Best of the Week
Most Popular
1.Stock Market in DANGER of Strangling the Bears to Death - Nadeem_Walayat
2. Germany Pivoting East, Exit US Dollar, Enter Gold Standard - Jim_Willie_CB
3.Flight MH17 – Kiev Flash Mob's Last False Flag? - Andrew_McKillop
4.Stock Market Crash Nightmare! - Nadeem_Walayat
5.Gold - The Million DOLLAR Question... - Rambus_Chartology
6.Gold And Silver – BRICS And Germany Will Pave The Way - Michael_Noonan
7.The Jewish Selfish Gene, People Chosen by God, Everyone Else is Goyim to Kill - Nadeem_Walayat
8.The Israeli Promised Land Dream - The Criminal Roadmap Towards “Greater Israel”? - Felicity Arbuthnot
9.Which Way is Inflation Blowing? Watch Commodities - Gary_Dorsch
10.U.S. Economy Quarterly Review and Implications for 2014-2015 - Lacy Hunt
Last 5 days
Stock Market Parabolic Collapse - Sowing the Seeds of the Next Depression - 30th July 14
How to Profit from the Russia Ukraine Conflict - 30th July 14
Greenspan: U.S. Economy Running Out of Buffer; Stock Market to See Significant Correction - 30th July 14
Rogue States And Loony Tunes - 30th July 14
Anne Elk’s Theory On Brontosauruses - 30th July 14
Our Totalitarian Future - Totalitarianism NOW! - 30th July 14
Stocks Bear Market Formation Revealed - 30th July 14
We Just Found “The Future” - 30th July 14
What the “Steak Bandit” Says About Asset Values - 30th July 14
Designer War By Default - Seven Types of Elite Madness - 30th July 14
Death of the U.S. Dollar? Gold an Inflation Hedge? Really? - 29th July 14
We’re Ready to Profit in the Coming Gold Price Correction—Are You? - 29th July 14
Their Economy Will Collapse, Including Ours - 29th July 14
Silver Prices – Megaphone Patterns - 29th July 14
Real U.S. Interest Rates - Fed Exit a Blue Pill? - 29th July 14
Why Israel Should NOT Exist, Just Like Any Other Rogue State - 29th July 14
Gold Still Looking Good - 29th July 14
Silver Price Set To Star - 29th July 14
Our Population Growth Totalitarian Future - 29th July 14
World War 1 Cause and Consequences - The Planned Destruction of Christendom - 29th July 14
Will Crashing Commodities Crash the Stock Market? - 29th July 14
Ukraine MH17 - Washington Thinks Americans Are Fools - 29th July 14
Stock Market Bubble Warning - 29th July 14
Gold Price and U.S. Dollar’s July Rally - 28th July 14
Second Quarter Corporate Earnings: Marching Toward a Strong Economic Recovery - 28th July 14
Time to Put a New Economic Tool in the Box - 28th July 14
Mossad in Gaza, Ukraine and the Cult Of The All-Powerful Elite - 28th July 14
Elliott Wave Gold Price Projection Since 1970 - 28th July 14
Investors Remain Uncertain As Stock Fluctuate Near Long-Term Highs - Will The Uptrend Extend? - 28th July 14
The Mass Psychology Of Decline - 28th July 14
Will the US Destroy the World? - Don’t Expect to Live Much Longer - 28th July 14
GDM and GDXJ Gold Stocks In-depth Look - 28th July 14
Stock Market One FINAL High? - 28th July 14
What It Means - Paradigm Collapse And Culture Crisis - 27th July 14
Wall Street Shadow Banking: You Can’t Taper a Ponzi Scheme: “Time to Reboot” - 27th July 14
6 Tips for Picking Winning Gold Mining Stocks - 27th July 14
Israel's War on Children, Exterminating the Palestinians Future - 27th July 14
Guilt By Insinuation - How American Propaganda Works - 26th July 14
Surprise Nuclear Attack On Russia To Liberate Ukraine - 26th July 14
Use "Magic" Of Gold/Silver Ratio To Greatly Increase Your Physical Holdings - 26th July 14
Derivatives Market Species Origins - Abuse, Props and Risks - 26th July 14
Stock Market Manipulation and Technical Analysis - 26th July 14
China’s Stock Market Finally Looks Like A Buy - 26th July 14
Ed Milliband Fears Israel Jewish Fundamentalist Gaza War Massacres Backlash - 26th July 14
The Big Energy = Power Battle Is Coming - 25th July 14
USrael - Zionists in Control of America's Goyim Brainwashed Second Coming Slaves - 25th July 14
More Weakness Ahead for Gold Miners - 25th July 14
Gold Price Strong Season Starts - 25th July 14
Geopolitics and Markets Red Flags Raised by the Fed and the BIS on Risk-taking - 25th July 14
Gold Lockdown Until Options Expiry - New Singapore Gold Contract Threatens Price Manipulation - 25th July 14
The Bond Markets, Black Swans, and the Tiny Spirit of Santo - 25th July 14
No Road Map For Avoiding The Future - 25th July 14
Israeli War Machine Concentrating Women and Children into UN Schools Before Killing Them - C4News - 25th July 14
Israeli Government Paying Jewish Fundamentalist Students to Post Facebook Gaza War Propaganda - 25th July 14
Why the Stock Market Is Heading For A Fall - This Time Is Not Different - 25th July 14
An Economic “Nuclear Strike” on Moscow, A “War of Degrees” - 25th July 14
BBC, Western Media Working for Israeli Agenda of Perpetual War to Steal Arab Land - 25th July 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Biggest lie in Stock Market History Revealed

