They told us not to worry: The real estate developers, Greenspan, Bernanke, all those analysts, real estate agents, brokers and economists told us the housing market in the U.S. would be a soft landing situation. But that’s not what’s really happening today.
Consider these facts:
— According the U.S. National Association of Home Builders, home buyer traffic has fallen to its lowest level since 1991.
— The U.S. National Association of Realtors says 26 U.S. major metropolitan areas recorded a year-over-year decline in home price in the second quarter of 2006.
— Inventory of new homes for sale is near a record high. U.S. housing starts are down about 20% from January 2006 and U.S. home building permits are down about 22% since the early fall of 2005.
No my dear friend, this is not a soft landing for housing but a hard landing.
I write so much about the U.S. housing market because when the media starts to cover the truth, when analysts and economist start calling the situation in the U.S. housing market as it is, American consumers will find out what’s really happening with home prices. This will cool consumer spending and the U.S. economy substantially, with discretionary consumer stocks being the most affected. The decline in the price of the home builder stocks is just the beginning of the broader decline in consumer stocks.
Hopefully, you’ve been heeding my forecast and have prepared yourself for an economic environment where housing prices are declining and American consumers are running away from their past spending sprees. Once this snowball gets going, the economic situation in the U.S. will not look pretty.