Down, Down, Down Goes Real Estate
Friday, April 25th, 2008 Subscribe To Our Feed
Purchases of new homes in the U.S. plunged more than forecast in March to the slowest rate in nearly 17 years as stricter loan rules and rapidly dropping prices caused buyers to dry up. Sales fell another 8.5 percent in the latest month to an annual pace of 526,000, the fewest since October 1991, from a 575,000 rate the previous month, the Commerce Department announced today in Washington. From December 2002, until December 2006, sales of new homes were more than one million per year, peaking at the rate of slightly more than 1.3 million annual new home sales in July of 2005.
I was particularly impressed with this gem of wisdom as stated in a Bloomberg news story today, “The threat of a prolonged recession is growing as lower home values constrain consumer spending and persistent declines in homebuilding subtract from economic growth.”
Gee, are they geniuses or what?
We’ve gone from a rate of 1.3 million new homes sold per year in 2005 down to just over 526 thousand per year as of 3 years later. Housing construction accounts for almost one fourth of the economy. It is a huge portion of our economy. And the new housing industry has shrunk by 60% in a 3 year period. The official news media presents those figures as indicating only a risk of prolonged recession. Those numbers are absolutely horrendous. Home builders are failing by the thousands. Jobs have dried up for tens of thousands of tradesmen. And this is presented as merely a risk of recession?
Don’t rely on the geniuses in the financial media to warn you of the real truth, that this country is headed for an economic depression. I would rate their hindsight at 20/60, and that is being generous. I would assing their predictive abilities at 0/0.
First time home buyers are just about locked out of the housing market. Extremely restrictive lending standards make it nearly impossible for all but those with impeccable credit and tens of thousands of dollars sitting around idly in a bank account to qualify for a First time home buyer loans.
The economy is crashing. Derivatives abuses by Wall Street have raped the financial system of the globe. The dollar will be diluted constantly with each passing week as the Wall Street insiders get bailout money in “small” chunks of $50 to $75 billion at a whack. And as a result everything will cost more.
Prepare yourself while there is still time, the worst is yet to come.
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