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The Real Estate Market Continues To Suffer. When Will It End?

May 6, 2008
Purchases of new homes in the U.S. plunged more than forecast in March to the slowest level in nearly 17 years as tighter loan rules and rapidly dropping prices caused buyers to disappear. Sales fell another 8.5 percent in the latest month to an annual rate of 526,000, the slowest since October 1991, from a 575,000 pace 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 over 1.3 million annual new home sales in July of 2005.

I was particularly dumbfounded 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 bought 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 collapsed by 60% in a 3 year period. The mainstream news media views those figures as indicating only a risk of prolonged recession. Those numbers are absolutely horrible. Home builders are going under by the boatload. Work has dried up for tens of thousands of tradesmen. And this is described as merely a risk of recession?

Don't rely on the geniuses in the financial media to warn you of the real truth, that we are 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.

Home buyers are just about shut out of the real estate market. Extremely tight lending standards are making it nearly impossible for everyone but those with impeccable credit and tens of thousands of dollars sitting around idly in a bank account to qualify for a mortgage loan.

The economy is crashing. Derivatives abuses by Wall Street have ruined the financial system of the world. The dollar will be diluted constantly with each passing week as the Wall Street insiders get bailout cash in "small" chunks of $50 to $75 billion at a time. And as a result everything will cost more.

Get prepared while there is still time, the worst is yet to come.
About the Author
J Stromsteen has many years experience in the finance, real estate, and insurance industry. She writes for the website Bush's Depression as well as first time home buyer to provide up to date information on the unfolding real estate crisis.
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