Best of the Week
Most Popular
1.RED ALERT: Paris Terror Attacks - What to Expect Next - STRATFOR
2.Paris Terror Attacks, Death Pangs of a Dying Religion, and Impact on BrExit EU Referendum - Nadeem_Walayat
3.Paris Terror Attacks, Islamic State Attempting to Spark Civil War in France - Nadeem_Walayat
4.Three Shocking Charts That Prove Gold Price Rally Is Coming - Sean Brodrick
5.Stock Market Nifty-Fifty Becomes Fab-Five; Return of the 'Four Horseman' - Mike_Shedlock
6.Africa Population Explosion - Why Europe's Migrant Crisis is Going to Get A Lot Worse - Video - Nadeem_Walayat
7.Gold Mining Stocks May Be The Buy Of The Century - Jeff_Berwick
8.Grandmaster Putin Beats Uncle Sam at His Own Game - Mike_Whitney
9.BRICS? No, CRISIS - Raymond_Matison
10.UK Housing Market Affordability, House Prices Momentum and Trend Forecast - Nadeem_Walayat
Last 5 days
Stock Market Top Valuations, at a Critical Juncture - 27th Nov 15
The Top Shopping Opportunity on Black Friday - 27th Nov 15
Economics Is About Scarcity, Property, and Relationships - 27th Nov 15
UK Immigration Crisis Hits New Extreme of 336k Net Migration, up 32% on 2014 - 27th Nov 15
Vauxhall Zafira B Fire Danger Recall - What to Do Video - 26th Nov 15
Triggers In US Dollar Collapse - 26th Nov 15
Apple Stock is a 10-Year Short - Bear Market Environment - 26th Nov 15
U.S. Federal Reserve Rate Hike - 26th Nov 15
George Osborne's War on Buy to Let Sector Trending Towards Doomsday - 26th Nov 15
Will Turkey Drag NATO into War With Russia in Syria? - 25th Nov 15
George Osborne’s Autumn Statement and Spending Review Full Text - 25th Nov 15
Will Fresh QE From ECB Boost Gold? - 25th Nov 15
Sheffield, Yorkshire and Humberside House Prices Forecast 2016-2018 - 25th Nov 15
Investors Watch Out For The Auto Industry… - 24th Nov 15
BEA Revises 3rd Quarter 2015 US GDP Economic Growth Upward to 2.07% - 24th Nov 15
Stock Market Supports Are Being Broken - 24th Nov 15
Is Gold Price on the Verge of a Breakout? - 24th Nov 15
Fed’s Tarullo: U.S. Interest Rates Liftoff Should Wait for Signs of Inflation - 24th Nov 15
Silver Price, COT, US Dollar Updates and More - 24th Nov 15
UK Regional House Prices Analysis - Video - 23rd Nov 15
Crude Oil Swinging For The Fences - A 20 to 1 Option Play - 23rd Nov 15
US Dollar, CRB, Oil, Gas, Copper and Gold - The Chartology of Deflation - 23rd Nov 15
UK Regional House Prices, Cheapest and Most Expensive Property Markets - 23rd Nov 15
Stock Market Rally Losing Momentum? - 23rd Nov 15
Will Gold Price Drop Below $1000 Soon? - 23rd Nov 15
Gold and Silver Sector Big Green Light and Low Risk Entry Setup... - 23rd Nov 15
Limits to Economic Growth - Challenge and Choices - 22nd Nov 15
Long Dollar Trade and Current Copper Price Below Cost of Production - 22nd Nov 15
UK Housing Market House Prices Affordability Crisis - Video - 21st Nov 15
The Fed Has Set the Stage for a Stock Market Crash - 21st Nov 15
Stock Market Primary V Wave Continues - 21st Nov 15
Gold And Silver - Value Of Knowing The Trend - 21st Nov 15
UK Footsie Bulls Set To Foot The Bill - 21st Nov 15
UK Housing Market Affordability, House Prices Momentum and Trend Forecast - 21st Nov 15
GDX Gold Miners’ Strong Q3 Results - 20th Nov 15
End of Schengen, Stock Market’s Technical Strength Grows - 20th Nov 15
Justice for All and The Curious Case of Zambia - 20th Nov 15
Paris, Sharm el-Sheikh, and the Resurrection of Old Europe - 20th Nov 15
Silver Prices and The Management of Perception - 20th Nov 15
Stock Market Nifty-Fifty Becomes Fab-Five; Return of the 'Four Horseman' - 20th Nov 15
Waiting for Goldot Again - 20th Nov 15
Michael Curran Goes Down-Market Shopping for Gold Stock Winners - 20th Nov 15
Why Isn’t This Incredibly Bearish Bond Market Development Making the News? - 19th Nov 15
SPX Appears to have Stopped its Rally - 19th Nov 15
The Great Fall Of China Started At Least 4 Years Ago - 19th Nov 15
Using Elliott Waves: As Simple As A-B-C - 19th Nov 15
Has Deflation Been Ddefeated? - 19th Nov 15
Dow Jones Stock Market Index is Not Going to Crash - 19th Nov 15

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

Reasons to Get Excited About Japanese Stocks

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

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

By: Mike_Larson


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,


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

© 2005-2015 - 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

Biggest Debt Bomb in History