Take a second, click on the title to this above, or the link below and read what is written there . . . go ahead do it now
http://finance.yahoo.com/news/Home-sales-hit-13year-low-apf-1272155599.html?x=0
Did you do it?
Let's look at some of the article's highlights:
* The number of people who bought previously owned homes last year fell to the lowest level in 13 years, and economists say it will be years before the housing market fully recovers. MY FRIEND AND FREQUENT CONTRIBUTOR HERE OUCH! (KIRK NACE) HAS BEEN SHARING THIS FOR OVER 5 YEARS AND YET SOMEHOW IT'S STILL NEWS???
* High unemployment and a record number of foreclosures are deterring potential buyers who fear home prices haven't reached the bottom NO REALLY, FEAR IS STOPPING PEOPLE FROM TAKING ACTION? WHEN WILL THE FEAR GO AWAY?
* "We built too many houses during the boom, and now after the crash, it will take us a long time to get back to normal," said David Wyss, chief economist at Standard & Poor's in New York. SO IT'S A SUPPLY AND DEMAND ISSUE? DEMAND IS LOW BECAUSE OF FEARS THAT WON'T DISAPPEAR ANYTIME SOON AND SUPPLY EXISTS, IT ISN'T GOING AWAY UNLESS GOD FORBID WE SUFFER NATURAL DISASTERS (ASK THE FOLKS IN NEW ORLEANS ABOUT THAT OPTION)
* "The job market is still very weak, and unemployment is very high. Until we get more jobs, people will be reticent about buying homes," INTERPRETATION -> DEMAND IS GOING TO STAY LOW
* Zandi (chief economist at Moody's Analytics) said home prices would fall another 5 percent this year. Sales of previously occupied homes would likely exceed 5 million. That's a slight improvement from last year, he said, but it will probably take until 2013 or 2014 for sales to reach a healthy level of 6 million units a year.SO WITH SUPPLY AT AN ALL TIME HIGH AND DEMAND EXPECTED TO TAKE ANOTHER 3+ YEARS TO RISE BY JUST 20% (4.91 MILLION IN 2010) IT'S LOOKING LIKE PRICES WILL CONTINUE TO DECLINE FOR AT LEAST ANOTHER 4-5+ YEARS . . . I'VE HEARD THIS SOMEWHERE BEFORE (READ THE OLDER ENTRIES ON THIS SITE FOLKS)
* Still, the unemployment rate is not expected to fall much below 9 percent this year. And the housing market cannot fully recover until the glut of foreclosed homes is cleared. Last year, a record 1 million homes were lost to foreclosures, and foreclosure tracker RealtyTrac Inc. predicts 1.2 million more will be lost this year.HOW WILL THE GLUT BE CLEARED WHEN 2010'S FORECLOSED HOMES (THE MOST EVER) AREN'T BACK ON THE MARKET YET AND FORECLOSURES ARE EXPECTED TO INCREASE ANOTHER 20% THIS YEAR???
SUMMARY:
We built too many homes
We have several years worth of inventory and shadow inventory currently available
This supply is still growing, rapidly
Demand is low because of fear
Unemployment and other causes of the fear aren't going away anytime soon
Kirk Nace's projections (that he has shared with some of us for many, many years) are looking more accurate all the time . . . prices bottom between 2015 and 2020 and then stay flat for a decade of more.
Of course he does tell us that the longer the government meddles in the market the more this pain will be extended. I've known him for a long time, and he can be incredibly annoying, but folks, the reality is becoming more and more difficult to ignore.
Any questions?
