Best of the Week
Most Popular
1.North Korean Chinese Proxy vs US Military Empire Trending Towards Nuclear War! - Nadeem_Walayat
2.Researchers Find $10 Billion Hidden Treasure In A Dead Volcano - OilPrice_Com
3.Gold and Silver : The Battle for Control - Rambus_Chartology
4.Asda Sales Collapse and Profits Crash! UK Retailer Sector Crisis 2017 - Nadeem_Walayat
5.Deep State Conspiracy or Chaos - James_Quinn
6.The Stock Market Guns of August, Trade Set-Up & Removing your Rose Tinted Glasses - Plunger
7.Gold Stocks Coiled Spring - Zeal_LLC
8.Neil Howe: The Amazon-Walmart Rivalry Will Determine the Future of Retail - John_Mauldin
9.Crude Oil Price Precious Metals Link in August - Nadia_Simmons
10.Gold and Silver Precious Metals Nearing Breakout - Jordan_Roy_Byrne
Last 7 days
Global Financial Crisis 10 Years On: Gold Rises 100% from $650 to $1,300 - 23rd Aug 17
GBP/USD Extends Losses - 23rd Aug 17
Donald Trump Terrorist in Chief, “We Aren’t Nation-Building Again, We Are Killing Terrorists” - 23rd Aug 17
How Planned Fed Rate Increases Impact The National Debt & Deficits - 23rd Aug 17
The 3 Assets to Add to Your Stocks Portfolio in This Rate Tightening Cycle - 23rd Aug 17
Half Price UK Theme Parks Entry 2017 With Cheap Chocolate Packs - 23rd Aug 17
[GIFT] Market Control System! - 23rd Aug 17
4 Reasons European Stocks Will Make a Big Comeback This Year - 22nd Aug 17
3 Lesser-Known Charts Revealing a Massive Stock Market Disconnect - 22nd Aug 17
U.S. Treasury Secretary: "I Assume Fort Knox Gold Is Still There" - 22nd Aug 17
Is the Stock Market Setting itself up for a Spectacular Crash? - 22nd Aug 17
Power Elites Launches Civil War Against Trump - 22nd Aug 17
The Stock Market No Longer Cares About Trump - 21st Aug 17
The Coming Boom Of Productivity Will Get Our Economy Back On Track - 21st Aug 17
Buffett Sees Stock Market Crash Coming? His Cash Speaks Louder Than Words - 21st Aug 17
This Could Be The Biggest Gold Discovery In History - 21st Aug 17
Stock Market Correction in Full Swing - 21st Aug 17
Seeking Confirmations – US Stock Market - 21st Aug 17
The changing demographic of online gamblers - 21st Aug 17
Gold is a coiled spring… the breakout is here, fundamentals are in place, technicals are compelling - 20th Aug 17
A Midsummer Night's Dream: Buy Gold and Silver - 20th Aug 17
Gold Mining Stocks 2017 Fundamentals - 20th Aug 17
EIA Weekly Report and Crude Oil - 19th Aug 17
4 Insights for Adjusting Your Portfolio in a Rate-hike Environment - 19th Aug 17
Gold Direction Indicator - 19th Aug 17
Historical Inevitability and Gold and Silver Ownership - 19th Aug 17
You Are Being Lied To About “Low” Gold Demand - 19th Aug 17
This is Why Cocoa's Crash Was a Perfect Setup - 19th Aug 17
Gold, Silver Consolidate On Last Weeks Gains, Palladium Surges 36% YTD To 16 Year High - 19th Aug 17
North Korea Is Far From Being Irrational… It Has A Plan - 18th Aug 17
US Civil War - FUNCTIONAL ILLITERATES TRYING TO ERASE HISTORY - 18th Aug 17
Bitcoin Hits New All-Time High Over $4,400 As It Catches Paypal In Total Market Cap - 17th Aug 17
3 Psychological Ingredients behind Great Web Content - 17th Aug 17
The War on Cash - Rogoff, Orwell and Kafka - 17th Aug 17
The Stock Market Guns of August, Trade Set-Up & Removing your Rose Tinted Glasses - 16th Aug 17
Stocks, Bonds, Interest Rates, and Serbia, Camp Kotok 2017 - 16th Aug 17
U.S. Stock Market: Sunrise ... Sunset - 16th Aug 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

Double-Dip Recession Deepens as U.S. Housing Market Collapses

Housing-Market / US Housing Sep 03, 2010 - 09:07 AM GMT

By: Mike_Larson

Housing-Market

Best Financial Markets Analysis ArticleThe Double-Dip recession I’ve been predicting for some time is deepening. And nowhere is the emergence of this powerful economic force more clear than in the housing market.

