The While studies indicate many U.S. real estate markets are overvalued and that some are even approaching "bubble" status, home prices continue to skyrocket. Last year, a record number of metropolitan areas boasted double-digit home price gains during the fourth quarter of 2004 - the result of limited housing supply and booming population growth. This, coupled with plummeting mortgage rates, spurred a 4.7% rise in housing starts (2.2 million units) - the highest since 1984.

But National City Corp., a bank holding company in Ohio, analyzed the premier U.S. housing markets, taking into account population density, past market premiums and relative income levels to determine where home prices should actually be. They found that one-fifth of the areas surveyed were "significantly overvalued": in Chico, Calif., for example, homes sold for 43% more than their estimated value. The analysis asserted that premiums exceeding 20% probably indicate a massive drop in future prices for that area.

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  One research economist in Oahu, Hawaii (where the study found that home prices had soared over 20%), disagrees. "While the numbers look high, we haven't had incredible growth compared to California," says Harvey Shapiro. "Our price growth has been similar to other places."
 
According to National City, the most overvalued housing markets in the country are found in Los Angeles, Miami and San Francisco.
 
Find out what type of REIT's will avoid the Housing Bubble Blowout - Just Go Here Now.

NewsMax's FIR Told You First: U.S. Pension Plans In Dire Straits

NewsMax's Pension plans in both the public and private sectors are being rendered insolvent by indifferent money managers, according to a report in Investor's Business Daily.
 
The high-level executives and government officials who manage the money for these defined-benefit programs are making horribly risky investment decisions - as they remain unaffected by any repercussions from their actions.
 
Studies estimate that private pension plans in the United States have around $450 billion in unfounded liabilities.
 
And as we told you in Financial Intelligence Report (Oct. 2004) The Pension Crisis Is Already Here, the government-run Pension Benefit Guarantee Corporation - which insures private pensions - was running a $23 billion deficit, up from $11.2 billion in 2003.
 
A financial crisis has been spawned by irresponsible behavior: Corporations cater to union demands for exorbitant pensions, knowing they will never be able to pay up in the distant future. And politicians seduce voters by promising costly retirement benefits - when they know simply can't afford it.
 
While the newspaper discussions talk of a Social Security crisis, the pension crisis is already here. Baby boomers are already retiring - many at age 55. The demands on pension funds to pay out to retirees will be enormous, causing a monumental sell-off of pension securities - stocks, bonds and other assets.
 
But there is little talk about the pension crisis among the media or the political elites.
 
As his term comes to a close, Federal Reserve Chairman Alan Greenspan appears to have some suggestions on how to salvage Social Security. Insiders say he is suggesting a new method of calculating retirement benefits - a progressive indexing system that would safeguard the interests of low-income workers while exposing higher earners to a type of inflation index that would cut into their benefits in the long-term.
 
Such a plan may soon be the solution for the pension crisis.
Editor's Note: Get the full story on the real Pension Crisis and how to protect your investments as pension funds sell off assets. Go Here Now.

Dividend Fund's Success Confirms FIR recommendations

As NewsMax's Financial Intelligence Report (Oct. 2003) High-Yield Dividend Stocks reported: "Experienced, prudent investors know that dividends play a crucial role in long-term investing...Others have come to understand that if they hold stock only in companies that don't pay dividends, they are at the mercy of the marketplace to bid their stocks higher to realize a positive return on investment."
 
Validating this statement is a four-year-old mutual fund that is finding success tapping into blue-chip stock dividends - a source of profit largely disregarded since the early 1990s. Lord Abbett America's Value Fund (with its $658 million in assets) is picking up where numerous businesses left off during the dot-com boom, when many companies ceased to pay dividends, focusing instead on capital appreciation.
 
Edward von der Linde, a Lord Abbett fund manager, says that during that era, most investors had a voracious earnings appetite and saw dividend distribution as "a sign of weakness". He claims that investors interpreted dividends to mean that the company's management didn't know how to make better use of its money.
 
But von der Linde and his associates knew that dividends were a key indicator of a company's growth - dividends accounted for almost half of the S&P's returns from 1926 through 2002. So they waited until investors valued these payments once again, and they seized an opportunity.
 
Now the Lord Abbett fund uses dividend yields to cushion losses during down periods and enhance overall returns for the long term. In 2004, the fund returned almost 17%, beating the S&P 500 by close to six percentage points - and managers insist it still has room to grow.

Editor's Notes:

• What are the best paying dividend stocks? Financial Intelligence Report tells you - Go Here Now.
• Gold is the 'Ultimate Insurance' - Read More. 
• Find out what type of REITs will avoid the Housing Bubble Blowout - Just Go Here Now.
• Get the full story on the real Pension Crisis and how to protect your investments as pension funds sell off assets - Go Here Now. 
• Beat Heart Attacks and Strokes - Go Here Now.