Category: Real Estate

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

Can you believe that the Real Estate industry is so desperate that it is spending $40 million on an advertising campaign to convince the public that “It is a Great Time to Buy or Sell a Home?”  Desperate times cause desperate measures to be taken.  However, that is just ridiculous!  Have we gotten to the point where marketeers think that we will believe anything?  All you have to do is ask your neighbor, whose house has been sitting on the market for 6 months, if it is a great time to sell a house.  Give me a break.

Nouriel Roubini, one of the few guests on CNBC that is not afraid to tell it like it is, says “In spite of the spin, the housing recession is getting worse.  Building permits – the most important leading indicator of future housing – fell another 5% last month and are already down 30%, and likely to fall even more in the coming months. In the housing sector the cycle starts with permits that lead to housing starts, to construction spending, employment in housing and sales. The continued fall in permits is the strongest signal that a 15% fall in housing starts (from trailing peak) is only the beginning of a much sharper adjustment in the housing sector. The sharp fall in new home prices – down 10% already – is the beginning of a much bigger downward adjustment in prices ahead, at least 30%.  The only thing that is going up in the housing market now is delinquencies, defaults and foreclosures.”

Desperate Realtors …

The following are headlines from yesterday.

• Homebuilders Try to Avoid Cancellations 
• Toll CEO says Speculators Walking Away from Contracts
• Beazer Tried to Close Homes to Avoid Future Cancellations
• Pulte CEO says Scaling Back in Response to Tougher Market
• Home-Improvement 3Q Earnings Seen Down

Two days ago it was:

• S&P cuts Target Price on Hovanian
• Bad News From Some U.S. Homebuilders
• US Homebuilders Say Housing Slowdown Continues

The homebuilders are singing a much different tune over the last few days.  Why?  Many have released earnings this week and the costs of misleading investors are too high.  So, CEOs are confessing their sins and are setting more realistic expectations.

I know what you are thinking.  The news is so bad that we must be near a bottom.   It is going to take some time, maybe years, to work-off the excessive inventory in the market.  Bargains will only get better.  Real Estate investors be patient.

 

Source: Reuters
by James Kelleher

U.S. Homebuilders Say Housing Slowdown Continues

CHICAGO (Reuters) – Three leading U.S. home builders warned on Tuesday that the slowdown in the country’s once-soaring real estate market continued in the latest quarter as deteriorating consumer confidence and falling prices cast a growing pall over the sector.

Luxury homebuilder Toll Brothers Inc. said it expects to report a 10 percent drop in quarterly home-building revenue, and warned of continuing softness in formerly booming markets such as Northern California and parts of Florida.

The company also said it expects to take fourth-quarter write-downs of $50 million to $100 million on both the land it owns and has options to buy, up from a prior forecast of $4 million. The charges will reduce net earnings by 18 cents to 36 cents per share.  

More ….

Can you imagine facing foreclosure on one house. How about 5?  Here is the story of a 24 year old aspiring real estate entrepreneur whose ambition coupled with bad timing has put him in quite the pickle.   I believe before all is said and done – the Internet implosion will look mild compared to the real estate fiasco that is unfolding.

More …