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The Housing Holocaust

Posted By admin On August 25, 2010 @ 8:18 am In Commentary | Comments Disabled

MIKE WHITNEY
Counterpunch [1]
Aug 25, 2010

Don’t look now, but someone just pushed the housing market off a cliff. The National Association of Realtors announced on Tuesday that the sales of existing homes fell a staggering 27.2 per cent to a seasonally adjusted rate of 3.83 million units. This is the lowest number of sales since 1995. The reaction on Wall Street has been swift. Shares plunged in a wild sell-off that pushed stocks down more than 100 points in a matter of minutes. US Treasuries rallied on the news, sending bond yields lower as jittery investors sought safety from the ongoing avalanche of dismal economic data. The 10-year slid to 2.49 per cent while the 2 year note dipped to 0.46 per cent. Bond yields are a gauge of investor pessimism. At present, confidence in the management of the economy is at a nadir.

Analysts expected that housing sales would suffer after the Obama administration’s First-time Home-buyer credit expired in April, (deals had to close by the June 30 deadline) but they hadn’t expected a real estate holocaust ending in sales that are a paltry 25 per cent of their peak in 2005. The shocking drop in sales has added 2.5 months to the massive stockpile of unsold homes that is presently clogging the system and threatens to send prices into freefall. The pace of existing home sales is now slower than any time on record.

This latest housing smackdown will put more pressure on homeowners who are already in arrears or trying to decide whether its in their interest to make payments on a $300,000 mortgage for a house that is currently worth only $150,000. Expect foreclosures to rise sharply. 24 per cent of all mortgages already have negative equity. That’s 11.2 million loans. According to housing expert Charles Hugh Smith:

“Since there are about 47 million outstanding mortgages, and 24 million homes owned free and clear (no mortgage), then we can calculate that free-and-clear owners hold about a third of the $16.5 trillion in home equity — roughly $5.3 trillion. That leaves about $1.2 trillion in equity spread amongst the 47 million homes with mortgages…..

Full article here [1]

Having A Supply Of Healthy Foods That Last Just Makes Sense (AD) [2]

The Housing Holocaust 240810banner7 [3]


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URLs in this post:

[1] Counterpunch: http://www.counterpunch.org/whitney08252010.html

[2] Having A Supply Of Healthy Foods That Last Just Makes Sense (AD): http://www.efoodsdirect.com//index.html?aid=14&adid=43

[3] Image: http://www.homegain.com/media-center/featured-videos/homegain-exposed-by-alex-jones

[4] The Next Housing Crisis: http://www.prisonplanet.com/the-next-housing-crisis.html

[5] Housing market continues its freefall as 14 million Americans descend into negative equity: http://www.prisonplanet.com/housing-market-continues-its-freefall-as-14-million-americans-descend-into-negative-equity.html

[6] US Housing Just Had Its Worst Quarter Since 2008, As Foreclosures Surge Again: http://www.prisonplanet.com/us-housing-just-had-its-worst-quarter-since-2008-as-foreclosures-surge-again.html

[7] Housing Double Dip Accelerates As Existing Home Sales Plunge -2.2% In May Versus 6.0% Consensus, Down From 8% In April: http://www.prisonplanet.com/housing-double-dip-accelerates-as-existing-home-sales-plunge-2-2-in-may-versus-6-0-consensus-down-from-8-in-april.html

[8] Housing rescue bill passed in US: http://www.prisonplanet.com/housing-rescue-bill-passed-in-us.html

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