All the fresh economic data confirms that home sales are weakening … home inventories are rising … and home price pressure is building.


Meanwhile, we’re seeing a fresh rise in early-stage mortgage delinquencies after a multi-quarter respite. Credit demand is contracting for real estate and other loans. And bank failures are rising fast.

This can’t be prevented. Neither the Obama administration nor Congress nor the Federal Reserve can fire some magic bullet at the problem to kill it. So as an investor, you can only do one thing: Prepare!

Housing Dip Deepens As Artificial Support Wanes

Last week while I was on vacation, we got a rash of fresh data on housing — none of it pretty. Just consider …

  • New home sales plunged 12 percent in July to a seasonally adjusted annual rate of only 276,000. That’s the lowest level since the Census Bureau began tracking these figures in 1963.
chart Double Dip Deepens as Housing Collapses
  • The median price of a new home slumped 4.9 percent from a year ago to $204,000. That’s the lowest level since 2003.
  • Existing home sales collapsed 27 percent in July to an annual rate of 3.83 million. That was twice as large a decline as economists expected.

Keep in mind that number includes not just single-family home sales, but also sales of condominiums and co-ops. If you use the single-family only figures, which go back decades, you see that sales haven’t been this weak since 1995.

  • The combination of falling sales and rising for-sale inventory is going to torpedo pricing. Heck, we now have 11.9 months of inventory on the market in single family homes, assuming the current sales pace were to hold constant. That’s the worst reading since 1983.

Worse, more and more supply keeps being dumped on the market by banks and other owners of repossessed homes. The Home Affordable Modification Program, or HAMP, was supposed to prevent that from happening. But it has only provided 340,000 permanent mortgage modifications. That’s far short of the four million modifications the Obama administration laid out as a goal when it rolled the thing out more than a year ago.

At the same time, the Mortgage Bankers Association just said that the 30-day late payment rate rose to 3.51 percent of all home loans in the second quarter. That’s the first gain in early-stage delinquencies in more than a year, and a leading indicator of rising future foreclosures.

Look, we’ve already seen 118 banks fail so far in 2010. Plus, the FDIC just revealed that its “problem list” of banks that could fail in the future grew to 829 in the second quarter from 775 a quarter earlier. That’s the highest since 1992.

If mortgage performance deteriorates again, and the double-dip recession drives up losses on other types of loans, we could easily see that list hit the four digits by the end of the year. Is that bullish for banks? For stocks? I sure don’t think so.

Jobs are getting scarce again.
Jobs are getting scarce again.

That’s especially true in light of the fact that we’re now LOSING private sector jobs again …

ADP Employer Services said the economy shed 10,000 jobs in August, worse than the 15,000-job gain forecast by economists. That’s the first time we shed private jobs in six months, and it comes as the government is laying off tens of thousands of Census workers.

More Bailouts Coming? Seriously?

If the Fed had a time machine, it could do what it should've done: Aggressively raise interest rates.
If the Fed had a time machine, it could do what it should’ve done: Aggressively raise interest rates.

In response to the latest round of dismal data, administration officials are flailing around. So are policymakers at the Fed. They’re talking about possibly reviving the home buyer tax credit … giving short-term loans to float mortgage borrowers through a period of unemployment … printing money to buy more assets … and all kinds of other stuff.

Pardon my French, folks, but that’s nuts! They’re essentially planning to do the same things that have already failed once … and expecting a different result.

Here’s the cold, hard reality that Washington won’t share with you: The only thing that can fix today’s problems is a time machine. Then we could go back to BEFORE the credit and housing bubbles got out of control, and do something to stop them.

The Fed should’ve aggressively raised rates. The banking regulators should’ve forced institutions to stop making dumb loans, rather than look the other way. Wall Street should’ve been more effectively policed, and prevented from raising leverage ratios to ridiculous levels.

But none of that happened. So a long, painful bust is preordained. It’s baked in. It’s coming whether we like it or not. We might as well all deal with that reality rather than keep hoping for some magic bullet from D.C.

Until next time,

Mike

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife