Impact of the Current Glut in Homes

| Nov 18, 2006 | Comments 2

Here is a quote from Peter Schiff’s latest commentary.

“Furthermore, more so than during any other period of American history, consumer spending is now largely dependent home equity extractions and temporarily low mortgage payments. As a result, predictions as to how the real estate slowdown will impact the economy should be made by comparisons to the deflation of prior asset bubbles. However, fallout from the bursting of this bubble may be more damaging than virtually any financial correction that we have experienced since the Great Depression.”

I don’t know if I was open to this kind of commentary back in the internet bubble days or there weren’t many giving warning signs.  However, after experiencing a bubble melt-down my sensors are wide open now. I don’t like what I am seeing in the real estate market and I don’t care what the bubble heads are saying.  Some people have already been hurt by the housing slowdown and many more will be before this is over.

Click here for Peter Schiff’s latest commentary

Filed Under: Real Estate

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  • tom

    What about all these kids graduating from schools every year? Couples with two incomes getting married? Is it that buyers cannot keep up with new home development? What about all the immigrants entering this country every year?

  • http://www.thetimeandmoneygroup.com miked

    Robert Toll, CEO of Toll Brothers, can say it much better than I can. ” This is the first downturn in the forty years since we entered the business that was not precipitated by high interest rates, a weak economy, job losses or other macroeconomic factors. Instead, it seems to be the result of an oversupply of inventory and a decline in confidence. Speculative buyers who spurred demand in 2004 and 2005 are now sellers; builders that built speculative homes must now move their specs; and nervous buyers are canceling contracts for homes already under construction.”

    http://money.cnn.com/2006/08/09/news/companies/toll_brothers/index.htm

    And as the old saying goes, actions speak louder than words. The Toll brothers sold $241 million worth of Toll Brothers stock in March.

    http://www.nysun.com/article/10870