I agree. And up here we saw a bunch of properties for investment dumped. Prices came down 10% very fast and then flattened. That's where we are today. I'd expect we see another 10% next summer barring some major change in the market fundamentals -- interest rates, layoffs, etc... The thing is if you are underwater $50-$100K but can finance a property for a $1K/month loss what will you do -- crystallize the loss or take the smaller cash flow hit and wait it out? What I am seeing is people waiting it out.
Some people think this may just be the start of a larger economic plunge: http://money.cnn.com/magazines/fort...1/13/8393160/index.htm?postversion=2006110111 Notice the chart comparing the HMI vs the S&P 500 over the past twelve years. A picture is worth a thousand words.
That's not a recession -- that's more like a depression. A 700 SPX would wipe out everyone's retirement planning. If you added in a substantial shot of negative housing equity we'd be looking at dark times indeed. Let's hope not.
great find... biggest concern is ARMS resetting...foreclosurs and massive layoffs within the homebuilding industry....
Electrical contractor friend is laying off 25 of 47 employees today in one division. Yep, market is very strong on the construction side.
this is one of the biggest reasons why i am a bear. IF the CEOs of the homebuilders say "no end in sight to the decline" and recently the housing industry is one of the largest in the united states when you include 1. Steel 2. building supplies 3. lumber 3. Copper 4. Home improvement Manufacturing 5. Home improvement retail 6. realty 7. roofing 8. Transportation serives 9. construction services 10. construction equipment. 11. lending services including banking and finance etc. you get a HUGE portion of the economy. when i see days like today with such a staggering housing starts number...and home builders are actually UP on the day... I am LITERALLY beating my head against a wall...i have a bump.
Maybe they taught economics 101 different where you went to school. Where I went to school, lower housing starts and permits means less supply. Less supply means less pressure on prices. OldTrader
And it also means less revenues, less book value of assets (because there are fewer), negative profit growth, and is a sign of worse times to come. KBH up, BIDU up, etc. This current market has abandoned fundamentals. The markets won't remain oblivious forever - they will just for a while. So many crap stocks being bid up higher and higher for the only reason that trailing PE looks nice and there's nothing else cheap to chase up. Dumb market, but it won't remain for long. Housing's only hope is massive wage inflation to pick up the slack after more ARMs start resetting. The fed's goal should be pro-inflation, devaluation of the dollar, and lowering interest rates. Its the only -temporary- way out of the housing doom without immediate pain. This will keep everyone happy for a few months. Then they'll see commodity prices even higher than before, since the dollar will be worth so little. Another odd joke is that Bush will take credit for the bull market of the last 5 years and the incoming next (likely Democratic) president will take the heat on the USD deflationary death spiral we're about to head into. And it won't be a 12 month death spiral. This will be a 5-10 yr deep one.
Less supply could mean higher prices assuming the market isn't already saturated with people that purchase more than 1 home, which I believe it is. The big home builders aren't that dumb. Their analysts can see what is coming and they are making smart business decisions. They have volume and leverage on their side. They can squeeze their suppliers for cuts. They are now offering only 3 models when they offered 5 before. Everything is going to alacarte in the new homes. Throwing in tv's and etc. You get the point. My wife called her contact in home sales division and the forecast for the first quarter is ugly, plain and simple.