largest and most comprehensive national database of foreclosure and bank-owned properties, with over 1.5 million properties from over 2,200 countiesacross the country, and is the foreclosure data provider to MSN Real Estate, Yahoo! Real Estate and The Wall Street Journal’s Real Estate Journal.

“Much of the 12 percent decrease in September can be attributed to changes in state laws that have at least temporarily slowed down the pace at which lenders are movingforward with foreclosures,” said James J. Saccacio, chief executive officer of RealtyTrac. “Most significantly, SB 1137 in California took effect in early September and requireslenders to make contact with borrowers at least 30 days before filing a Notice of Default (NOD). In September we saw California NODs drop 51 percent from the previous month,and that drop had a significant impact on the national numbers given that California accounts for close to one-third of the nation’s foreclosure activity each month. Anotherexample is North Carolina, where legislation was signed into law in August that requires lenders to provide homeowners and the state’s commissioner of banks a 45-day noticeprior to filing a Notice of Default. We saw NODs drop 66 percent in North Carolina in September.

“On the other hand, initial foreclosure filings in Massachusetts jumped 465 percent from August to September after being much lower than normal in June, July and August. Thattemporary lull happened after a new law took effect in May requiring lenders to give homeowners a 90-day right to cure notice before initiating foreclosure. But in September,about 90 days after the law took effect, initial foreclosure notices jumped back up close to the level we were seeing earlier in the year.”

Nevada, Florida, California post top state foreclosure rates in September

Nevada continued to document the nation’s highest state foreclosure rate in September thanks to an 11 percent increase in foreclosure activity from the previous month.Foreclosure filings were reported on 13,022 Nevada properties during the month, an increase of 137 percent from September 2007 and one in every 82 housing units — more than

5 times the national average.

A 9 percent month-over-month increase in foreclosure activity helped Florida’s foreclosure rate leapfrog past foreclosure rates in Arizona and California to take the No. 2 spot, with

one in every 178 housing units receiving a foreclosure filing in September. Foreclosure filings were reported on 47,956 Florida properties during the month, an increase of 44percent from September of 2007.

Foreclosure filings were reported on 69,548 California properties in September, a 32 percent decrease from the previous month but still up 36 percent from September 2007. Withone in every 189 housing units receiving a foreclosure filing during September, the state’s foreclosure rate slipped to third highest among the states.

Other states with foreclosure rates ranking among the top 10 in September were Arizona, Georgia, Michigan, Ohio, New Jersey, Indiana and Colorado.

Top six states account for 60 percent of third q uarter foreclosure activity

Six states accounted for more than 60 percent of U.S. foreclosure activity in the third quarter. California alone accounted for more than 27 percent of the nation’s foreclosure

activity, with 210,845 properties receiving a foreclosure filing during the quarter — up 4 percent from the previous quarter and up more than 122 percent from the third quarter of 2008.

Foreclosure filings were reported on 127,306 Florida properties during the third quarter, the second highest state total. The state’s foreclosure activity increased 16 percent fromthe previous quarter and nearly 109 percent from the third quarter of 2007.

Arizona documented the third highest state total in the third quarter, with 40,419 properties receiving a foreclosure filing — a 9 percent increase from the previous quarter and a189 percent increase from the third quarter of 2007.

Ohio, Michigan and Nevada all reported foreclosure filings on more than 30,000 properties during the third quarter, although foreclosure activity in Ohio was down 11 percent fromthe previous quarter and foreclosure activity in Michigan was down 8 percent from the previous quarter. Nevada’s foreclosure activity increased more than 22 percent from theprevious quarter and was up more than 132 percent from the third quarter of 2007.

Sun Belt cities dominate top metro foreclosure rates in third q uarter

The cities with the 10 highest foreclosure rates among the nation’s 100 largest metropolitan areas in the third quarter were all located in California, Florida, Arizona and Nevada.

California alone accounted for six of the top 10, and Stockton, Calif., took the top spot, with 3.69 percent of its housing units receiving a foreclosure filing during the quarter.Stockton’s foreclosure activity was down 9 percent from the previous quarter but still up 87 percent from the third quarter of 2007. Other California cities in the top 10 forforeclosure rate were Riverside-San Bernardino at No. 3, Bakersfield at No. 4, Sacramento at No. 7, Fresno at No. 9 and Oakland at No. 10.

