The Beginning Of The End
The Beginning Of The End By Michael T. Snyder - Kindle Version

The Prepper's Blueprint

The Mystery Of The Shemitah
Don't Buy Survival Food Until You Read This - If you stockpile the wrong foods, you could be setting your family up to starve. It sounds harsh, but the truth is too many people with good intentions are making critical mistakes with their food stockpiles. Watch this video now >>
The End of Obama? Approaching Obama scandal could change the White House Administration and our country overnight... Click Here
Gold Buying Guide: Golden Eagle Coins

Archives

Young Living Thieves Oil Spray

Record Low New Home Sales In 2011

New home sales in the United States are on pace to set a brand new all-time record low in 2011.  This will be the third year in a row that new home sales have set a new record low.  Sadly, this is yet another sign that the U.S. economy continues to grow weaker.  Back in 2005, more than four times as many new homes were being sold as are being sold today.  The home building industry is one of the central pillars of the U.S. economy, and the fact that we are going to set another new record low for home sales in 2011 is a really bad sign for those hoping for an economic recovery.  Unlike most of those that work in the financial industry, those that build new homes produce something of lasting value for American families.  In addition, millions of Americans have traditionally made a solid living by building and selling new homes.  But today the market for new homes has totally dried up and large numbers of those jobs are disappearing.  Some of the reasons for this include high unemployment, a glut of foreclosures on the market and the tightening of lending standards on home loans.  In order for the U.S. to have anything resembling a healthy economy again, we are going to need a revival in the sale of new homes.

But unfortunately, it looks like things are getting even worse.  In August, the number of new home sales declined for the fourth month in a row.  That is a very troubling sign because typically summer is the best time for new home sales.

Celia Chen, the director of housing economics at Moody’s Analytics, is saying the following about the dismal numbers….

“With job growth at a standstill, the stock market swinging wildly, Congress wrangling over the debt ceiling and the euro zone’s problems sending consumer confidence down, sales of new homes are slipping from an already weak pace.”

When you take a close look at the numbers, it really is shocking to see how far we have fallen.

Back in 1963, the U.S. Census Bureau began monitoring new home sales.  Prior to the most recent economic downturn, the record low for new home sales happened in 1982.

In that year, only 412,000 new homes were sold.

Well, that record was broken in 2009.

Then it was broken again in 2010.

And it will be broken again in 2011.

This year, we are on pace to see only 303,000 new homes sold in America.

That is beyond pathetic.

To get an idea of just how bad that is, just check out the following chart which comes from the Calculated Risk blog.  The first number is the year, the second number is the total number of new homes sold during that year, and the third number is the total number of new homes sold through the month of August during that year.  The number of new homes sold during 2011 is a projected number….

2000:  877  608
2001:  908  644
2002:  973  670
2003:  1,086  759
2004:  1,203  841
2005:  1,283  906
2006:  1,051  756
2007:  776  577
2008:  485  365
2009:  375  261
2010:  323  231
2011:  303  211

As you can see, this will be the fifth year in a row that new home sales have fallen.

And yet the folks on television keep telling us that the recession is over.

The frightening thing is that new home sales are this anemic even with mortgage rates at historic lows.

So what is going to happen once mortgage rates start going up?

It is hard to imagine new home sales getting even worse than they are now.

And we desperately need to get things turned around.  New home construction is very good for the economy.

According to the National Association of Home Builders, each new home that is constructed creates the equivalent of 3 jobs for an entire year and generates approximately $90,000 in taxes.

So what is holding things back?

Well, for one thing, if people do not have good jobs they cannot afford to buy new homes.

Back in 1969, 95 percent of all men between the ages of 25 and 54 had a job.  In July, only 81.2 percent of men in that age group had a job.

That is a massive problem that needs to be solved.

Unfortunately, our leaders continue to allow millions of our jobs to be shipped overseas.

If you gathered together all of the people in the United States that are “officially unemployed” right now, they would constitute the 68th largest country in the world.  It would be a nation larger than Greece.

Secondly, there is a gigantic glut of foreclosed homes on the market right now that is competing with new homes for the few qualified home buyers that are out there.

It is absolutely shocking how many vacant homes there are in some areas of the country.

According to the U.S. Census Bureau, 18 percent of all homes in the state of Florida are sitting vacant.  That figure is 63 percent larger than it was just ten years ago.

In the city of Detroit alone, there are more than 33,000 abandoned homes.

Until the number of vacant homes goes down, there is just not going to be a need in the marketplace for a lot of new homes.

Sadly, it looks like another huge wave of foreclosures could be on the way.

According to the Mortgage Bankers Association, at least 8 million Americans are currently at least one month behind on their mortgage payments.

That is more than a bit frightening.

Thirdly, lending standards on home loans have dramatically changed.

Five or six years ago, if you were breathing you could get a home loan.

Even the family dog could get a home loan.

But now the pendulum has swung to the opposite end of the spectrum.

Applying for a mortgage today is like getting a series of proctology exams from a very rude and very uncaring doctor.

