American dream or American nightmare?

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switters's picture
switters
Status: Platinum Member (Offline)
Joined: Jul 19 2008
Posts: 744
American dream or American nightmare?

The housing numbers just keep getting uglier.  From Mish's blog today:

  • US Households: 75 Million
  • 2009 Projected Foreclosures: 3.5 Million (1 of every 21 households)
  • 2009 Projected Home Sales 5.5 Million
  • Inventory of Foreclosures 2 1/2 years (assuming 25% of home sales are foreclosures)
  • Number of Homes Underwater 8.8. million (1 of every 8.5 households)
  • Number of Households underwater if prices decline another 5%: 11 Million (1 of every 6.8 households)

His conclusion?

Foreclosures and defaults of all kinds and consumer balance sheet repair in general will be a drag on the economy for years, possibly even a decade. I Expect Seven Years of Subpar Growth and High Unemployment at a minimum.

Hard to argue with him.

 

 

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
Re: American dream or American nightmare?

And yet Housing Starts were up for the month of June. Why are they adding supply to a supply glut? What Are They Smoking?

switters's picture
switters
Status: Platinum Member (Offline)
Joined: Jul 19 2008
Posts: 744
Re: American dream or American nightmare?

Reminds me of Einstein's definition of insanity.

Housing starts up in June.  What does that spell?  D - E - N - I - A - L, with a healthy dose of delusional wishful thinking.

Sigh.  We still have such a long way to go. 

davidhood's picture
davidhood
Status: Member (Offline)
Joined: Jul 10 2008
Posts: 4
Re: American dream or American nightmare?

Housing starts in June were at a seasonally adjusted annual rate of 582,000. This is 3.6% above May but is 46.0% below the June 2008 (year early).

That is not what they said at all –  that 3.6% has a margin of error of 11.3%.  Huh? With a margin of error like that, they'd should just fess up and admit..."we don't know"

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
Re: American dream or American nightmare?

On a personal note, the American Nightmare may become my dream.

My wife and I have always had a dream of relocating, The region of the country that we live in did not significantly participate in the housing bubble, so as our house stayed the same in value, we saw the prices of homes in the areas of the country that we wanted to relocate to soar in value. This was very frustrating because it meant that we couldn't really afford to relocate. So instead of pursuing our dreams, we did the prudent thing and stayed put and payed our house off.

So now, on the flip side of the housing bubble, we are seeing the value of our home appreciate in value relative to the rest of the country. And our local economy seems to be strong in relation to the bubble-land regions. I'm growing more confident that our patience is going to pay off, and we will one day be able to pursue our dream of relocating.

From my perspective, mean-reversion is a wonderful thing.

 

jneo's picture
jneo
Status: Platinum Member (Offline)
Joined: Jan 7 2009
Posts: 742
Re: American dream or American nightmare?

 

"It's Called the American Dream because you gotta be asleep to Believe it" - George Carlin

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