2 Plain-as-Day Signs the Housing Market Is about to Crash… Again
I know this article sounds like doom and gloom, but a crash just means that houses just got cheaper, there will be more renters, and less competition for us. So don’t get down about the tone of this article.
The mainstream media exists not so much to inform as it exists to manipulate consumer behavior. This is why the media began peddling stories proclaiming that the economy was recovering almost immediately after the crash of 2008. These stories continued to run all through the Great Recession and beyond.
Today, many people are now convinced that the economy has indeed recovered and that there’s nothing but blue skies and margaritas ahead. But for those who dig below the surface-level propaganda on TV, it is quite obvious that the economy is resting on a shaky foundation.
This is becoming especially clear in the housing market where The Powers That Be have doubled down on the same problems that caused the collapse in the first place. It is also becoming clear that the housing market has once again reached dizzying 2007-level heights and is standing on the precipice of a deep economic chasm. It is teetering on the edge and about to topple in.
In fact, we’ve been given two recent signs that warn us of the impending crash. Here they are…
Plain-as-Day Sign #1 that the Housing Market Is about to Crash:
Former Federal Reserve Chief Ben Bernanke was recently turned down when he applied to refinance his home. In an interview, Bernanke himself said that maybe the Fed had “gone too far” with its lending restrictions. If Bernanke can’t get a mortgage to refinance his home, then what about all the average people in the U.S.? What chance do they have? The housing market cannot be healthy if ordinary people are unable to buy homes.
Plain-as-Day Sign #2 that the Housing Market Is about to Crash:
New housing starts plummeted 14.4% in August of this year, so homebuilders are now offering all kinds of incentives to get people to sign contracts on new homes. What this really means is that home prices are about to drop. Yahoo Finance reports:
We may not be in the midst of another housing bubble but it’s not for lack of effort on the part of the homebuilders. In the attached clip EuroPacific Capital head Peter Schiff says the inducements being thrown in for potential buyers are evidence of desperation, at best, and excess that could endanger the economy at worst.
“If you remember, during the housing bubble instead of dropping prices, which would have been a sign of trouble, the builders started throwing in freebies,” Schiff explains. “Some of the developers were even throwing in brand new cars so they didn’t have to acknowledge prices were falling. Now they’re doing it all over again. Builders are loading up on incentives because they’re having a hard time selling their homes. This is really a precursor to falling prices.”
Regardless of why demand is flagging Schiff says the Fed is out of suckers to “lure” into getting involved in real estate with relatively cheap money. Among the big funds that were pushing demand there seems to be a limited appetite as well. After spending more than $8 billion buying up housing in 2012 and 2013 Blackstone (BX) stopped purchases in March of this year.
Big funds have stopped buying houses,average people can’t qualify for mortgages,home ownership levels are at a 19-year low,and demand for new homes is falling fast. This cannot end well for the housing market or the economy at large.
(November 2014 Newsletter)