Real Estate Market

The roots of America’s financial crisis can be traced back to 2007, when the U.S. housing bubble burst. This sent the dominos tumbling and the United States into an economic meltdown in 2008. Despite government intervention, the economy has sputtered and slipped in and out of recession.

What most investors and analysts failed to realize as the bubble burst for the housing market is that much of the U.S. economy—millions of jobs—are related to the real estate market.

Since 2001, readers have turned to Michael Lombardi’s famous daily economic newsletter Profit Confidential for stock market guidance. Analyzing the real estate market is of utmost importance to figuring out where our general economy is headed.

In our daily Profit Confidential e-letter, we regularly comment on the U.S. housing market and the real estate market. Is it time to buy real estate? Where are housing prices headed?

In a June 6, 2005 Profit Confidential article, Michael started warning about the crisis coming in the U.S. real estate market just as it was peaking: “The conversation at parties is no longer about the stock market, it’s about real estate. Looking around, it would be very difficult to find people who believe that one day it could be out of vogue to own real estate because the properties would be such a bad investment. Those investors who believe a dark day will never come for the property markets are just fooling themselves.”

In July, Michael told Profit Confidential readers, “The U.S. lowered interest rates in 2004 to their lowest level in 46 years. And, what did Americans do with their access to easy money? They borrowed and borrowed some more, investing the borrowed money into real estate. Looking ahead, perhaps the Fed’s actions (of lowering interest rates to entice consumers to borrow more than they can afford) will, one day, be regarded as one of the most costly errors committed by it or any other banking system in the last 75 years.”

In 2006, Profit Confidential “begged” its readers to get out of the housing market before it plunged. On August 2, 2006, Michael predicted, “I’m getting very worried about the state of the U.S. housing market and its ramifications on the economy. The U.S. could be headed for its first annual decline in home prices on record, adjusted for inflation. And, I really believe this could be a catastrophe for the U.S. economy.”

Michael was also one of the first to predict the housing bubble would decimate the U.S. economy and slip into recession. On March 22, 2007, he warned, “Over the past few weeks I’ve written about subprime lenders and how their demise will hurt the U.S. housing market, the economy, and the stock market. There’s no escaping the carnage headed our way because the housing market and subprime business are falling apart. The worst of our problems, because of the easy money made available to borrowers, which fuelled the housing boom that peaked in 2005, has yet to arrive.”

At the same time, Michael wrote that former Federal Reserve Chairman Alan Greenspan was quoted as saying, “The worst is over for the U.S. housing market, and there will be no economic spillover effects from the poor housing market.”

During the previous recession, residential construction was a major factor to recovery. Not so this time. Why? The homebuilding industry was collateral damage in past recessions. This time around, it was a major cause of the Great Recession. Over-building, brought on by over-zealous banks, easy credit, and a mountain of debt, has left the U.S economy in an extremely fragile state.

Reminding Profit Confidential readers to exit the U.S. housing market was the best real estate guidance we have ever offered. Today, we regularly follow housing prices in major American cities, foreclosure rates, interest rates, and home building stocks, not only for guidance as to where the real estate market is headed—but as guidance as to where the overall economy may be headed.


The U.S. existing home sales surged to an eight-year high. On Thursday August 20th, the National Association of Realtors published its report on exiting home sales for the month of July. (Source: The National Association of Realtors, August 20, 2015.)…

The U.S. housing market has come under pressure as housing starts have stagnated since the end of 2013, interest rates are poised to rise this year, and first-time buyers are missing from the housing market. Buyers Missing From U.S. Housing…

The verdict is in… Last week, at the end of its regularly scheduled meeting, the Federal Reserve said: 1)      It would continue to reduce the amount of money it creates each month. The Fed said it will be out of…

According to the U.S. Congressional Budget Office, next year, the government is expected to incur a budget deficit of $469 billion and then another budget deficit of $536 billion in 2016. (Source: Congressional Budget Office web site, last accessed July…

As I often harp on about in these pages; economic growth occurs when the general standard of living in a country gets better. You can’t say an economy is improving when a significant portion of the population is suffering. You…

My cousin and his family had to walk away from their house in Arizona. There were no buyers, and they were underwater after the market crashed. The whole thing was really hard on them on all fronts, and they had…

One of the most often talked about parts of the economy is the real estate market sector. Because real estate is such a large and important part of the economy, naturally, many eyes are focused on whether or not this…

It really is the perfect environment for higher oil prices, which is both good and bad for the U.S. economy. Higher oil prices reflect a better economic outlook, as speculators bet on better gross domestic product (GDP) growth in the…

For the past four years I’ve been singing the same tune… The U.S. economy cannot recover unless the U.S. housing market recovers. As a past “real estate man,” (in my life), I’ve never seen an economic recovery unaccompanied by a…

Alcoa, Inc. (NYSE/AA), the first stock in the Dow Jones Industrial Average to report third-quarter earnings, missed analyst expectations. The Street was hoping Alcoa would earn about $0.20 a share. The company earned $0.15 a share. But let’s look closer.…

There have been warning signs in China that investors must be mindful of, including high inflation, speculative real estate buying, slower demand, and slower gross domestic product (GDP) growth. The Chinese economy, which had been firing on all cylinders and…

There’s plenty to say about the economy and the stock market this morning…my opinions on both can be found below. But right now I want to talk about something the media and analysts have not been focusing on, something I…

FedEx Corp. (NYSE/FDX), which runs the world’s biggest cargo airline, is a company that economists and analysts often look to as a gauge of future business activity. Last week, FedEx stock hit a two-year low. Yes, you can buy the…