A Goldman Sachs Report on Housing

Earlier in the week Goldman commented on the MBA foreclosure data and noted a few interesting tidbits.

• If the "speculator states" of California, Florida, Arizona and Nevada were excluded the national deliquency rate would have fell, instead of showing a an annual rate of increase of 17%.
• The report also noted a migration of credit problems from subprime to prime with exotic products getting the blame.
• The Goldman report also noted that they are bearish on the housing market seeing home prices 13% to 14% over valued. Goldman is of the opinion that it could take "several" years for home prices to reach fair value.
• They also remind that the peak in subprime ARM resets won't occur until March of 2008; resets on option ARMs won't reset until 2010!
• They favor shorting originators like Countrywide (CFC) and Washington Mutual (WM).