Housing Bubble Bursting?

[Randolph Kinney]

Just another after the fact housing forecast of doom

Merrill foresees massive price declines

U.S. house prices could fall 25% to 30% over the next three years as new supply, weak demand weigh, Merrill Lynch says.

HONG KONG (MarketWatch) -- Merrill Lynch forecasts nationwide U.S. home prices could decline 25% to 30% over the next three years, as new supply and weak demand weigh on the market. "This sounds dire... but would only reverse part of the unprecedented 130% price surge from 2000 to 2006," wrote economist David Rosenberg in a research note released Wednesday. Rosenberg added the S&P 500 may decline an additional 20% to 25% to breach the 1,100-point level if the market follows historical precedents at times when the U.S. economy is in recession.

And now someone sees a problem with housing that will bring down the markets! :Eyecrazy:

 

[Randolph Kinney]

Government can't see 'em, can't track 'em

Housing — it's not just the coasts (Greenberg blog)

How much has the income of closing attorneys, builders, appraisers, home inspectors, title examiners, loan originators, lumber salesman, misc supply salesman, various trade contractors etc dropped? They are still employed earning 1/2 of what they earned last year if that lucky. Those that are unemployed now don’t show up in statistics because most were self employed or sub-contractors and therefore ineligible to apply for unemployment.

Looks like a new found unemployment scheme has developed: free tax rebates to everyone, working or not, paying taxes or not.

 

[Austin]

I spend entirely too much time watching the talking heads talk about this so called recession. It seems like one minute they get the picture then five minutes later return to their state of confusion.
In my view we are not in a recession, we are in a train wreck brought on by Federal banking policy and fiscal policy by the Fed government. True, the economic activity will decline as a result but is it accurate to call it a recession?
Let’s call it what it is: SNAFU on a grand scale complements of the political class. The demand is there, the supply is available but the terms of sale are in a spiral. If your car has a bad transmission changing the tires will not fix the problem.

 

[Big ole Boy]

THe notion of recession - SNAFU

All talking heads tend use the old ideas "two succesive quarters" to verify an "official recession" .......

.... unfortunately, this kind of thinking describes an economy that we had 10 to 15 years ago where "prices" were much more stable ......

..... so, it becomes quite polyanna to rest on these "old" notions of recession ......

.... today .... were are looking at a "freefall" in the economy ........

.... we won't have to wait to verify what is painfully already obvious .....

..... the smarter ones knew this was coming for decades ... we just staved it off as long as possible ....

.... the pump and dump of the US economy is complete ......

.... all the planets in our solar system revolve around a center of gravity .....

.... and so does ..... "the math/gravity ..... of plain and simple economics ...

... no mystery here .......

 

[Greg Bell]

For Pete's sake , this is a classic recession that may turn into a depression due to the inflated Real Estate market , including Commercial.Read this post six months from now.It will be enlightening.Quick ,Buy some beans and Ammo..

 

[Terrel L. Shields]

I don't see it as a classic recession, but rather a classic bubble. And Austin saw it well before it peaked. I, too, think that in a highly computerized mobile society, these events are very compressed compared to decades ago. And Austin's suggestion that

we are not in a recession, we are in a train wreck

makes sense to me. The government is responsible for this. First, by deregulating and unleashing the mortgage industry much in the fashion they did in the 1980's. Deregulate a long regulated industry and predicatably you get fraud, over-lending, and a crisis. We just repeated the same mistake we made in 1980's with deregulation of the S & L's. The S & L is now called a "Savings Bank"...I call them a "Spending Bank" as they lent excessively and buyers went on a drunken spree only to sober up when the payments come due.

 

[Thomas N. Morgan]

At the rate we are going, pretty soon everybody will owe everybody, and nobody can pay anybody!

 

[Riick]

Next Bubble

Here's an interesting tid bit on THE NEXT BUBBLE


"Janszen's essay lays out an accurate but pretty by-the-book explanation of how bubbles arise, and explores the sources of the dot-com and housing bubbles. But his overall argument is distilled to the following:

[T]he industry in any given bubble must support hundreds or thousands of separate firms financed by not billions but trillions of dollars in new securities that Wall Street will create and sell. Like housing in the late 1990s, this sector of the economy must already be formed and growing even as the previous bubble deflates. For those investing in that sector, legislation guaranteeing favorable tax treatment, along with other protections and advantages for investors, should already be in place or under review. Finally, the industry must be popular, its name on the lips of government policymakers and journalists. It should be familiar to those who watch television news or read newspapers.​

Janszen doesn't have to hint too awful much to make his prediction painfully apparent to the reader: what's a growth industry at the intersection of public policy, current events, and politics in an election year? Ah yes, alternative energy.

Indeed, the next bubble is already being branded. Wired magazine, returning to its roots in boosterism, put ethanol on the cover of its October 2007 issue, advising its readers to forget oil; NBC had a “Green Week” in November 2007, with themed shows beating away at an ecological message and Al Gore making a guest appearance on the sitcom 30 Rock. [...] The Energy Policy Act of 2005, a massive bill known to morning commuters for extending daylight savings time, contained provisions guaranteeing loans for alternative-energy businesses, including nuclear-power technology. The bill authorizes $200 million annually for clean-coal initiatives, repeals the current 160-acre cap on coal leases, offers subsidies for wind energy and other alternative-energy producers, and promises $50 million annually, over the life of the bill, for a biomass grant program."​

 

[moh malekpour]

U.S. Existing Home Sales Fell More Than Forecast

http://www.bloomberg.com/apps/news?pid=20601087&sid=abeWJq6XfCdU&refer=home

Jan. 24 (Bloomberg) -- Sales of existing homes in the U.S. fell more than forecast in December, capping the biggest yearly slump in more than a generation.

Purchases fell 2.2 percent to an annual rate of 4.89 million, the National Association of Realtors said today in Washington. For all of last year, sales of single-family homes declined 13 percent, the most since 1982, and prices dropped for the first time in at least four decades.

Falling property values and tougher borrowing rules may lead to more foreclosures and depress housing for most of this year. The worsening real-estate recession is at the core of the economic slowdown and will probably prompt the Federal Reserve to lower interest rates next week and in future meetings, economists said.

``We are not at the bottom in the housing market,'' said Nigel Gault, director of U.S. research at Global Insight Inc., a Lexington, Massachusetts, forecasting firm. ``The Fed is trying to battle against the fundamentals which say housing is not going to recover until we have a substantial decline in prices.''

 

[Randolph Kinney]

Just stand in line with the rest of the suckers!


New York Expands Countrywide Securities Fraud Suit; Names 26 Underwriters as Defendants

“The actions of Countrywide and its underwriters created a situation in which, when the company’s stock and bond prices fell, it was [FONT=Verdana, Arial, Helvetica, sans-serif][FONT=Verdana, Arial, Helvetica, sans-serif]investors[/FONT][/FONT], and not the company’s executives, that sustained heavy losses,” said New York City Comptroller William C. Thompson, Jr., who helps run the city’s pension funds.

“We will pursue every avenue to ensure that those who defrauded investors are held accountable for their actions.”