Friday, November 30, 2007

Housing market roundup.

US Housing Market Crash Can't Find A Floor!
Housing-Market / US Housing Nov 30, 2007 - 12:41 PM
By: Money_and_Markets: Housing-Market

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."

...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...

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...

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...

...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.

...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!

I have tried in vain to tell people on various blogs, especially the orthonomics blog, that refinancing their homes, or taking out flaky adjustable mortgages and home equity loans to pay for Jewish Day School tuition is pure insanity - economic suicide. And in the past couple of days, as the topic turned to retirement funds, I have tried to tell them that there is no such thing as a "safe" investment and their banks that they trust have long since thrown off the safety laws that were passed after the Great Depression and are drowning in red ink, but they won't listen.

Spitting into the wind, someone called it.

Oh, well. It's not like I didn't try.

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