For the last time, Housing ISN’T “Booming”.

5 Sep

I keep reading on all these “Housing sites” that things are getting better. IN fact, “Housing is Booming!”

They heard  Obama say it, so it must be true, right?

Um, WRONG.

I’ve been saying for months (in response to this “booming” garbage) that it’s just investor driven. NOW the statistics are finally coming out and the data proves my point.

According to Goldman Sachs, almost half of ALL U.S. home sales are completed using “full cash” transactions.

Yes, that’s right. Goldman Sachs just reported that cash sales account for 57 percent of all residential home sales versus 19 percent in 2005. Other estimates are not as high, but still range from 40 percent to 50 percent. That’s amazing. And that’s not just new homes; it’s ALL homes.

So, do you really think that a lot of first-time homeowners are racing hellbent into escrows – buying their homes with 100 percent cash?

Really? You’ve got to be kidding me. I’m betting my paycheck that most second- and even third-time homeowners probably aren’t paying 100 percent cash or anything close to that.

When “cash purchases” drive a Bull market (despite what guys clinging to the sides of lifeboats would have you believe)  it’s NOT an upturn in the marketed item. It’s a FIRE SALE. The fact that this bull market is driven so heavily by cash purchases tells you conclusively that it’s not a real housing market boom at all. It’s just another cattle drive by greedy investors looking to cash in on hardship and market swings. Can you say “investment bubble”? I knew you could. 😉

And, in some states where housing is a huge deal, it gets worse. In places like Florida and Nevada, the cash sales recorded represents 65 percent of the market transactions. Arizona? That’s a big “housing” state, right? Brace yourself. 1 home sale in 2 is cashed out.

This goes right back to what I was saying. Investors are snapping up homes to either try to flip for a profit or turn into rentals as more and more American families find themselves unable to either maintain a mortgage or even GET one.

IMHO – those guys trying to convince you that everything is healing… are simply lying to you.  These so-called “Booming housing markets” are clearly not booming because of a fundamental demand for housing, economic recovery or market influence provided by the tooth fairy.

They’re booming because of investment demand.

And anyone who says otherwise is full of the same stuff in my cattle pastures… and I’m not talking about “grass”… unless you’re talking about it in it’s “recycled form”.

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