Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
The Three M's of Hyperinflation : Milosevic, Mugabe, And Maduro - 26th May 19
Global Multi-Market / Asset Charts Review - 26th May 19
An Oil Shock Could Be the Black Swan That Finally Drives Gold Higher - 26th May 19
Brexit Party Forces Theresa May to Resign, Boris Johnson Next Tory Prime Minister? - 26th May 19
IBM - Investing in AI Machine Intelligence Stocks - 25th May 19
Seasonal Dysfunction: Why Generations of Gold and Silver Investors Are Having Such Difficulty - 25th May 19
Employment - The Good and the Bad of Job Automation - 25th May 19
Gold Mining Mid-Tier Stocks Fundamentals - 25th May 19
Buy This Pick-and-Shovel 5G Stock Before It Takes Off - 25th May 19
China Hang Seng Stocks Index Collapses and Commodities - 24th May 19
Costco Corp. (COST): Finding Opportunity in Five Minutes or Less - 24th May 19
How Free Bets Have Impacted the Online Casino Industry - 24th May 19
This Ultimate Formula Will Help You Avoid Dividend Cutting Stocks - 24th May 19
Benefits of a Lottery Online Account - 24th May 19
Technical Analyst: Gold Price Weakness Should Be Short Term - 24th May 19
Silver Price Looking Weaker than Gold - 24th May 19
Nigel Farage's Brexit Party EU Elections Seats Results Forecast - 24th May 19
Powerful Signal from Gold GDX - 24th May 19
Eye Opening Currency Charts – Why Precious Metals Are Falling - 23rd May 19
Netflix Has 175 Days Left to Pull Off a Miracle… or It’s All Over - 23rd May 19
Capitalism Works, Ravenous Capitalism Doesn’t - 23rd May 19
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

US Housing Market Crash Can't Find A Floor!

Housing-Market / US Housing Nov 30, 2007 - 12:41 PM GMT

By: Money_and_Markets


Mike Larson writes: Every month, I get asked if there's any evidence whatsoever of a turnaround in the housing industry. So far — every month — I've had to emphatically say "NO."

And I'm going to give it to you straight about the numbers that were just released: They are some of the worst I've ever seen.

Here's what happened for the month of October ...

  • Existing home sales dropped almost 21% from a year ago. The seasonally adjusted annual sales rate, at 4.97 million, is the worst since the National Association of Realtors started tracking combined sales of single-family homes, condos, and co-ops.
  • What about inventories? Well, at the current sales pace, it would take 10.5 months to move all the existing single-family homes on the market. That's the highest since July 1985! Yes, I'm talking more than 22 years ago!
  • As for home prices — they were down 5.1% from a year ago. That's the biggest drop on record.
  • A separate research firm, S&P/Case Shiller, says real estate prices just suffered the single largest quarterly decline they've ever seen ... and they started tracking the data in the late 1980s.

It was much the same story for new homes, too. Sales were down almost 24% from a year earlier, while the government's September sales estimate was dramatically slashed — by 54,000 homes.

Meanwhile, new home prices plunged an astounding 13%, or almost $33,000! That hasn't happened since 1970, when Richard Nixon was president and the U.S. was mired in the Vietnam War.

I don't mean to be glib, but these latest housing stats really stink. The only comforting fact is that I'm no longer one of the very few who recognize what's happening.

The First Step to Fixing a Problem Is Acknowledging You Have One

Finally, some of the same people who helped cause these problems are starting to acknowledge today's harsh housing reality. Take a look at three very telling comments from this past week:

Fed Vice Chairman Donald Kohn:

"I think the housing sector has continued to decline and erode at a very, very rapid rate, and while this was expected, I think it would be nice to see some early signs that it was beginning to stabilize and we haven't seen that yet."

Wells Fargo President, John Stumpf:

"I don't think we're in the ninth inning of unwinding this ... if we are, it's an extra-inning game."

Stumpf went on to tell an investment conference that this is the worst real estate market he's seen in his 30-year career. In fact, he compared this downturn to the Great Depression!

Goldman Sachs' Economists:

"[The real estate sector is] mired in a full-blown vicious cycle."

Goldman also warned that home prices nationally will decline 15% from their highs — and could drop as much as 30% if the economy slips into recession. The firm's analysts cut ratings on everything from airlines to automobile makers to REITs and even dining stocks.

I've been warning you about this for a long time, of course. But to hear it from some of the nation's top financiers and economists is truly amazing.

Donald Kohn and Ben Bernanke are finally waking up and smelling the coffee!

IF there's any glint of good news in all this, it's that key political and industry leaders are finally waking up.

They aren't trying to ignore the worst housing crisis in modern history anymore ...

They aren't trying to claim the mortgage collapse is "well-contained" ...

And they are finally starting to explore some potential solutions, like FHA mortgage reform and loan modifications for distressed borrowers.

So, Is It Finally Time to Start Plowing into Housing Investments?

No! In my opinion, your best approach to the housing sector is to avoid it.

Some smaller, private home builders are already going bankrupt. They include Kara Homes in New Jersey, Neumann Homes in the Chicago area, and Levitt and Sons here in Florida.

Many of the larger publicly-held builders are struggling with high debt loads, plunging sales, and surging cancellations — including Hovnanian Enterprises and Beazer Homes.

As far as I'm concerned, this is no time for bottom fishing.

So what about the banks ... the ones that financed the mortgages behind the bubble? Again, most of 'em are still too dangerous to touch. Sure, you might catch a dead cat bounce or two. But for your longer-term money, there is great uncertainty and too much risk.

Remember, only two or three months ago mainstream pundits and analysts were saying Fannie Mae and Freddie Mac would dodge the mortgage problems. Now, those stocks have been cut in half! Freddie Mac has been forced to slash its dividend by 50% and go hat in hand to investors in order to raise $6 billion in capital.

There ARE a few isolated survival stories — banks with little mortgage loan exposure and institutions that generate most of their income from fees.

I'm even toying with the idea of a recommendation or two in the Safe Money Report . Heck, at some point, even mainstream financial stocks will have tanked enough to make the risk of dabbling worth the reward. But in most cases, " Stay Away " is still the best advice.

One last thing: You should also take a serious look at your other stock holdings right now. Are you loaded up with retailers who need strong consumer spending to make their numbers? Are you hitching a ride on the high-tech express, expecting business spending to pad these firms' bottom lines? If so, I think you're risking a visit to the slaughterhouse. Recession risks are simply too high right now.

Look, the private equity boom that I flagged back in April has burst, just as I expected.

Ditto for the commercial real estate bubble, which I warned you about in May .

Now, the entire U.S. economy is poised to grind to a near standstill — with corporate profits suffering as a result. So consider yourself warned again about the risk of broader market losses!

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 .

Money and Markets Archive

© 2005-2019 - 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