The Real Economic Evidence Is Revealed By The Numbers

Posted on April 25, 2008
Filed Under Real Estate |

Purchases of new homes in the U.S. plunged more than forecast in March to the lowest rate in almost 17 years as stricter loan qualifications and rapidly dropping prices caused buyers to disappear. Sales fell another 8.5 percent in the latest month to an annual pace of 526,000, the slowest since October 1991, from a 575,000 rate the previous month, the Commerce Department announced today in Washington. From December 2002, until December 2006, sales of new homes were more than one million per year, peaking at the rate of slightly more than 1.3 million annual new home sales in July of 2005.

I was particularly dumbfounded with this bit of wisdom as stated in a Bloomberg news story today, “The threat of a prolonged recession is growing as lower home values constrain consumer spending and persistent declines in homebuilding subtract from economic growth.”

Gee, are they geniuses or what?

We’ve gone from a rate of 1.3 million new homes purchased annually in 2005 down to just over 526 thousand annually as of 3 years later. Housing construction accounts for almost a quarter of the economy. It is a huge portion of our economy. And the new housing industry has collapsed by 60% in a 3 year time frame. The official news media presents those figures as indicating merely a risk of prolonged recession. Those numbers are absolutely terrifying. Building contractors are failing by the boatload. Jobs have dried up for tens of thousands of tradesmen. And it is presented as only a risk of recession?

Don’t rely on the geniuses in the financial media to warn you of the real truth, that this country is headed for an economic depression. I would assign their hindsight at 20/60, and that is being generous. I would assing their predictive abilities at 0/0.

First time home buyers are just about locked out of the housing market. Extremely restrictive lending standards make it almost impossible for all but those with impeccable credit and tens of thousands of dollars sitting around idly in a bank account to qualify for a First time home buyer loan.

The economy is crashing. Derivatives abuses by Wall Street have raped the financial system of the world. The dollar will be watered down constantly with each passing week as the Wall Street fat cats get bailout cash in “small” amounts of $50 to $75 billion at a whack. And as a result everything will cost more.

Get prepared while you can, the worst is still ahead of us.

Tags: Real Estate

The Real Economic Evidence Is Revealed By The Numbers

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