Many mortgage lenders today will deny you at the slightest hint of a problem.

Even if you have a very high income, near perfect credit, very little debt and a long history of financial responsibility there is still a very good chance that you will be turned down.

If you don’t believe this, just start talking to people that have applied for home loans lately.

A ton of pending home sales are being cancelled because potential home buyers simply cannot get approved.

Until some sort of “balance” is restored to the mortgage lending process, this is going to continue to be a major problem.

It would be nice if I could tell you that things are going to get better soon, but the truth is that there are all kinds of signs that the U.S. economy is getting even worse and there are all kinds of signs that the global financial system is on the verge of a massive nervous breakdown.

So if you make a living by building or selling new homes, you might want to find other ways to supplement your income for a while.

Things are not going to turn around significantly any time soon.

  • Danyel

    thank you for all these articles. You are the only consistent news source i can find that speaks about our problems today realistically.

    • Michael

      You are welcome Danyel. I am very honored that people spend a few moments out of their day to see what is new here.

      Michael

  • Dr. Chicago

    Consider average home prices at $50,000 (low I know). Commission of 7% (3.5 for selling and buying agent) which is $3,500. The difference between 2006 and 2011 is a bit more than 750,000 homes. That is a lost of $2.6B dollars for realtors. Again at $50,000 for an annual salary, it would equate to 52,500 jobs lost comparing 2010 vs. 2006. Ouch.

  • doomster

    Excellent post… Sure seems that way – there are some houses around here that have had “For Sale” signs up for years and no one has ever lived in them. A lot of people owe more than their homes are worth – and how many want to have a short sale and walk away with nothing? Another thing that’s hitting record lows is the interest on savings accounts. Yesterday I got my bank statement and the rate was down to 0.16 percent! Apparently that’s relatively good these days: http://aeinetwork.com/news362.html

  • SpunkyBunks

    High gas prices are keeping new home sales down. Who wants to move out to the no-wheres-ville suburbs when gas fluctuates between $3-$4 a gallon!

    • Highspeed

      You ain’t seen nuttin yet!

  • Scott

    Buiding new homes is no substitute for a viable industrial base.

    To say “new home construction is very good for the economy” is kind of myopic. New home construction is not sustainable environmentally or demographically. That is, not unless you endorse the continued rape of the planet in order to perpetuate America’s current, suburban nightmare, and also plan to continue to flood the U.S. with undocumented migrants willing to enter debt-slavery to corporate lenders in order to buy.

    I like a lot of your essays and intend no offense, but, every now and again you’ll write one that’s somewhat unbalanced and not very well thought-out. In my opinion, this one of them.

    Even so and our differences aside, I like this blog and am grateful for all of the effort and time you put into it. Keep it up…

    • Michael

      Thanks Scott – It is okay if we disagree on some things. None of us are ever going to agree 100% on everything. :)

      Michael

      • Scott

        Upon re-reading my comments, I think I sounded too harsh. I apologize for that and for any offense, I didn’t intend any.

        It bears repeating that I’m grateful for this blog. Your essay on outsourcing was the take-home written final exam for my Macroeconomics class last year (I am a high school teacher in CA). Thanks again, and thanks also for the opportunity to post and appear here.

        • Michael

          Wow – I am very honored to hear that.

          And please feel free to express your disagreement whenever you disagree with me. I have some really strong opinions, and I am amazed that I have not scared everyone else away by now. :)

          It is okay for us to not agree on everything. Hopefully by sharing our views with one another we can all continue to learn.

          Michael

    • Hank Reardon

      “New home construction is not sustainable environmentally or demographically. That is, not unless you endorse the continued rape of the planet in order to perpetuate America’s current, suburban nightmare”

      LMAO! Dumbest.analysis.ever.

      • Jamcanig

        Hank, will cheap oil and energy be around forever? We can’t keep turning farmland into sprawl or being a net food importer will be another massive problem we will have to contend with. Aging sprawl is enormously expensive to maintain too, so don’t complain about high water, sewer and property taxes.

      • Carl Campbell

        Hi Hank, I must be a “dumb analyst too. I don’t know what “LMAO” is. The real rapists are those that allowed and particpated in the absolute destruction of a viable and important industry like providing homes for Americans. It only took a couple of short years to plan and to execute the crime. These rapist left homeowners with all their clothes removed (30%-70% loss of value across the boards. These rapes also destroyed the other legitmate consruction related busineses ie. Trades, Materials providers and handlers, Home improvement people, Real estate services, Architects, equipment providers ect.ect. An ungodly Real estate “bubble” was created that put up many years worth of new house inventory and a very short time!

  • REED RICHARDS

    with the current inventory of homes being vastly overprices, not to mention the many that are empty, I would say that a slowdown in new home sales is a good thing. The current market needs to shake itself out, home prices come to honest market levels, and then rebuild from there. But simply building more and more homes on top of the existing surplus makes about as much sense as adding more and more people to state-wide prison rolls. You are not going to build your way out of the current housing slump by building more homes. That would be absolutely the wrong thing to do at this point.

