It’s just “Ice Water” – How about a dip?

23 Jan

I’m constantly getting email from “housing professionals” that claim I’m all wet.

They read my posts about “the state of the housing market” and then they saber-rattle about the media’s claims of recovery.

Yeah? It’s just “wishful thinking”.

No one wants to see housing stabilize as much as I do.

Most of America’s primary source of personal (family) wealth comes from the house they live in… wealth that is quickly disappearing as those housing values plummet.

How many of you lost your retirement saving in 2008 when the market ate everything in it’s path?

After 2008, most families TNW (Total Net Worth) was reduced to little more than the values invested in their homes.

Is your house worth as much now as it was a few years ago?

Are you “underwater” in a condition that makes your outstanding loan value more than the current street value of your home?

When “the experts” and other ilk spout that:

“The housing market is rebounding! Don’t worry! It’s Happy Happy Fun Time!”…

I get really hacked off.

It’s NONSENSE.

There’s a reason that I teach families to build their own affordable, sustainable homes.

From the Federal Reserve FOMC statement September 21, 2011:

“…the housing sector remains depressed…To help support conditions in mortgage markets, the Committee will now reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. In addition, the Committee will maintain its existing policy of rolling over maturing Treasury securities at auction.”

What does this mean?

It means that the FED realized that forecasts defining the bear housing market for 2012 were spot on. So they used their control of the fiat money supply to temporarily inflate demand of the highly leveraged purchases.

The result was not naturally occurring “supply and demand” market conditions as some “experts” claim. The results were just a “Created and crafted market condition” – one that cannot be maintained “forever”.

First, anyone foolish enough to “forecast promise like Moses getting tablets off mountainsides” in  a sector that is so dependent on government action (or more accurately government inaction) isn’t worth the paper it’s printed on. In fact, those forecasts should be printed on toilet paper, because then they’d be worth something… appropriate to their substance.

I have to wonder just how deep these people have their heads stuck in … um… the sand. They use words like “job creation” and “household formation”.

The best way to disguise failure is to try to redirect your attention.

“We’re producing jobs!”

Nonsense. Define the “jobs” being created, please.

Sure, the administration is producing Public Sector jobs, despite the requirement for “private sector jobs” to fund them.  Remember,  Public Sector jobs, regardless of how important they may be, do NOT contribute to the GNP. The creation of Public Sector jobs actually creates a hole… that taxes must fill.

And these taxes are paid HOW? By private sector workers in a job market that is slowly eroding, like ice on a hot sidewalk, that’s how.

Demographics don’t support the conditions that some “experts” claim to be in effect.

Sure, the fat cats are getting fatter. However, there aren’t a lot of fat cats. Most families lack an abundance of advanced degrees, high paying job skills or “work in a market that they’ve cornered”.

Now, add an economy that isn’t as strong as the media claims, higher taxes (checked your paychecks since the first of the year?) and a wage scale that is slowly eroding as bosses demand more and more work for less compensation (because you should feel lucky that you have a job) and you have a time bomb waiting to go off.

Want to really screw up product values? Eliminate millions of potential buyers from it’s purchase group.

The housing market is just such a product;

  • The millions that got foreclosed are no longer buyers.
  • The millions that will be foreclosed in 2013-14 are no longer buyers.
  • The millions that are unemployed will not be buyers.
  • The millions of graduates without jobs will not be buyers.
  • The millions of empty-nesters whose homes have devalued (and will devalue more) as additional foreclosures (bank reo – “Real Estate Owned” inventory) are released will not be buyers.
  • The millions of families that will see their taxes, healthcare and other expense increase will not be buyers.

How many of us have said things like;

“I should have sold in [fill in the blank]!”

When housing values return to previous highs and then SURPASS them, I’ll buy that the housing market is recovering. Until then, moves north of the baseline are just making up a small percentage of housing value LOSSES that lived under that baseline for years.

This isn’t about blame. You can finger-point anywhere you want. It doesn’t change the conditions. It’s about common sense.

Until the economy rebounds, until jobs are plentiful, until governmental spending is balanced by “fair and equitable” taxation… things won’t change.

Who will buy all this housing to drive values and sustain the allegations of growth?

It won’t be “Mom and Pop America”, let me assure you.

It’s going to continue to be the rich and famous… like wealthy Russian “Oil” children and the denizens of Hollyweird…

The Renaissance Ronin

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One Response to “It’s just “Ice Water” – How about a dip?”

  1. texarcana2002 January 23, 2013 at 11:11 pm #

    Don’t forget the Chinese, bro: they’re buying up property at a crazy rate.

    You’re spot-on on the rest of it. I got lucky, twice: Oct 2008, sold the mega-Victorian for what we bought it for plus the improvements (luckily, right before the crash); then, January 2012, sold the modest replacement house (mainly to shed some pesky relatives/squatters) for somewhat more than we had in it–and shed a 12yo house that was about to lose its A/C unit. Among other issues.

    We got an apartment, and started looking: and found that, for the $140-150k range we wanted, we couldn’t find a house in the area (McKinney, Texas) that wasn’t in the same boat: 10-12 yo, run down, a/c about to die, and shabby. Most good homes in the 0-5yo range are $170+k, and out of reach.

    So, today: we went a bit north (Anna, TX), took advantage of the USDA, and got a brand-new build for $152k, no down, low interest (3.5%), and maximized insulation, new appliances, new everything, including a/c.

    Exactly what we needed at the time.

    Point? Texas is the anomaly: our housing market has improved, despite what’s happening elsewhere. And allegedly, new jobs, tho neither my wife or I have seen any benefit from it–maybe working for Lowe’s is equivalent to living in a leper colony!! O¿O

    Again: I agree with you. I think unemployment is way higher than reported (how does 25% sound?), and shanty towns aren’t too far away. Fatcats get fatter, most of our money gets sent overseas with our jobs, and we get dirt-poor.

    I call it, “The Impoverishment of America”. Or: “History of the World Part 2: The Rebirth of Aristocracy”.

    I only have two pistols, let’s hope they’re enough. :-\

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