Second Leg of the Housing Decline Set To Begin (or Why Economists Are Dangerous To Your Wealth)
Monday, June 28, 2010
- Housing data is weak and just took a turn for the worse
- Stimulus efforts were essential to keep housing propped up
- The stimulus has ended
- QE and stock market prices are correlated
- What’s coming next
- What you should do
We bought our house in November of 2009. This will turn out to have been a very bad financial decision. We’ll be underwater on that purchase for a very long time; maybe forever (or until Bernanke’s great experiment takes the final turn towards massive currency destruction and inflation; whichever comes first).
Of course, we bought it knowing that. Our decision to buy centered on our valuing time more than money. What I mean by this is that all of the changes that we are now fully engaged in around our house, ranging from insulating to installing solar panels to putting in a fruit orchard, all take time. Time became more important to us than money, and so we bought.
But for every nation dealing with the after-effects of a housing bubble, what matters is that house prices start to climb again. Of course, the housing bubble was just a symptom of the larger and far more damaging credit bubble, but housing is a useful indicator for where we are in the larger credit-bubble story.
Because of its importance to both the bubble’s bursting and its eventual repair, I track housing for signs of true recovery.