    • Carl Campbell

      Reed, I really wish it was just a “slow down of new home sales” and that all that is needed is for the market to “shake itself out”. That would really be nice. The reality is that a lid is being kept on the fact that the residential home industry has been totally torched beyond recognition. It was hit by napalm! The shaking out is more accuratly an 8.3 earthquake. Just think Reed forclosed homes and short sales are being sold for much less than the basic cost of land, permits, plans, fees, materials and labor to build a house! What does that tell you about any future for housing and to be able to sell your house?

  • Gary2

    The God of the Bible has a special concern for the poor and is openly suspicious of the rich. And if that is not clear in the Bible, nothing is.
    You might say when it comes to economics; God has a bias toward the poor. God’s prophets say that nations will be judged by how they treat the poor and vulnerable — not by how much they lower tax rates for the wealthy. Listen to what the prophets Amos, Micah, Isaiah, and Jeremiah say about the rich and the poor, about fairness and justice, about inequality and equity. Is there any doubt that if the biblical prophets were saying such things in the House of Representatives or on Fox News today that they, too, would all be accused of class warfare?
    What about Jesus? Mary, the mother of Jesus, spoke clearly about his coming and his meaning in history when she prophesied about his mission in her famous prayer/song known as the Magnificent. She predicts how the child in her womb will reverse the status quo, saying, “He has brought down rulers from their thrones but has lifted up the humble. He has filled the hungry with good things and sent the rich away empty.” These are not the words of a humble and charitable service provider, but the language of a social revolutionary who would certainly be charged with class warfare today on conservative talk radio.
    Jesus fulfilled his mother’s prophesy in his own Nazareth Manifesto — his first words, in Luke 4 — by saying, “The Spirit of the Lord is upon me, because he has anointed me to bring good news to the poor.” He clearly should have been more sensitive to the rich who, after all, are job creators, right? How did all the prophets and Jesus miss that essential economic point?

    Well, let’s be clear: There really is a class war going on, and the upper class is winning. The only people doing well in this economy are the people at the very top, some of whose selfish behavior caused this recession in the first place. Only they have “recovered” from the crisis they helped create. The rest of us are still trying to recover. That’s a war being waged by Wall Street against Main Street. And Wall Street is winning that war.

    http://blog.sojo.net/2011/09/22/god-and-class-warfare/

    • Ben Dover

      You are obviously a slacker who thinks I should carry you.

    • John B.

      I agree that the country is divided. It’s divided between the half that pays taxes, and the deadbeat half living easy on government handouts. Instead of the North vs. the South, it’s gonna be the Taxpayers vs. the Deadbeats.

    • Craigo

      Thanks for your post, Gary2. As a saint, I have to say that I agree with some of what you wrote, but for some reason you certainly have limited knowlege of what “poor” means. Fiscally poor is only one group. You have to gain context every time you read in order to determine which class of poor is being discussed. In the case of Luke 4:18, the poor are those who do not yet have the good news.

  • bertaggle

    looks like this is the 6th, not 5th year in a row.

  • A.S.

    The number one reason for this to happen: the Federal Reserve (see last article).

    BTW, I know you are watching me and I don’t care. There still is the 1st Amendment. And if you think otherwise, why don’t you just go to the Smithsonian Museum and burn the original Constitution? I DARE YOU!

  • mark

    The price of a house is still to high. Wages would have to increase a lot for the someone to be able to afford a starter home. It is good that a buyer would need a 20% down payment plus closing costs so that they would have some skin in the game. We really ruined the housing market with no or low down payment loans. This brought so many new buyers into the market that hyper-inflation of prices became the new normal. Well that new normal is long gone but the hangover of all the over priced debt is still there. If this problem wasn’t so serious, I would laugh each time that I hear it said that we have to fix the housing market (reinflate the price of houses back up). You will not have wages go up much as long as you have to compete with China etc.

    • JJ

      I agree, prices are too high and still need to come way down. If we are heading back to early 1980’s wages in this country, we need to head back to early 1980’s home prices too.

      • Otown Right Guy

        We are heading back to 80’s wages, but we have record food, gas, healthcare and college tuition prices. This is all thanks to federal government intervention.

  • David Gurney

    I disagree.The subsidization of Real Estate since 1946 created gigantic distortions in the marketplace and led to our cities being transformed into war zones.

    Only when prices fall to 1995 levels or below,can the economy ever recover.

  • http://www.placeofrefuge2012.com Sheila

    We have met several people who were going to bug out as soon as they could sell their house. We have not met anyone who could do that.

    Housing sales are in the toilet.

    http://www.placeofrefuge2012.com

  • JackieR

    Most people that build homes are mexican as well as mow lawns and puts on new roofs.

  • http://lnx-bsp.net/ Tel

    I don’t believe that housing markets actually can drive an economy. If the core of the economy (industry, energy, agriculture, and production) is healthy, then the housing market will be healthy as people naturally move house, have families, etc.

    If the core economy is weak, then housing must also be weak, and retail will also be weak, because people simply make do with less — have smaller families, put multiple families under the same roof, don’t bother moving house to get a new job, because there is no job, etc.

