“It’s going to be a long, slow slog and the lagging sector will be new home sales because they have to compete with existing sales and foreclosures,” Bill Hampel, chief economist at the Credit Union National Association in Washington, said before the report. “New home sales probably have until the fourth quarter until they start recovering.”
What happens in the 4th quarter that makes the housing market recover? A sudden influx of immigrants? A sudden increase in employment?
We don’t think there will be a recovery…not in the 4th quarter…not this year…not next year…not for 10 years.
Instead, housing prices are probably going to sink. Why? Because they’re a consumer item, not an investment. For 100 years, a house was a place to live in…and housing prices more or less kept pace with inflation. Then, beginning in the mid-’90s people came to see a house as “the best investment you can make.” They began buying houses as a way to make money…and as a way to save for retirement. It made sense. What would you rather have, a mutual fund growing at 10% per year…or a house that goes up by 10% per year? The house! Because you can live in it…and show it off. So you leverage up…you buy twice the house you can afford. You live better. And you make more money.
Those days are over. But, not everyone realizes it. Some wait for the housing market to ‘recover.’ Some may imagine that they will once again see profits from their houses. Others just hold on…waiting for an up-tick so they can get out.
There are still millions of people living in houses they can’t really afford…and millions of others who are “underwater” and running out of air. That’s why the number of houses facing foreclosure rose in the last quarter of last year. And it’s why the inventory of unsold houses continues to rise.
Gradually, people are coming to see houses in a new light. Soon, they’ll see them as money-pits…as expensive follies…and as a pain in the neck. Instead of being proud to have a McMansion…they’ll be embarrassed…like having a car with tail fins in 1985…or wearing a mullet in 2010.
Not only that, it will also be seen as a big waste of money. As the Great Correction continues, unemployment will remain at high levels…savings will increase…and people will want to cut expenses. Among other things, they’ll want smaller, cheaper houses. They’ll want to dump their suburban castles and walk away from their country palaces.
Houses will be losers.
More Here..
Tent industry might be a good investment right now, or maybe just buying a tent is a good investment, or a travel trailer.
ReplyDeleteThe housing industry will not be anything like it is or was. In the next 25 years Mobil homes, tents and large cars will be the living quarters for many, including myself.
The sheeple will be shocked when the local Sheriff shows up, they are swat teamed, tasered and physically kicked out of their dream homes. You know, those nice 3 bedroom frame homes with pressed wood siding in some gawd awful semi abandoned sub division, where many of the homes have been bull dozed and the remaining vacant homes being lived in by homeless or drug gangs. A wonderful picture of America? You betcha.
Now go finish your 24 pack and watch your March Madness.
Baa!Baa!
Not so !
ReplyDeleteToday I learned that if you bought your 750k dream home w/pressed wood siding and cedar lookalike shingles with curbside garbage pickup
on your 45k salary with no money down and a BMW
to park in the driveway -----------------------
And And --------------------- And you find yourself a mite behind in payments; or or
or your Mcmansion is now only worth Umm like maybe 200k or so !
Well don't worry friends and neighbors; barry is a gonna borrow some tarp monies & give 'em to ya all !
Ain't that jest the best news !
I simply couldn't add anything to the article.
ReplyDeleteIt is just so very true, every word of it.
"There are still millions of people living in houses they can’t really afford" (This is my favorite line in the article.)
This was one of the best ones yet on this blog.
Well I'll be gawt dang, that barry is real change for sure, helping them folk who bought a mcmansion with an interest only loan. And that tarp money is for sure real money.
ReplyDeleteI just knew that Fox news economic babe telling me the recession is over was right.
I'm off to buy me a 48" flat screen tv, so I can finish watching March Madness.
Thanks barry!
Nice picture, EA.
ReplyDeleteMany good points in the article. Too bad the powers that be will not let the values drop. Buy some land and build your own.
ReplyDeleteAlos, what is wrong with drinking beer and watching basketball? It's called leisure time, you might want to try out.
all of dem house bought in the last year, thanks w, 100% of these homes was bought during your term of liar bank loans, the banks knew could not be paid back, thanks war criminal murderer loser cokehead bush
ReplyDeleteOwning property is an American right...for those who can afford it. Not looking forward to moving into government housing. Better to live in a tent.
ReplyDeleteI once was the Founder of a non-profit humanitarian org, that was dedicated to building basic housing for the 4 billion (out of 6 billion) people who live in extreme poverty. I had to close the org, because "rich" people in the First World, didn't care about the poor people of the Third World.
ReplyDeleteNow it looks like I should start over and focus on this First World (the USA) as it devolves into a Third World nation.
I could build a 300 square foot home and include solar power for about $2K. Then there are "Cobb Homes", some have walls built from old tires, stacked high and filled with rocks or sand or cement. The tire walls are then covered with adobe. Add a roof and you have well build home. Dome homes are excellent. Yerts are wonderful if you don't live in extreme weather areas, hot summers and frozen winters. My favorite is to build the home from foam insulation panels, walls, interior walls, roof, cut out the window and door frames and spray every surface with Grancrete. Grancrete is as strong as concrete, but very flexible at the same time. A Grancrete home can be constructed in the morning and lived in the same night. Tumbleweed homes are usually in the 100-300 square foot range. One model looks like a doll house and it can be hooked up to a small truck and towed anywhere.
This is where we're headed folks. We have to clean out Washington DC first.