Insider

Second Leg of the Housing Decline Set To Begin (or Why Economists Are Dangerous To Your Wealth)

Monday, June 28, 2010, 7:33 AM
Enroll NowFor enrolled members only. Enroll or Sign in to read the full article.

Second Leg of the Housing Decline Set To Begin (or Why Economists Are Dangerous To Your Wealth)

Monday, June 28, 2010

Executive Summary

  • 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.

 

Enroll Now
Or Sign In with your enrolled account.
Endorsed Financial Adviser Endorsed Financial Adviser

Looking for a financial adviser who sees the world through a similar lens as we do? Free consultation available.

Learn More »
Read Our New Book "Prosper!"Read Our New Book

Prosper! is a "how to" guide for living well no matter what the future brings.

Learn More »

 

Related content

22 Comments on Second Leg of the Housing Decline Set To Begin (or Why Economists Are Dangerous To Your Wealth)

Enroll now or Sign In to read all member comments.