    Having said that, the banks (as ever) are behind the curve by keeping their mortgage lending tight. That horse bolted back in 2008. No point locking the stable door three years later. There is good scope for alternative non-bank loan systems e.g. http://www.lendingclub.com/

    • Carl Campbell

      Hey Tel,

      You know, I have been watching how the housing market has been working for a hell of a lot of years. I am sure it is much more of a crucial component that people even have a clue about. The essence of it is what Sheila said, that is “housing sales are in the toilet”. This last sub-prime lending debacle decimated housing in the entire US. By creating this huge real estate crash that reduced housing prices by from 30% to as much as 70% in a few short months, every homeowner in the US got knocked to there financial knees! The eqilbrium that existed in home building, buying and selling and lending since WWII was smashed to powder. Even in down times people could sell a home for a modest gain or break-even. In this current catastrophic senario, every homeowner is paralized and functionally bankrupt. Moreover they are totally immoble, as they can not sell their homes because prices are not feasable (too low) or they are simply deep under water! A guy I talked to was wondering about the “ripple effect” in the economy with this disaster. The right word is “Avalanche” effect! Everthing even remotely related to housing is dead in the water all at once.

  • 007

    8 million people are behind on their mortgages. Those houses will soon be on the market as foreclosures along with the millions more being held by the banks and Fannie and Freddie. What a disaster for those families along with anyone that owns a house. Stay away from real estate.

  • http://www.demandronpaul.com Mark Watson

    Stop for a moment and think. How much of the American Economy is Real? In other words, if you had cash you earned on the job or in your business, you could plunk it down at the register without leaving your personal information, and get what you wanted for it?

    Not much.

    No, if you want a degree, go get a college loan- but the bank won’t do that until the government promises to pay for it if you don’t.

    If you want a business, go get a business loan, but the bank won’t do that until the government promises to pay for it if you don’t.

    If you want a home, go get a home loan, but the bank won’t do that until the government promises to pay for it if you don’t.

    Want to buy on-line, or in store, go get a credit card, Don’t even think of getting out of the balance due.

    It used to be that we paid for things in cash, or by check. Mortgages were few if at all. College was not “required” to get the 8-5 job.

    So stop and think about how much of life happens on credit. Now realize how dangerous it is. Remember those plastic surgery parties with family and friends as they cut up their cards, and made it out of debt?

    If you had to save money and buy a house, today you could not do it. In 1913 before the FED, Henry Ford paid his non-college-degreed, non-union assembly line workers $5 a day. I wish I earned $5 per day. If you convert 1913 Gold Dollars with todays FIAT at about 1600/oz Gold, and converting for no income tax, todays worker needs to earn:

    $85 an Hour

    to have the buying power of Henry Ford’s assembly line worker.

    In 1913, it took just over 4 days to earn enough to buy an oz. of Gold. Today, your average $10/hr joe would take about 150 to 180 days to buy that oz. of Gold.

    In 1913, it took just over 100 days to earn enough to buy a new car. Today, we barely afford lease payments, but for someone earning $10/hr, to buy a used car of any value, say $7000, it would take 88 days. A new car is $23K so that’s 288 days.

    In 1913, it took just over 1000 days to earn enough to buy a nice house. Today, most Americans never own one unless their parents passed away and left it to them. Still, at $10/hr, a $450,000 home takes 5625 days to save- that’s 15 years! If we drop down to a $200,000 home, 2500 days, or 6.8 years.

    In todays microwave society, get-it-today, fully-furnished- we are willing to go into debt- hell- we have to go into debt to get the things we need.

    If you lose your job, everything you make payments on is at risk. Your house, your cars, your student loans, your health insurance, your life insurance, your credit, etc.

    In 1913, if you paid a small rent, and some necessities, you might extend that to 6 months but you had no tax, title, license, forced liability insurance, VIN numbers or street cameras watching your every little move. No care payments! A few repairs. Heck, if you saved for the year, you could buy two! After the cars are purchased, yo apply that payment back into your own savings, and in say 3 years, you leave your apartment and OWN YOUR OWN HOME.
    You can till your own soil and keep a garden instead of depending on a local produce department. You can have kids. Without rent, you can fund your own business until its gets off the ground.

    Today, None of this can happen.

    We are living in a broken window economy. A zombie economy. What we think is real is not. We do not see the “unseen” that might have been if we had saved our money, and not mortgaged our lives away.

    The IRS was put into place to fund the government that would surely need money to explode and become the nanny state/warfare state it is today. It was necessary after the FED was created to defraud the American people out of their only real wealth: Gold.

    Legal Tender laws force us to exchange monopoly money for real goods and services. US Dollars backed by Gold before FDR acted as claim checks. You could go to the bank and claim gold on deposit as a withdraw into your hands, or into your own account. Today, US Dollars are worthless, they are a claim on nothing. That someone hands you a cup of coffee for your $4 FRNs is out of this world. It is like voluntarily paying a thief, before he holds you up. Legal Tender Laws apply to Gresham’s Law. Bad money drives out the good. Who is going to pay you for goods or services in Gold or Silver, if legally in court, a debtor can pay you in worthless dollars to settle a balance. If we did not have legal tender laws, some businesses would tire of accepting worthless paper, and choose to accept only Gold or silver, or some other competing currency.

