Tuesday, December 17, 2013

The Housing Market Is About To Crash

For any of you thinking that your underwater mortgage is now covered by the value of your home or for those who were thinking they would take advantage of the housing market "recovery" and sell, you better take a look at facts.  The facts are not what is being reported to you by the Government, Wall Street or the various housing industry associations.  The facts are what you have to dredge up by wading the through the details of housing market reports. You have to go well beneath the surface of the headline media reports and fluffed up news broadcast sound-bytes.

It just so happens that I have done that and have been doing that.  And just like I warned people in 2004 that the housing market would collapse - which it started to do in mid-2005 - I am warning everyone again that the housing market is about to take a long, hard drop.

How do I know this?  Because I look at the actual data that is being reported by homebuilders.  Not the glossed up b.s. they present to the public at large but the actual data buried in the bowels of their SEC filings.  To begin with, the upper management of just about every single publicly traded homebuilder has been dumping stock en masse.  They are not buying their shares.  They are either taking their stock and option bonus awards - which get filed as a purchase - and dumping them as soon as they are allowed by law or they are dumping shares outright.  I publicly challenged an official at Pulte Homes to have himself and his management cronies take after-tax cash from their bank accounts and buy shares outright.  That was about two months ago. Not only did he not get back to me but, in fact, insiders there are dumping.  Look for yourself:  Stock Bonus At Zero Cost Dumped At $18.35.  They are ALL doing this. 

Want to know why insiders are dumping?  You can read my latest two articles in which I dredge up the real numbers here:  Housing Market Bear Growls - Black Swan Coming  and here:  New Home Prices Falling Fast.

For those of you looking to sell your home thinking it is worth what a broker might have quoted you three months ago, forget about it.  Prices of new and existing homes are falling - not year over year as reported - but sequentially month to month, starting in the early summer. It is the latter data that is relevant - not the latest month's data vs. the same month last year.  My links above have some of the data to prove that.  In addition, you may have noticed more "for sale" signs popping up.  This shouldn't be happening in December but it is - at least all around Denver. I have received emails from all around the country with readers telling me they see the same thing where they live.  My bet is that there will be a deluge of homes listed for sale in early 2014, after the dust settles from the holidays.  Prices are going much lower.


  1. Thanks for keeping it real dude. Now I will go vomit my breakfast as all my assets continue to collapse.

  2. Common sense and truth have lost out to incredible cronyism and the Fed's support...but maybe people will start to get the message....

    Jim Grant.."The Fed can change how things look, it cannot change what things are,"

    "I got up this early to talk, not to listen," Jim Grant berates Fed-apologist Steve Liesman as the two go head-to-head over the fallacy that QE has been a success. "The Fed can change how things look, it cannot change what things are," is the single-sentence summation of the mirage that the Fed's "dangerous monetary manipulation" has created.

    Arguing that Grant is wrong because, as we saw this morning with CPI, there is no inflation, Grant blasts back pointing to the massive inflation in asset prices, art, farmland, ferraris as indicative of who the Fed's policies have helped. Grant adds to the list of obvious bubbles and even Joe Kiernan jumps in on his side against Liesman's insistence that the Fed is omnipotent (because the currency hasn't crashed... yet).
    150 seconds of perfect disequilibrium at the pretense of central planning...


    The only happy ones are those benefiting from this obscenely corrupt financial charade.

  3. No deluge in listed inventory in Houston yet, but the market is turning. We just hit a new low for listed inventory in November (only 2.9 months). What's interesting is now it's not just the $80K and below segment that's seeing declining sales. Negative sales now hitting $150K price segment, and all other segments seeing softer activity.

    What's comical is that the local real estate board mentioned low inventory, seasonality, and even higher mortgage rates, but they skirted the AFFORDABILITY issue. As a practicing broker, I believe this the four-letter word in the industry right now that no one wants to discuss.


  4. I couldn't believe my ears as I heard an announcer on NPR FM station today make the statement that due to new homes not being built as much in quantity lately , to be looking forward to a surge in new homes built and sold for 2014 throughout the U.S. ! ?
    Dave , what are these people smoking , cuz I don't want any !!

  5. Anecdotally Dave, I will tell you that in my area of New Jersey very near the George Washington Bridge, in a two block area there were 9 homes put up for sale since spring. Only one sold but the eight others are still up for sale, and with no added signage such as ‘short sale’, ‘price reduced’, ‘sale pending’, ‘ under contract’, etc.
    A few now instead are attempting to ‘rent’. I am not seeing any foot traffic to speak of.
    This does not bode well, I’m afraid.

  6. People who take mainstream financial news at face value deserve what they get....

  7. If Lennar is in such great shape why we're they dumping massive amounts of shares?


    The stock is up nearly 4% in the futures as I type.

  8. Dave,
    By holding up houses hasn't the fed also helped the property insurers maintain their premium income versus having it drop? This year I received a 26% increase in home premium with no changes to policy. Is this to offset lost income in a zirp world? Seems like price gouging....they say replacement costs have gone up but then how can reported inflation be so low?

