Daily Reckoning on real estate, bunch of blurbs
"No takers for homes," says a Denver paper.
"Single family permits at 7-year low," comes the news from
Southern California.
"Hot housing market could be cooling," says USA Today.
The housing market has been cooking for so long you'd think
the thing would be done by now. And maybe it is.
"The boom is over," says Celia Chen, at Economist.com.
We've reported rumors of the end of the housing boom on
more than one occasion in this space. We're not going to
embarrass ourselves by reporting another one. Month after
month, for as long as we can remember, the whole world
economy has been sustained by American consumer spending.
And for the last couple of years, American consumers have
been sustained by credit - by mortgage credit, to be
specific.
Without it, even more people would be standing in
unemployment lines - everywhere from Baltimore to Bombay.
Thanks to lower rates and higher house prices, consumers
were able to "take out equity" from their own homes. This
cute little phrase perfumed the event like patchouli oil on
a sweaty mortgage broker. But sooner or later, we keep
saying, the whole thing is going to start to stink.
The housing sector cannot continue to rise 3 to 4 times
faster than the rest of the economy forever. Sooner or
later, it has to cool off. Personal income rose only 1.7%
last year - according to the Bureau of Economic Analysis -
the first time since 1958 that the figure has been less
than 2%. People whose incomes rise less than 2% cannot
afford a 10% increase in housing costs, year after year,
for very long.
Sales figures for houses in the San Francisco bay area were
down 15% from a year ago. In Southern California, they were
down 7.5%.
In the Rockies, the figures are worse - with Denver sales
off 18%. Even in Richmond, sales fell 5% from a year ago.
And in Massachusetts, housing sales for the first quarter
fell 15%.
Could be the war in Iraq, of course. Could be a fluke.
Nothing to worry about. Nah...no reason for concern. Forget
about it.
and a note about California, and its pathetic financial straits...
The Golden State, for example, doesn't seem to have an ounce of gold
left in its coffers...nor even a wooden nickel. "California
could completely run out of money soon," KFWB News reports.
"Financial conditions are such that the state controller
could begin the budget process by issuing 'IOU's' to
vendors doing business with the state." |
