Anyone have any idea what's causing this massive boom in the Midwest?

Usually stuff like that is a result of seasonal adjustments etc. I think all of March is going to be an "upward biased" month for economic data... partly because of wamrer weather and partly because of the earlier time change.

I'm not sure if this had been commented on yet, but there was a Morningside commentary I first read on housingpanic on the state of some banks that did Alt-A and the problems they were having.

The resource cannot be found.

What I thought was interesting was the conundrum they were having selling into a flat MBS market, if they could not make costs in the sale they will probably hold them on the books. I guess we're going to find out who's the best capitalized when the tide goes out.

"Most of the $400 billion in Alt-A loans originated in 2006 were sold into the secondary market. However, the recent subprime mortgage blowup has scared investors away from mortgages, including Alt-A mortgages. Banks, which have continued to originate loans, are faced with two choices. They can sell the mortgages for unattractive prices, taking an immediate loss on the loans, or they can write them down to fair market value and hold them in their loan portfolios.

If a bank chooses to sell the mortgages, we estimate, in a worst-case scenario, that the loans will sell for just 98.64% of their value. Add the cost of making the loan and selling it for a 1.36% discount, and a bank will take a real and immediate hit to its income statement. For instance, SunTrust STI originated $10.1 billion of Alt-A mortgages in 2006. Selling at a 1.36% discount would cost the bank a whopping $137 million, or $0.38 per share. This might seem like a major problem, but we estimate that the loss would have lowered SunTrust's 2006 earnings by only 7%. The largest impact would be at Indymac NDE , where writing Alt-A mortgages to sell into the secondary market is its primary business. We estimate that Indymac would lose almost 3 times what it made in 2006. Investors should note that this is just an exercise; in reality, Indymac would stop writing loans if all it could do is sell them at a loss.

...

We do not believe that selling the Alt-A loans at current market prices is the best action the banks could take for their shareholders. Most banks, and all of the major banks, have enough capital to hold the mortgages in their loan portfolios for the short or long run. The only exception from the nine listed above might be Indymac. As long as the underwriting on the Alt-A mortgages is sound, the banks will be able to make money, not lose it, by holding the mortgages. It would simply take time, as the bank can either collect interest income over several years by holding the mortgage, or wait for the market to recover before selling.

Consequently, we believe that banks will write down the Alt-A mortgages they currently have for sale and hold them in their portfolios at fair market value. Because of accounting rules, banks would record the same type of loss as if they sold the mortgages (see prior table). However, this would be only an accounting loss; while it would hit earnings, it does not destroy any economic value. Assuming that underwr

Assuming that underwriting remains sound, banks should recognize enough income in the long run to more than offset this loss.

In other words, banks would earn a long-run profit on the Alt-A mortgages in this scenario. ..."

In my part of Indiana, home permits were down 40% from last year. It would be nice to see more detailed data. The weather was really cold in Feb, so maybe somewhere, much of the Feb starts were shifted to March.

Ethanol is money for farmers, but that would not so quickly translate into local prosperity.

Dear Friend:

Thank you for contacting me about subprime mortgages, which are loans that are marketed to borrowers with weak or imperfect credit. I appreciate hearing from you.

In order to purchase a home during the recent housing boom, millions of Americans turned to lenders offering alternative mortgage products such as interest-only and adjustable-rate mortgages. Lured by low interest rates and easy access to credit from predatory subprime lenders, millions of Americans purchased homes they cannot afford.

Though subprime loans have initial monthly payments lower than standard mortgage loans, the payments are structured to increase either suddenly or slowly over time. As a result of recent interest rate hikes coupled with abusive loan terms, payments often grow beyond what borrowers can afford to pay, forcing many families into delinquency or even foreclosure.

The Senate Committee on Banking, Housing and Urban Affairs is currently holding hearings on this matter in an effort to gain more information about unscrupulous lending practices and the current crash of the subprime mortgage market.

Please know that I am monitoring this situation closely and will

keep your views in mind should pertinent legislation come before the Senate.

Again thank you for writing to me.

Barbara Boxer
United States Senator

GRRRRRR! I received the above from Boxer's office. If this is her honest-to-goodness level of understanding of what has gone on- I am truly frightened of the fixes she might help dream up.

CA r.e. bubble hasn't been limited to the residential sector. This is incomprehensible!
"April 12 – PRNewswire: “New Pacific Realty Corp. announced yesterday the sale of 9900 Wilshire to an affiliate of The CPC Group for $500 million. The half-billion-dollar price tag for the 7.95 acre site, which is adjacent to the Beverly Hilton Hotel and overlooks the prestigious Los Angeles Country Club, is one of the last remaining major development parcels in the City of Beverly Hills, and believed to be largest price ever paid in North America for a development site in the entitlement phase. New Pacific Realty acquired the site just three years ago for $33.5 million.”

If you write a Sentor write about Real-estate prices and affordability not the loans.

Err.. Whoops. Sorry Daisy, I thought you were commenting on the Morningstar article I had posted. My comments still are valid, just a little less direct.