    Notice, prices today expressed in gold and silver, are cheaper for cars and houses, and everything else. In dollars they have never been higher. So we live on credit.

    Buy another Zombie House or Zombie Car, or work at a Zombie Job, earn a Zombie degree, this is not what our founders intended.

    • Michael

      Mark that was a really good comment. Have you posted this anywhere else?

      Michael

    • Otown Right Guy

      Excellent post! I only take issue with “Still, at $10/hr, a $450,000 home takes 5625 days to save- that’s 15 years! If we drop down to a $200,000 home, 2500 days, or 6.8 years.”

      You are understating your case, because you are assuming the $10/hr worker is taking home 100% of his pay and working 365 days a year! Let’s say he takes home $8.50/hr after deductions (taxes and insurance) and he works 260, 8 hour days/yr. That’s 25 years to pay off the $450K house. And that assumes he has no other expenses!

  • Angel

    Wow do you really think this is a good time to be buying houses? I bought my house in 2002 and I am worried sick about what I will do if the dollar becomes completely devalued and our political system comes undone or more banks go under. How will we pay for our homes? Does anyone know how this will work out for the home owner?

    • Carl Campbell

      Angel,
      You should probaly be OK if you make the right moves. A typicaly modest home in 2002 was most likely a reasonable price. The thing is I hope you did not use your home as a “credit card”, as your payment will be to high and you are probably toast. In any event, being mobile is a key, ie if you need to relocate for good work. The huge problem for everyone now and in future, is that people are just damn immobilized! They are immobilized and paralyzed by not being able to sell these freeking houses! You if you have to travel for good work, you will need to have some kind of cheap temporary housing, second home or RV whatever.

  • JD

    Car salesmen and Real Estate agents and construction workers basically have no future prospects. When I installed carpet last year, almost none of the jobs I had were new construction. Almost all were remodels. Once the majority of homeowners got their houses done work dropped off sharply. I talk to some of my friends in that business and it is either feast of famine. Same with sprinkler installion. All remodels and old customers, no new construction. New home construction is alot of peoples bread and butter. We helped fuel the economic prosperity of the early and mid 2000s. Now our economy is stagnant. I dont see what business or industry is going to pull us out of this. Maybe painting foreclosure signs? The banks will not lend you money even with a good job and credit. They want collateral and real assets. They dont trust in your jobs income anymore because you might be the next pink slip. Lets see where does that leave us? We dont manafacture here anymore. We dont build new houses anymore. Maybe El Pollo is right. Carjacking and kidnapping may be all we have left.

  • JasonD

    Michael,

    We need to learn to live sustainably and occupy all of the houses that are now vacant, not support some bubble sector of the economy and tear up more arable land to build millions of cheap lookalike houses.

  • nowwthen

    Back in more normal times you could get an FHA or a conventional mortgage with a 3 to 5 percent downpayment. You had to have decent, not perfect, credit, show the ability to repay the loan and pay a PMI (private mortgage insurance) premium of 1/4 percent or so until you either paid down the loan or the house appreciated in value to show you had at least 20 percent equity. Most new home sales were to people who were using proceeds from the sale of their first home (which had appreciated enough over the average 7 years they lived in it)as a downpayment on the newly constructed and nicer home. Their first home became a nice first home for another family who met similar purchasing criteria.

    For various self-serving reasons several entities came to believe that the American Dream of home ownership should become a universal American reality. Politicians and the agencies they’ve contrived to oversee mortgage lending came to believe that relaxing lending standards to the point where no documentation “liar loans” of 125% of a home’s value should be approved. After all, everyone deserved a nice house and, besides, home values would continue to appreciate at 10 to 20 percent annually anyway right? Other politicians saw the folly in this but decided that complicity offered far more political capital. So they jumped on the bandwagon extolling what they’d achieved by allowing lending standards to deteriorate and thereby turning borrowers without a prayer of upholding their commitments to repay into homeowners.

    All the while the lenders were happy to play along because they knew damn well that they’d collect all of their various fees and points and then bundle up thousands of these loans and sell them off, before the ink was dry if possible, to investors as mortgage backed securities. How could an investor go wrong? They were backed by equity in homes that people would surely want to hold onto because their value increased by tens of thousands of dollars every single year. It was such a sure thing that these securities even carried triple A ratings.

    We all know how that movie ended. Now, five or six years following the frenzy, you need to have credit that could get you canonized and 20% down just to get a mortgage application. Forget getting the downpayment from equity in the house you’re trying to sell. There’s even a good chance you’re continuing to make payments on a loan with a balance far higher than the value of your home. But you consider yourself one of the lucky ones if you haven’t already been foreclosed on. That 20% downpayment is going to be pretty hard to put together for those paying for rent, food and utilities even with all three of those part time jobs.

