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
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

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