    When you think about it the premiums you pay for auto, health, and home insurance keep going up and consume a great deal of the average consumers disposable income while their wages on balance have fared poorly.

  9. Another great sign.......

    Millionaires become the 'family bank'
    The wealthy are handing out so much money to needy family members that they've earned a new nickname: "the family bank."

    Nearly half of the multimillionaires in a new study gave money to family members, with an average contribution of $313,200 over the past five years, according to Merrill Lynch and Age Wave.

    The assistance includes money to adult children, grandchildren, parents and siblings—not to mention the proverbial feckless cousin and mercenary brother-in-law.
    Fully 81 percent have provided support to adult children and 39 percent to grandchildren over the past five years, the study found.

    Because of the tough economy, today's multimillionaires are doling out so much to family that they are now acting as "the family bank," said the study, which looked at individuals with $5 million or more in investible assets.


  10. MSM lies, charts don't................

    Land Of The Lost: Mortgage Applications Tumble -5.45% To 1995 Levels

    The U.S. remains in the “Land of the Lost” in terms of mortgage purchase applications, real median household income and the employment-to-population ratio.


  11. thanks as usual dave. The BS is neck deep these days in the mainstream news propaganda.

  12. The US Federal Reserve has announced a slowdown in its effort to boost the US economy.

    The central bank said it planned to scale back its $85bn (£51.8bn) a month bond buying programme by $10bn a month.

    Stimulus of this kind is designed to lower interest rates and boost economic activity

    The Fed's governing committee cited stronger job growth as a reason for the decision to begin winding down its programme of bond buying.

    The announcement followed a two-day meeting in Washington DC.
    Continue reading the main story
    “Start Quote

    Our economies and financial markets have been hooked on the drug of cheap money for longer than at any time in history”

    image of Robert Peston Robert Peston Business editor

    Read more from Robert

    The Fed's decision to begin to ease its extraordinary stimulus efforts also indicates that the central bank believes that the US economy has finally strengthened enough that it no longer needs as much support.

    The $10bn reduction comes from two areas: the Fed will reduce its US Treasury purchases from $45bn to $40bn per month as well as its buying of mortgage-backed securities (MBS) from $40bn to $35bn per month."


    Another trick-up-the-sleeve by the Feds. Watch the stock market soar more to QEternity. wash-rinse-repeat.

    1. Tapering - Join the dots and end up with ZIRP

      When a central bank holds interest rates below their natural market level, it stands there to provide however much liquidity is required to keep the rate suppressed. This in practice is the result of a number of factors including overall demand for money, and on the supply side changes in the quantity of narrow money, bank credit expansion and required reserves. QE is one form of this liquidity, and the extent to which QE is reduced must be compensated for by other means if interest rates are going to be kept at the target level.

      This simple fact makes changes in QE meaningless in the broader monetary context, and on this vital point the Fed keeps silent. Instead it attempts to offset the deflationary implications of tapering by increasing its commitment to zero interest rate policy (ZIRP) and for longer. We are left wondering how long it will be before this contradiction is generally understood. Furthermore, those that link QE to prospective prices for gold and silver are ignoring the commitment to interest rates and are effectively pushing a one-sided argument.

      It is not just precious metals that are mispriced. Government bond yields, particularly for the weaker eurozone states do not reflect credit risk. Equity markets are priced on the back of ZIRP. Fixed assets, particularly housing and motor vehicles are being financed on the back of this unreality.

      The important point is not tapering, but that ZIRP continues indefinitely.



  13. CFTC Misreporting Size of Swaps Market, Agency Says Technical Errors in Data Resulted in Undercounting of Swaps Market

    The CFTC said in a footnote to its weekly swaps report that the largest data repository, the Depository Trust & Clearing Corp., "has informed us that due to a…technical coding issue, the notional values in the interest rate asset class have been understated." The agency also reported "a processing error" by a separate repository operated by CME Group Inc. A CME spokeswoman didn't respond to a request for comment. A CFTC official characterized the data problems as "growing pains." The agency formally began to report swaps data on a weekly basis just last month.


  14. Breaking Bad(der): Existing Home Sales Miss Expectations (4.9M Vs 5.02M)

    Existing home sales missed expectations this morning. Existing home sales for November were 4.90 million versus the expectation of 5.02 million.


  15. The Kidnapper wears Prada

    Published on Dec 18, 2013
    The Kidnapper wears Prada: Why the rich are getting much, much richer, why the Fed is in a corner and what it means for you!

    As the Federal Reserve gets a new chair and decides what to do next, whether to print $85 billion a month more or not, we examine the heist, who gets all the loot, why today's kidnappers wear Prada. Wake up. See what happens when financial kidnappers dress up as loyal patriots and extort money in the name of the common good.

    a little less but message intact............

  16. Blackstone’s Big Bet on Rental Homes

    The Blackstone Group LP, the world's largest private equity firm, became the largest owner of rental homes in the U.S. , acquiring 41,000 homes in the past two years. In October, Blackstone offered the first-ever "rental-home-backed" security on Wall Street. The bond is backed by just a fraction — 3,207 — of the rental properties owned by Blackstone. Monthly rent checks from the properties will be used to service the $479.1 million security.