    So here we are in 2011 swirling toward oblivion in a vicious cycle that becomes stronger as it feeds on every new decrease in our prosperity. The good jobs are being done by foreign workers or digitally controlled human servants – robots, computers, ATMs – that pay no US income taxes, social security taxes, real estate taxes or sales taxes. Neither do they buy homes nor put any earned income back into the economy. Corporations have amassed a collective $2 trillion in cash but have no reason to expand since the demand for their products and services is not growing because unemployment is. Many continue to grow their bottom lines not by increasing their top lines but by cutting back on expenses i.e. jobs. When there’s talk of tax increases corporate spokespeople and the politicians they own claim they’ll be dissuaded from hiring. When they’re given tax breaks intended to create jobs they’re just as likely to use the funds to invest in equipment that replaces workers. . . or, money being fungible, (rhymes with spongeable) a nice round of bonuses for the managers that, in doing so, figured out how to reduce expenses.

    So I wouldn’t bet on the housing industry making a comeback any time soon even if interest rates continue to drop below their already near record lows. Renting and downsizing along with doubling up like the extended families in developing countries and, sadly homeless are more likely the direction we’re moving.

    • Michael

      Wow very nice comment nowwthen.

      Michael

      • Carl Campbell

        Yes Mike, I too am quite impressed with the very knowledgeable and insightful people who post here. It is refreshing. Who are you guys, anyway? I just wish you guys (and me too) could have helped to evert this grim catastrophy. In retrospect it seems, for years conservatives have been putting good energy into promoting and supporting the so called “Republicans”. Big deal huh? We have been railing about a miriad of issues, while Democrats and Republicans have set Rome on fire.

    • prosperity for all

      “The good jobs are being done by foreign workers or digitally controlled human servants – robots, computers, ATMs – that pay no US income taxes, social security taxes, real estate taxes or sales taxes.”
      Tax the hey out of the owners operating these devices and employing foriegners to do business on American soil.

    • mark

      When I bought my first home in 1981 the lender would only fund 80%. It was up to me to come up with the rest as a cash down payment or some of my 20% portion made up with a second loan. This was the norm. The real estate bubble started with the advent of low down payment loans. As the amount of the down payment shrunk , the bubble became larger. The buyer needs to have enough skin in the game so that the lenders loan is backed up with real value. The value of real estate is in an ever changing cycle of ups and down. The swings are usually small enough that 20% covers the low points. When the bubble kept going up because of lax lending standards, the fall back to earth is much larger and is bringing a lot of pain as we hit the ground.

      • nowwthen

        I don’t know what your situation was in 1981 but your 20% downpayment was required for a reason. Tens of millions of 95% of appraised value loans were written by the VA, the FHA as well as banks and S&ls throughout the 70s and 80s to creditworthy borrowers willing to pay the 1/4 point PMI premium.

        • mark

          Those low down payment loans were all government loans. Conventional loans required 20% for owner ocupied and 30% for rental property. To get an FHA loan, the property had to pass their inspections. This made the property cost more. I wanted to buy low, fix up the property and then rent it out. As I would finish all the repairs, I would refinance into a 15 year loan, then take the cash and buy another property and start the repairs on the new property. Over a thirty year time frame it has worked out well. Most would not do this as you have to live well below your means and work real hard to make this system work.

  • addict

    Wow, this is abysmal. And I have an existing home to try and sell.

    • Highspeed

      addict,

      Find a group of people who love you and will have your back in a collapse. In my case that is my Church. There are about 50 of us and we are prepping like crazy. Store food, dig a well, set aside some non gmo seed, buy supplies and learn to work with these people. We have a building that any or all of us can re-locate to if it comes to that. Also make sure you have people who are security minded in your group.
      In our group, everybody has a specialty, be it weapons, farming, cooking, medical or whatever. Just get organized and do it soon.

  • prosperity for all

    No new home housing bubbles, please. Absolutely not. Disgusted with the last one where acres of arable land became developed into shoddily built ridiculously overpriced McMansions. Cryin’ shame when orchards are leveled and forever gone to ugly McMansionvilles. Leave open space alone. Don’t it always seem to go that you don’t know what you’ve got till it’s gone. They paved paradise and turned it into a parking lot all in the name of the greedy looking to turn a fast buck. Shame on that!
    Our country is Beautiful, Purple mountains majesty, spacious skies and all that. Let us not lose what is left of it to cookie cutter suburbs, ok? Our bread basket amber waves of grain will be gone with more new housing bubbles..then what- at the mercy of foriegn producers- fool’s folly there. No thanks.
    What needs to be done is revitalizing depressed areas. (think Detriot) Breathing new economic life into dead zones via rebuilding, recycling dilapidated energy hog buildings into energy efficient. But please save and restore the beautiful and historic architectural masterpieces that American Craftsman build in days gone by. These are works of art worth preserving. There are plenty of restorations and rebuilding in depressed areas to work with! This, in turn would create jobs for people who live in and around those areas who need a boost to prosper. The idiocy of creating new consumer market base in foriegn third world countries by developing those all the while our own existing economy and infrastructure crumbles and continues to fall into disrepair!

