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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 371.65-1.1%Nov 17 4:00 PM EST
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To: TobagoJack who wrote (11662)11/17/2006 5:02:58 PM
From: foundation  Read Replies (1) of 217836
 
Housing Free Fall Turning into Meltdown...2007 Recession Ahead

Nouriel Roubini | Nov 17, 2006

<snip>

"... For the last few weeks and months I have been writing dozens of detailed notes and blogs (see my latest here) rebutting the utter nonsense that has been spewed - based on little or no data - on the alleged bottoming out of the housing recession. Even Alan Greenspan - the allegedly careful reader of macro data - had joined this cheerleading clown show and the NAR spin of half-lies that "we are near the bottom of the housing recession". The actual data that were coming out of the housing market in the last few weeks were clearly inconsistent with this cheerleading non-sense and spin. So, maybe these delusional optimists will now shut up for a while and listen to the numbers after today's announcement that housing starts fell over 14% last month and that they are now at their six year low. Even worse, building permits, that are THE leading indicator of future housing activity, fell further by 6.3% and they are now at their lowest level since 1997.

And even at these low levels of permits and housing starts the housing sector is nowhere near its bottom. In previous housing recessions, housing start fells as much as 40% to 50% from their peak; so, with starts now being only 27% down, the housing bust has still a very long and ugly way downward to go. And lower permits today mean lower housing starts ahead, and lower starts mean lower construction and lower construction means much lower construction jobs; expect over 800K jobs to be lost in housing in the next year.

So beware of the new spin that you will hear soon claiming that, with starts now down 27%, the bottom of the housing bust is near; building permits and housing starts are likely to fall at least another 20% in the next 12 months before any bottoming out of the worst housing bust in the last five decades is reached in 2008.

And in spite of lower starts the glut in the housing market is getting much worse (not better as delusional optimists are spinning it): indeed the completions of current housing projects will dump another huge mass of unsold homes into the market in H1 of 2007 at the time when the speculative demand for housing ("condo flipping "investments) is collapsing and the fundamental demand for housing is collapsing too as the economy spins from a sharp slowdown into a recession. As I predicted last summer real home prices are likely to fall at least 30% in the next 3 years; and new home prices are already falling at a 10% annual rate. They will fall much more as the 90% increase in real home prices since 1997 was a massive speculative price bubble based on little fundamentals.

And now the housing recession is spreading to non residential construction..."

rgemonitor.com
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