With 3.48 percent of its housing units receiving a foreclosure filing during the third quarter, Las Vegas documented the second highest metro foreclosure rate. Foreclosure filingswere reported on 26,304 Las Vegas properties in the third quarter, up 21 percent from the previous quarter and up 129 percent from the third quarter of 2007.

Two Florida metro areas were in the top 10: Fort Lauderdale at No. 5, with 2.30 percent of its housing units receiving a foreclosure filing during the quarter; and Orlando at No. 8,with 1.87 percent of its housing units receiving a foreclosure filing during the quarter.

Phoenix documented the sixth highest metro foreclosure rate, with 2.11 percent of its housing units receiving a foreclosure filing during the third quarter.

Report methodology

The RealtyTrac U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing reported during the month or quarter — brokenout by type of filing at the state and national level. Data is also available at the individual county level. Data is collected from more than 2,200 counties nationwide, and thosecounties account for more than 90 percent of the U.S. population. RealtyTrac’s report incorporates documents filed in all three phases of foreclosure: Default — Notice of Default(NOD) and Lis Pendens (LIS); Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have beenforeclosed on and repurchased by a bank). If more than one foreclosure document is filed against a property during the month or quarter, only the most recent filing is counted inthe report. The report also checks if the same type of document was filed against a property in a previous month or quarter. If so, and if that previous filing occurred within theestimated foreclosure timeframe for the state the property is in, the report does not count the property in the current month.

http://www.realtytrac.com/gateway_co.asp?accnt=137300

http://www.realtytrac.com/gateway_co.asp?accnt=137300



Interest Rates A very interesting event is currently happening in the bond market. Mortgage rates are going up and the the 30 Year Yield (TYX) is dropping. Often we see the twocharts below mirror each others movements but this trend has recently changed. Why? Despite the Government Bailout of Phoney Mae and Fraudy Mac and provideliquidity to the credit markets increasing mortgage rates is not something that the real estate market wants to see right now. The U.S. Government or "Big Mamma" hasno control over the bond market. As risk and fear increases in the real estate market the bond market prices it in with higher yields. There is also uncertainty regardingthe economic health of the United States as it has committed $2.7 trillion to various bailout programs.

Stock Market Thank the lord that Red October is over! What you just witnessed happen in the stock market is worse than anything we have ever seen since the Great Depression. Themarket performance YTD ending 10/31/08 has just been brutal. If you are not using risk management techniques to invest in this market I suggest you get out for good.You will lose in the short and long term.

"Buy and Hold." "Stocks for the long run." If you have ever followed the stock market there is always some "expert" telling you to follow the above strategies. Unfortunately, if you bought and held the S&P 500"For the long run" you have lost money and an entire decade. The S&P 500 closed at 1125 on 11/13/98 and closed at 919 today. Although you have different mutualfunds to choose from in a 401(k) the truth is that equity funds available in these plans are very correlated to the SPX. This means that millions of Americans who havenot touched their 401(k) in the past ten years have lost money. This is very discouraging to watch hard earned money disappear and go to financial heaven. There arestrategies that can be implemented to prevent losing another decade and that means hiring a Financial Advisor to help you manage your 401(k). The stock market willcontinue to remain volatile and trade up, down and sideways for years to come. In order to have a successful investment gameplan for the future economy many of you

are going to need to implement what I call Tactical Asset Allocation.



al Disclaimer

claimers and Acknowledgements

The research done to gather the data in the Charleston Real Estate Market Report involves examining thousands of listings. With thismuch data inaccuracies will occur. Care is taken in gathering and processing the data and information within this report is deemedreliable. IT IS NOT GUARANTEED. The real estate market is cyclical and will have its ups and downs. Past performance cannotdetermine future performance. The purpose of the Charleston Real Estate Market Report is to educate you on current and consistentmarket conditions by reporting leading market indicators with the support of traditional real estate data.

This information is offered with the understanding that the author is not engaged in rendering legal, tax or other professional services. Iflegal, tax or other expert assistance is required, the services of a competent professional are recommended. This is a personal newsletterreflecting 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 effort has been made tomake this report as complete and accurate as possible. However, there may be mistakes. Therefore, this report should be used only as ageneral guide and not as the ultimate source for making money in real estate.

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Q3 2008 Charleston Market Report

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