  • McKinley Morganfield

    I wholeheartedly agree with those who place the blame at the feet of government. The current state of the residential real estate market is a direct result of distortions caused by federal policies. The bubble was created by the feds and although they are still trying desperately to re-inflate, it is in vain. Prices must continue downward until sane market value is reached.

    MW asks, “How much of the American Economy is Real?”

    That is the 16 trillion dollar question! For more than 3 decades now the economy has been based on easy credit and debt. We’re now reaping what we have sowed, namely, more debt.

    “For various self-serving reasons several entities came to believe that the American Dream of home ownership should become a universal American reality. Politicians and the agencies they’ve contrived to oversee mortgage lending came to believe that relaxing lending standards to the point where no documentation “liar loans” of 125% of a home’s value should be approved. After all, everyone deserved a nice house and, besides, home values would continue to appreciate at 10 to 20 percent annually anyway right?”

    Nowwthen’s comment is right on target. This was the rationale and now we see the folly of believing markets will continue to rise forever.

  • http://www.maximesipoezii.ro Razvan

    Very good comment Mark!! Keep it up!

  • http://www.hotbedinfo.com Kyle

    Thanks for the article! It’s a buyers market!

    Google: Scientists Warn Tidal Wave Could Soon Destroy the Coasts of Florida and Brazil

    • McKinley Morganfield

      “Google: Scientists Warn Tidal Wave Could Soon Destroy the Coasts of Florida and Brazil”

      And, the sky is falling! ;-)

  • Peter H.

    Don’t blame the government for the housing crisis (unless you blame Frddie Mac & Fanny Mae for taking on all those worthless mortgages without checking if the borrowers had the ability to repay them.)
    The fault lies with the greed of fianacial institutions and builders who would sell homes to anyone who would sign a deed of sale – even dogs as you pointed out!
    These financial institutions should have been regulated better, or have followed sound business pratices and they are, by and large, not doing there utmost to cleear up the mess, so it is “buyer beware” when it comes to acquiring a house that was built in the last 3 years or so and is now vacant and in foreclosure.

    • John B.

      Should have been regulated better by who? That’s right, blame the government.

      You might want to look up the “Community Reinvestment Act” which was started under Jimmy Carter, and greatly expanded under Clinton. Clinton also repealed Glass-Steagal, which is what allowed Wall Street into the mortgage business. Also, there were many crooked mortgage brokers, and greedy real estate speculators flipping houses. The financial institutions are the least to blame. They were forced to hand out loans they didn’t want to, or else get sued by ACORN lawyers like Barrack Obama. Hey, let’s put him in charge of the whole country. How’s that working out?

      • Carl Campbell

        Hey Johnny B.!

        Good job. You really cleared out a lot of B.S. that has been flying around. Tell us how the Reagan and Bush regimes also fit in to all this.
        “Loss of manufacturing jobs” has been a major topic (panic) that is justified. Just think for a moment about a normal non-bubble construction and real estate market. Not just new construction, but also remodeling, rehab work, infrastructure, maintenance, and reclaimation of distressed residential and commercial property. How many manufacturing jobs are there in building materials and related inputs? ie. Paints, industrial coatings, Painting equipment, Scaffolding, Ladders, Cabinets, Doors, Mill equipment,Power tools, Hand tools, Fasteners, Windows,Hardware,Pavement, Batch plant equipment, Lumber, Concrete, Construction equipment,Commercial vehicles,Vehicle equipment parts and tires, Flooring,Roofing materials,Adhesives,Masonry, Chimneys,Sheet metal, Electrical equipment,Electrical fixtures, Pipe, Plumbing fixtures, Wiring,Glazing,Drywall materials, Structural steel,Welding equipment, Compressors, Generators, Building and roofing papers,Fire sprinkler components,Metal framing materials, ect. What kind of a multiplier effect is there with the money made from construction related manufacturing? It has got to be staggering!

    • McKinley Morganfield

      Fanny, and Freddie knew the creditors were incapable of repaying. It was all about numbers and the higher the numbers the higher the bonuses. Check this out: http://tinyurl.com/6dnxker

  • John B.

    Hmmm, what do 2009, 2010, and 2011 all have in common? Could it be because we have a socialist in the white house?

    What other dismal records have been set?

    Budget deficits?
    The national debt?
    The number of unemployed?
    The number of people on food stamps?

    Yet the left wing media would have us believe that the current admin has “turned things around”. And that anything bad that is happening is the fault of someone who hasn’t been around for 3 years.

    The real problem is that the public is so stupid, that they actually believe the left wing media.

    • Ian

      Obama is a corporate puppet. Enough with the socialism charges. And besides, countries that are socialist are thriving right now. So shove it.

      • John B.

        Right. The socialist countries are thriving at bringing down the entire world economy. Portugal, Italy, Ireland, Greece, and Spain, to name a few of the pigs. Grow a brain.

