fiscal cliffJust like I warned people in 2004 that the housing market would collapse – which it started to do in mid-2005 – I am warning everyone again that the housing market is about to take a long, hard drop.

 

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By Truth in Gold:

For any of you thinking that your underwater mortgage is now covered by the value of your home or for those who were thinking they would take advantage of the housing market “recovery” and sell, you better take a look at facts.  The facts are not what is being reported to you by the Government, Wall Street or the various housing industry associations.  The facts are what you have to dredge up by wading the through the details of housing market reports. You have to go well beneath the surface of the headline media reports and fluffed up news broadcast sound-bytes.

It just so happens that I have done that and have been doing that.  And just like I warned people in 2004 that the housing market would collapse – which it started to do in mid-2005 – I am warning everyone again that the housing market is about to take a long, hard drop.

How do I know this?  Because I look at the actual data that is being reported by homebuilders.  Not the glossed up b.s. they present to the public at large but the actual data buried in the bowels of their SEC filings.  To begin with, the upper management of just about every single publicly traded homebuilder has been dumping stock en masse.  They are not buying their shares.  They are either taking their stock and option bonus awards – which get filed as a purchase – and dumping them as soon as they are allowed by law or they are dumping shares outright.  I publicly challenged an official at Pulte Homes to have himself and his management cronies take after-tax cash from their bank accounts and buy shares outright.  That was about two months ago. Not only did he not get back to me but, in fact, insiders there are dumping.  Look for yourself:  Stock Bonus At Zero Cost Dumped At $18.35.  They are ALL doing this.

sic semper tyrannisWant to know why insiders are dumping?  You can read my latest two articles in which I dredge up the real numbers here:  Housing Market Bear Growls – Black Swan Coming  and here:  New Home Prices Falling Fast.

For those of you looking to sell your home thinking it is worth what a broker might have quoted you three months ago, forget about it.  Prices of new and existing homes are falling – not year over year as reported – but sequentially month to month, starting in the early summer. It is the latter data that is relevant – not the latest month’s data vs. the same month last year.  My links above have some of the data to prove that.  In addition, you may have noticed more “for sale” signs popping up.  This shouldn’t be happening in December but it is – at least all around Denver. I have received emails from all around the country with readers telling me they see the same thing where they live.  My bet is that there will be a deluge of homes listed for sale in early 2014, after the dust settles from the holidays.  Prices are going much lower.

  1. LMAO Just received this about an hour ago. Lol

    HOME SALES AND PRICES UP IN NOVEMBER: In a press release to the media today, Maine Listings reports home sales increased 2.65% in November 2013 compared to November 2012. The statewide median sales price (MSP) increased 1.6% to $175,000 in that same time period. For the complete report.
    What they are forgetting to tell you Is:  The $175000 homes used to be worth $400,000 It’s a joke but hey it pays my bills.

    • @MaryB
       
      Maybe it’s just me, Mary, but if I have a house for sale, I really do not much care who buys it.  My goal is to sell the property, not make a political statement with it.  
       
      We bought our current house from a bank in 1994.  The owner was a bank employee they wanted to transfer to the East coast.  He agreed to the transfer only if they would buy his house so that he would not have to deal with all that plus the hassle of moving.  That our home was purchased from a bank instead of from an individual made zero difference to us.  We got a great deal on it.  :-)
       

    • And the bank was probably happy to be rid of it!  I made the same deal on my last move and I can promise my company has very little care who buys it.

  2. Charlie I’m not sure how this will affect you, but in my weekly coffee with a local residential mortgage broker, he told me the ‘qualifying mortgages’ will require about a 17% increase in  income to meet the debt service requirements for a government backed loan.  I think he said FHA but maybe Fannie Mae.  He was bummed since it is tough enough to qualify now and with Frank Dodd kicking in next year, the criteria will get tougher.  that may affect the abilities of borrowers to get loans.  That might affect home prices too but we didnt get into that element of the puzzle.  My  local banker shared with me a disclosure that this same rule will require his bank to retain 5% of conventional protfolio loans, reducing the bank’s ability to leverage capital, thus reducing total loans and require a stronger borrower.

    • Same in France. For a young couple first time buyer, now bank request 2 full time employment (with at least more than 1-2 years history in the same company), and the debt service cannot exceed 30% of total family revenue. Few years ago we can go until 35-37%, and job question was not so tight. So now most of home buyers are 2nd time buyers that sell another home for buy the new one. Prices are still at historical high, but (and because) new home building is 40% lower that 2 years ago.

  3. You forget the banks of the government has over 35trillion dollars in loan value the can loan out at any given time they want. With just the push of the button they buy sell the lights on or off of the usa or even the world. All the QE by the fed was 4 trillion dollar an if they deposited it in a bank they can lend 10X that amount out. That’s 40 trillion dollars in loan value. Sorry the housing market isn’t going to collapse or banks or the stock market. The end of the 25% declines are over. They won they can rule it all. Yes the PM war is lost precious metals.

  4. I know I said that I had quit this board, but I could not resist this one, even if only to gloat.
     
    Thanks to a bitter and vicious divorce, I am now mortgage-free; property-free and banker-free, and loving every minute of it.
     
    Thanks to the many fine human beings who contribute to this and many other likeminded sites, I am a silver stacker.
     
    Make no mistake and have no illusions – the bankers are not stupid; they know what they are doing; and they will probably win in the end, but I hope they get their balls crushed in the battle.
     
    There’s another thing you need to be aware of – the bankers have no national allegiances. Moving manufacturing from America/Australia/Britain to China/India/Korea – NO PROBLEM! As long as the profits keep rolling in…
     
    The sooner you start living OUTSIDE of the Truman Show, the sooner you will be able to take charge of your own life and your future wellbeing.
     
    Good luck and Merry Christmas everyone!
     
     

    • Cheers Speeros and Merry Christmas.  The stacker’s path can be a rough one but getting there is worth.  Many of us get there without the turmoil that you experienced.  But millions will never get there  Keep up the good fight

  5. The worst affect on your property price is having a neighbor that has their house go into foreclosure.  The bank drops the price of the house to cover the loan or a percentage of it and you will find out how low the price was when you go to sell your house.  A comp price from a foreclosed house in your neighborhood will drop your price from the realtor.  You can ask all you want but the loan company will go by the average of comps from comparable houses near you.

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