Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Lousy U.S. Economy Pulling Rug Out From Under Housing Market

Housing-Market / US Housing Jun 25, 2010 - 07:48 AM GMT

By: Mike_Larson

Housing-Market

Best Financial Markets Analysis ArticleHeads up, folks! It’s time for a very important housing market update from the front lines.

More than a year ago in these cyberpages, I told you that housing was stabilizing. All my indicators pointed to an improvement in conditions — less deadweight inventory on the market … increased sales rates … stabilization in pricing.


Many housing and housing-related stocks ramped after that alert came out. Some even hit multi-month and multi-year highs! And staying short during that period would’ve killed your portfolio.

But now?

The times they are a-changing once again. The reason? The lousy economy is pulling the rug out from under housing!

No Job = No House

Last year, I told you housing was bottoming out. Many commentators claimed government support was the only reason conditions were improving. Think home buyer tax credit here and all the mortgage modification programs.

My counter-argument?

Yes, the credit was boosting sales. And yes, mods were keeping some homes off the market, homes that would have previously been foreclosed on and listed for sale. But those forces were the icing on the cake, not the cake itself.

The “cake” was the plunge in pricing and the plunge in mortgage rates. They made housing an attractive investment again in some markets, and made ownership financially competitive again with renting.

But my view was always predicated on economic improvement. As long as massive job losses were gradually subsiding … and consumer confidence was returning … cheap house prices and cheap mortgage rates would offset other negative forces. Sure enough, for most of the past year, conditions gradually improved.

Without new jobs, the housing sector will continue to plummet.
Without new jobs, the housing sector will continue to plummet.

But in the past few months we’ve seen the economy take a turn for the worse. Confidence is flagging and most importantly, we aren’t creating any real jobs! Sure, Census workers are banging on doors around the country and collecting government paychecks for a while.

The private sector, though, is barely hiring at all …

Many companies are still firing people left and right. The “all in” unemployment rate, that includes discouraged and underemployed Americans, is almost 17 percent!

So I don’t care how low prices fall, or how cheap mortgage financing gets. No job = no house.

Here Comes the Housing Double-Dip

The latest housing numbers clearly show this new dynamic playing out …

  • Existing home sales dropped 2.2 percent in May, compared with expectations for a gain of 6 percent. The supply of homes on the market actually rose slightly from year-ago levels to 3.89 million.
  • New home sales collapsed a whopping 32.7 percent in May to a seasonally adjusted annual rate of 300,000. That’s the lowest level in the history of data collection, which goes back to 1963. Prices slid almost 10 percent from a year earlier.
  • The National Association of Home Builders’ index, which tracks how builders perceive market conditions, tanked to 17 in June from 22 in May. That was much worse than the economists were expecting, and it was the sharpest drop in any month since November 2008.
    Slumping housing demand is pushing lumber inventories higher and prices lower.
    Slumping housing demand is pushing lumber inventories higher and prices lower.
  • The Mortgage Bankers Association’s purchase loan application index just touched 167.80. That was down from 270.70 a year earlier and the worst reading since 1997.

Oh, and one of my favorite indicators — the price of lumber? It’s taking an Acapulco cliff dive! Lumber futures prices have plunged from $327 per 1,000 board feet in late April to around $180 now. Folks, that’s a 45 percent collapse in two months!

Bottom line?

It’s once again time to ramp up the search for short sale and put option candidates in housing-related industries. That’s precisely what I’ll be doing in some of my services.

Meanwhile, if you haven’t already considered liquidating some of your stock positions and paring down your risk, don’t wait any longer. The risk of a double-dip in housing and the economy is rising fast. And if you want to find out how to adjust your portfolio for only 27 cents a day, just click here.

Until next time,

Mike

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 http://www.moneyandmarkets.com.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Sammy
27 Jun 10, 23:24
us housing

you were bullish on housing just few weeks ago, telling people to buy housing stocks

http://www.marketoracle.co.uk/Article18912.html

Now that theyve fallen your saying not to buy housing stocks ?


Post Comment

Only logged in users are allowed to post comments. Register/ Log in