  • bruce2288`

    One of the reasons home prices are unaffordable is the size of the new homes being built. Average home size has greatly increased as family size has gone down. It was what the buying public wanted, maybe the buying public needs to reevaluate the size of home they need, along with number of bathrooms, marble counter tops and jaccuzis

  • Mad Max

    Some people thinks this is bad. Just wait few months are a year. People buy house without a job, and a shrinking pay check doesn’t help either.

    Memo to America: Stop waiting for Democrats and Republicans to save you. It’s bad for your health and your future. Can’t you tell?

    FIGHT THE CAUSE – NOT THE SYMPTOM
    OsiXs (Revolution 2.0)

  • Gay Veteran

    John B.: “Hmmm, what do 2009, 2010, and 2011 all have in common? Could it be because we have a socialist in the white house?….”

    The economic diaster started under Bush, and continues under Obama.

    “…The real problem is that the public is so stupid, that they actually believe the left wing media.”

    Get real! There is NO “left wing media”, there is only the corporate media.

  • Stolengoat

    How to make a Horse **** Cocktail

    The first thing you will need to make this tasty Horse **** cocktail is a 2 party system.

    This provides us with the illusion of choice. Just ask my old Uncle, George Washington.

    Next we will need massive doses of Corporate bought politicians over many decades. Slowly changing the political topography in D.C.

    Former GENERAL and President Dwight D. Eisenhower felt so strongly about the dangers of the military industrial complex he was compelled to make that warning the corner stone of his farewell speech before leaving the white house. He was a General ***************** and he felt that strongly about it!!!!!

    Now that the politicians have been bought and paid for by the big corporations it’s time to open the revolving door of employment between the big shots in the major corporations and the government. Back and fourth they go working for green backs not the people. Now we can proceed with the warmongering in order to fatten the pockets of corporations like Bell Helicopters, Lockheed Martin and all the other corporate giants that profit from destruction.

    Next we are gna need to open all shapes and sizes of corporate loop holes. Remember folks these are the job creators so lets just let em do whatever they want. Maybe even get the FCC to change the laws so they can buy up 90% of all media outlets. Guess what that got us???

    You guessed it {Corporate Media} and the death of true journalism that was historically used as a counter wieght to hold government accountable to the people.

    Now we have prepackaged, canned news and entire mountains of Horse ****. Total nonsense like where knuckleheads like Paris Hilton took there last poop is now somehow important..

    These S.O.B.’s did more damage than la cosa nostra ever even thought about. I say we bring back the mob, have em shake down these guys giving the bad loans. Maybe break a knee cap or 2 in the name of the US taxpayer. Get a couple hard core, pipe beaten wise guys to make these corporations an offer they cant refuse!!!!

    Between the blood sucking power grabing Corporations and our bloated and overwieght BIG Brother we keep getting pushed more and more every day. We have been a witness to a methodically slow erosion of our rights year after year. Very soon the average Joes and normal Bobs will find there back to a wall. It will get mighty interesting when that happens. The American people may be sheeple now, but I hear them waking from there slumber and we will be grumpy mudda’s when we awake. In the wise words of the great warrior poet “The Hulk” You wouldn’t like me when i’m angry.” Americans are a ultra competitive group of survivors. If I were a Corporate fat cat or a Government man i’d be working to purge the system before us hard assed country boys and cold hearted city boy are forced to chop yall back down to size!!!!!

  • http://futuremoneytrends.com 420 Productionz

    Hi, this new 12 minute documentary on the housing market goes great with this acticle:
    http://www.youtube.com/watch?v=ZUMwVDH3o-I

  • http://investingdatabase.com/investing/investing-tips/?s=H&p=1 Dennis The Menance

    The real estate business does not seem to have caught its breath’ It seem to be gasping for air. All the hupla years and years ago about being in the housing market was the best thing that could ever happen to you. I can can picture the young real estate agent’ the banker waiting for the buyer to sign on the doted line chuckling when someone suggested that real estate could maybe not be the greatest investment in the world. So over confident that you could smell it in the room.

  • http://www.paginadeimobiliare.ro/cautare-avansata.htm?category=2-camere-10&location=caras-severin Anunturi imobiliare

    spain and italy downgraded… what`s next? how to make our investments safe?

  • Terry

    Re:
    “Five or six years ago, if you were breathing you could get a home loan.

    Even the family dog could get a home loan.”

    Where did you get this silly idea? Many Americans couldn’t get a home loan five or six years ago.

    Five years ago, a mortgage telemarketer claimed I could get a home loan. So I applied and proved him wrong.

    Burger flippers don’t get home loans in any economy or any lending environment.

  • Kenuck

    Do what I did..take ’bout 20,000US,get some lumber and build your own..screw the loan ************.

  • none

    What happened with the housing crash?!

Emergency Essentials/BePrepared
Agora Financial
Thrive Life
FEMA Hates This

High Blood Pressure?
The End Of America?
FINCA BAYANO
Survive After Collapse

Silver.com

Camping Survival
GunMagWarehouse.com
SFC_The-Video-They-Tried-To-Ban_125
Facebook Twitter More...