Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

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.


© 2005-2019 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

6 Critical Money Making Rules