Best of the Week
Most Popular
1.Is the Stocks Bull Market Over? Dow Trend Forecast into End January 2015 - Nadeem_Walayat
2.Gold and Silver Stocks Apocalypse Now, Bear Market Review - Rambus_Chartology
3.NHS Baldrick Plan to Spread Ebola Across UK - Sheffield, Newcastle, Liverpool, London Hospitals - Nadeem_Walayat
4.Ebola Terror Threat Suicide Bio-Weapons Threatens Multiple 9/11's, Global Plague - Nadeem_Walayat
5.Second-Richest Man Says Mortgages Now a "No Brainer" - Dr. Steve Sjuggerud
6.Gold And Silver Still No End In Sight - Michael_Noonan
7.NHS Baldrick Plan to Spread Ebola Across UK - Sheffield, Newcastle, Liverpool, London Hospitals - Nadeem_Walayat
8.The Gold Bug is Set to Bite Back - EWI
9.How Alibaba Could Capitalize on the EBay-PayPal Split - Frank_Holmes
10.The Consequences of the Economic Peace - John_Mauldin
Last 5 days
Gold And Silver Price - Respect The Trend But Prepare For A Reversal - 25th Oct 14
Ebola Has Nothing To Do With The Stock Market - 25th Oct 14
The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - 25th Oct 14
Japanese Style Deflation Coming? Where? Fed Falling Behind the Curve? Which Way? - 25th Oct 14
Gold Price Rebounds but Gold Miners Struggle - 25th Oct 14
Stock Market Buy the Dip or Sell the Rally - 25th Oct 14
Get Ready for “Stupid Cheap” Stock Prices - 25th Oct 14
The Trend Every Nation on Earth Is Pouring Money Into - 25th Oct 14 - Keith Fitz-Gerald
Bitcoin Price Decline Stopped, Possibly Temporarily - 25th Oct 14
Bullish Silver Stealth Buying - 24th Oct 14
Blood in the Streets to Create the Gold Stocks Investor Opportunity of the Decade - 24th Oct 14
Swiss ‘Yes’ and ‘No’ Gold Initiative Campaigns Compete at Launches in Bern - 24th Oct 14
War And The Law Of Unintended Consequences - 24th Oct 14
Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - 24th Oct 14
Saudi Move to Cut Oil Prices Is Now Russia's Biggest Economic Threat - 24th Oct 14
US Stock Market Top Is Now In Sight - 24th Oct 14
New Profit Points in the Shifting Balance of Power, Welcome to Saudi America - 24th Oct 14
QE Failure & Folly Of Paper Mache, Treasury Bond Integrated Lifeline Patches - 24th Oct 14
U.S. Economy Faltering Momentum, Debt and Asset Bubbles - 23rd Oct 14
Annuities - Afraid Your Money Will Vanish before You Do? - 23rd Oct 14
What Debt Deleveraging? - 23rd Oct 14
How to Profit from Massive Spin-Offs with Just One Play - 23rd Oct 14
Evaluating Ebola as a Biological Weapon - 23rd Oct 14
Euro, USD, Gold and Stocks According to Chartology - 23rd Oct 14
Why You Should Always Be Invested in the Stock Market (Even Now) - 23rd Oct 14
Five U.S. Housing Market Warning Signs Point to Real Estate Market Downturn - 23rd Oct 14
The Better Short: Gold or Silver? - 23rd Oct 14
Focus on Graphite Companies with Green Energy and Technology Strategies - 22nd Oct 14
Crude Oil Price Hitting Bottom - 22nd Oct 14
Evidence of Another Even More Sweeping U.S. Housing Market Bust Already Starting to Appear - 22nd Oct 14
Gold Or Crushing Paper Debt Stocks Crash? - 22nd Oct 14
India Gold Demand Surges 450% and Bank of Russia Demand At 15 Year High - 22nd Oct 14
Bitcoin Stock Exchange Could Be "More Valuable than Alibaba" - 22nd Oct 14
Currency War - How to Profit from a Stronger U.S. Dollar - 22nd Oct 14
Banks Hold Treasuries and Make Loans- 22nd Oct 14
Gold and Silver Timing is Everything - 22nd Oct 14
Don't Get Ruined by These 10 Popular Investment Myths (Part VII) - 22nd Oct 14
Follow the Baby Boom to Biotech Stock Profits - 22nd Oct 14
Copper, Nickel and Zinc Won't Be Cheap for Long - 22nd Oct 14
How Will We Know That the Gold & Silver Price Bottom Is In? - 21st Oct 14
Is Gold as Dead as Florida Hurricanes? - 21st Oct 14
First Swiss Gold Poll Shows Pro-Gold Side In Lead At 45% - 21st Oct 14
The Similarities Between Germany and China - 21st Oct 14
The REAL Reason Why the Stock Market Turned Down - 21st Oct 14
Petrobras is a 'Scheme, Not a Stock' - 21st Oct 14
Stocks Bear Market Indicator Is Off the Mark - 20th Oct 14
Stock Market Ideal Turning Point is at Hand - 20th Oct 14
Investors Quit Complaining, The Environment is Perfect Right Now - 20th Oct 14
Ebola Armageddon Could Trigger a Rebirth in Gold and Silver Prices - 20th Oct 14
Gold vs Euro Risk Due To Possible Return of Italian Lira - Drachmas, Escudos, Pesetas and Punts? - 20th Oct 14
Stocks Rebounded Following Recent Sell-Off, But Will It Last? - 20th Oct 14
U.S. Responsible for West Africa Ebola Outbreak Says Liberian Scientist - 20th Oct 14
Stock Market Intermediate B Wave has Started - 20th Oct 14
Gold Stocks Analysis – FNV, CG, NCM, SBM - 19th Oct 14
Stock Market Primary IV Wave Counter Trend Rally - 19th Oct 14
Gold And Silver - Financial World: House Of Cards Built On Sand - 18th Oct 14
Anatomy of a Stock Market Sell-Off - 18th Oct 14
Why OPEC Has Declared an Oil War on Russia - 18th Oct 14
Gold and Silver Extreme Shorting Peaks - 18th Oct 14
Bitcoin Price Fall to $350? - 18th Oct 14
Tesco Supermarket Crisis Worse To Come as Customers Vanish! - 18th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stocks Epic Bear Market

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.


© 2005-2014 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

Free Report - Financial Markets 2014