The Golden Truth: Pending Home Sales Index: "Nothing Is But What Is Not..."

Monday, October 4, 2010

Pending Home Sales Index: "Nothing Is But What Is Not..."

(Act 1, Scene 3 Macbeth). The National Association of Realtors released its montly pending home sales index today. The headline cheerily reported "another gain." Here's the link: Pending Home Sales. Of course, in taking its cue from Government economic reporting, buried in the cheerleading is that fact that the number originally reported for July was revised lower, as was the case for the June number when July was reported.

Interestingly the NAR chief economist Lawrence "the glass is overflowing" Yun's comments uncharacteristically reflected some caveats to his effervescent commentary. If Yun is now hesitatingly shaking his pom-poms, the true conditions of the housing market must be just absolutely horrific. Not to mention the fact that, despite record low mortgage rates, the August 2010 index level is 20% below the level reported for August 2009. Take away the homebuyer tax credit and introduce a sell-off in the bond market, and the housing market is set up for another cliff dive (nothwistanding the fact that the economy is headed into purgatory and the job market, other than for Government employees, continues to deteriorate).

It is my view that before the housing market ever reaches a true bottom, we are likely to see prices fall at least another 30-40% from where they are now. I said back in 2002 that I expected ultimately, minimually a 75% decline from peak prices. That has already occurred in some of the worst bubble markets. I know that on a case-by-case basis some very high end homes in Denver (Cherry Hills Village) are down in excess of 60%. The bottom line is that, despite what even some nabobs of negativity like Nouriel Roubini are saying, we still have a long way to go.

On another note, it would be wise for the hoi polloi to start taking their cues from the super-rich: Super-rich Investors Buy Gold By The Ton

3 comments:

AnonymousMonday, 04 October, 2010
Dave,

You mentioned Cherry Hills Village in Denver is down 60 percent. So, i guess that's a good place to buy in. do you know of any other "A" grade areas on the west coast that are down 60 percent? ie. san francisco, los angeles, san diego areas.

Ricky T
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Dave in DenverMonday, 04 October, 2010
ya buy in if you want to watch your investment go down another 30-40% from here.
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UnknownTuesday, 05 October, 2010
Dave,

You might find this post on the CA RE market shadow inventory nightmare interesting. DHB's blog has been spot on thus far:

http://www.doctorhousingbubble.com/california-has-nearly-9-years-of-housing-supply-58-county-mls-supply-and-foreclosures/

Keep up the good work!
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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.