Wednesday, March 23, 2011

Housing Is Done

I don't want to beat a dead horse but I took a lot of crap from everyone I know when I sold my home in 2004.  It took a few years but my conviction was correct.  The dopes who bought my home used 100% financing in the form of a 1st mortgage and a home equity loan to pay for it. LOL.  They are at least 30% underwater right now (30% of a big number, by the way).

As most have seen by now, new home sales absolutely collapsed by 16.9% in February to a record low.  I just want to point out how pathetic our media is by showing you the Bloomberg news headline BEFORE the news hit - Blooberg was anticipating a strong number based on Wall Street-Einstein forecasting:  Sales of New Homes in U.S. Probably Climbed in February" - here's the LINK  I wanted to post that in order to exemplify how important it is to to do your own due diligence and research in order to get closer to the truth.  Our media in general is a complete failure at this.

Here's the details from today's new home sales report:  New-home sales reach record low; Feb. median new-home price down 13.9% to $202.1K; Feb. median new-home price drop biggest on record; Northeast new-home sales fall 57% on month; Every region but the West saw record lows.  Here is a pretty good news report of the details: LINK

What's even funnier is that Goldman Sachs issued a strong buy recommendation on Pulte Homes early this morning.  I'm sure they have a priority client looking to unload its position in PHM.  If PHM were a double-digit stock I would be shorting it right now.

The price-cutting new homebuilders will feed into the price levels of existing homes, and bank foreclosure inventory will further fuel the downward price-spiral.  About a year ago several people asked my view on housing prices and when I said "lower," they insisted that it was a good time to buy.  Oh well...

Dallas Fed-Head Richard Fisher has been in the media today and yesterday whining about all of the money-printing and insisting that it will end with the expiration of QE2 on June 30.  This is pure Fed-official rhetoric.  In fact, a long-time colleague of mine referred to Fisher as "a douche" when I asked his view on where Fisher was getting his evidence that the economy was improving.  I'm still chuckling over that response and agree.

Anyway, I would like Fisher to explain to me how the U.S. Government will finance its Treasury issuance if the QE program terminates on June 30th.  It would be impossible to replace the Fed right now as pretty much the sole-source of funding for new Treasury debt.  Let's be realistic about this.  And the housing market collapse is the surest indication that the economy is going back into a tail-spin.  In fact, most of the positive numbers in all of the economic data being released is coming from price increases at all stages of production, imports and exports.  Any real, marginal production increases are coming from Government-supported industries like autos and defense/aerospace.  The consumer, when you strip inflation out of the retail numbers, is still in retraction.  Employment, when you strip out the manipulation of the numbers, is still contracting. 

Make no mistake about it, QE3 in some form, overt or disguised, will happen.  This is why the dollar can't sustain any kind of rally right now and it's why gold and silver continue their inexorable climb.

5 comments:

  1. Try this

    http://bit.ly/i7F7Ee

    Sold Sep 2005. Buyer believed to have spent another big 6 figure on additional 'remodeling'

    ;)

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  2. Hey Dave,
    Where would you put the odds of the Dark Riders paying us a visit before opex and rattling their swords? You think they can keep the lid on until Tuesday?

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  3. good question. i havent' even been paying attention to opex. the more interesting question is when will that big chunk of open april silver be delivered?

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  4. What I don't understand is how we here in the UK we still have housing that is way overpriced. Ave house prices are still near 7x ave salary.

    I'm in rented waiting for the oncoming US style housing collapse. Got out July '10 phew.

    ReplyDelete