Signs of a New U.S. Housing Market Bubble?

Housing-Market / US Housing Feb 05, 2013 - 03:26 PM GMT

By: Money_Morning

Housing-Market

Jeff Uscher writes: Investors have taken comfort from the recent improvement in housing prices seen across the country.

Shares of homebuilders, including Toll Brothers (NYSE: TOL), Lennar Corporation (NYSE: LEN) and the SPDR S&P Homebuilders ETF (NYSE: XBH), had been bid up late in 2012 and into January.


But now the shares are rolling over. Could the relative underperformance of the homebuilders be telling us something?

David Stockman, former director of the Office of Management and Budget under President Ronald Reagan, thinks so.

In an interview with The Daily Ticker, Stockman said, "I would say we have a housing bubble again. I don't think we have a real, organic, sustainable recovery."

Stockman argues that "fast money" is moving into the local real estate markets that suffered the biggest declines in order to "speculate in buy-to-rent for a quick trade."

Stockman thinks that these speculators will be looking to sell out as soon as prices rise sufficiently to give them a specific rate of return and that "they will be gone as quickly as they came."

Signals of a Housing Bubble
Stockman argues easy money policies by the Federal Reserve are stoking the speculative rise in housing prices.

The Fed is conducting its unlimited quantitative easing policy by purchasing $85 billion worth of assets monthly - $45 billion in U.S. Treasury securities and the remaining $40 billion in mortgage-backed securities.

Those fearful of a new housing bubble, including Stockman, say the Fed's actions are pushing mortgage rates down to record low levels.

But housing bulls say tighter lending standards are allowing only borrowers with the best credit to get loans.

Stockman points out that The Blackstone Group (NYSE: BX) now owns 16,000 housing units.

"These are not apartments," he said. "These are single-family homes in Scottsdale, Arizona." Blackstone is now the largest manager of single-family home rentals in the United States.

This is clearly a logical reaction to the Fed's ultra-easy monetary policy, which has driven down interest rates and has forced investors to scramble for yield.

These Key Elements of a Housing Recovery Missing
Ken Harney, a nationally syndicated columnist writing in Forbes, said, "The latest statistical overview of 146 major metropolitan areas compiled by Realtor.com reveals strikingly different conditions around the U.S., ranging from double-digit percent price increases in communities that suffered some of the deepest hits during the housing and mortgage bust years, to persistent price declines in dozens of cities that are now struggling with their own busts caused by high unemployment and unresolved local economic challenges."

Stockman argues the buyers needed to create a genuine housing recovery are missing from the market. "The problem in housing is that the two forces you need to recover, first-time buyers and trade-up buyers, are both missing," he said.

"The first-time buyers, the young people, don't have jobs or, if they do, they have got so many student loans that they can't raise enough of a down payment to become effective buyers," Stockman continued. "Secondly, the trade-up buyers are now becoming the baby boomers heading for retirement and, basically, they have no savings, and they are going to have to sell their castle into the market and so they are going to be trade-down sellers.

"Having the Fed come in and make interest rates artificially low...is a huge mistake," Stockman argues. "We are just recreating the same speculative bubble that we had before.

"It is always wrong to mislead markets with cheap money and low interest rates because it basically fuels speculation...As soon as the Fed has to normalize interest rates...the fast money will sell as quickly as they can and the bubble will pop almost as rapidly as it has appeared."

Stockman concluded, "The only people who benefit are the top 1%, the hedge funds, the LBO [leveraged buyout] funds, the fast-money people who come in for a trade, make a quick buck and then move along to the next bubble."

Source :http://moneymorning.com/2013/02/04/is-this-a-recovery-or-a-new-housing-bubble/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 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