fleck tonight on housing:
fleckensteincapital.com
Now I would like to talk about housing. A friend sent me a chart of new one-family homes for sale, showing the level to be at its highest since August 1973. Quite likely, this chart will continue making new highs as homes for sale pile up. Add this data point with (a) my comment yesterday that new starts and permits were bigger than expected, (b) the fact that builders have money, and will continue to build, (c) the rank speculation we see (a la some of the things I've shared in Ask Fleck, and what everyone sees through their own eyes), and my guess is that if the housing market hasn't already peaked, it's in the process of peaking. I don't think it can get all that much crazier, especially as the ATM-financing mechanism is starting to sport cracks.
That doesn't mean the housing stocks are going to decline immediately. But I believe the housing market is running on fumes now, and perhaps the action in the housing stocks will actually give us some corroboration of that. This matters because it's how folks have been able to live beyond their means for the last couple years, even in the aftermath of our original equity bubble, which of course has been followed up by this housing bubble.
My firm belief is that all these companies associated with the financing of housing are going to be slaughtered in the coming unwind. In fact, I'll go out on a limb and say that I would not be a bit surprised to see the equity of General Motors completely obliterated, given their financing of cars and h(through Ditech) housing, and the potential for loss in their auto business, in light of their soaring employee-benefit costs. |
