Skip to content

The Fundamentals: How bad are they?

On a daily basis we all get confronted with a lot of data.  In that data resides many false signals and conflicting statistics.  Today, I would like to take a step back and look at the housing market as it resides today.  The housing market is where most of the trouble started and will most likely be a heavy burden for some time to come.

Housing prices seem to have stablized, but there are a lot of delinquencies that need to be worked through

Delinquencies on Subprime are declining, but what about prime borrowers?

Housing Foreclosures still need to be worked through the system - Have the banks really realized the losses?

Do not expect new housing to provide the jumpstart in the economy. I would not want to be a homebuilder.

Existing home sales spiked, new home sales stagnant. What about after the homebuyer's tax credit?

Homeowners Versus Home Renters since 1965. Should all of those families really have owned a home? Are we going to realize the long-term average?

Homeowner Vacancy Rates since 1960. All-time highs.

This might seem like a depressing bit of statistics, but it is always better to be realistic rather than put your head in the sand.  The government will do everything in its power to support the housing market and stem any further declines.  The banks are still holding a ton of this risk on their balance sheets and have not realized all of the losses that the collapsed housing market has created.  The mortgage modification program was mildly successful and I believe that the next step will be for the government to reduce principal on outstanding mortgages of troubled borrowers.  The banks and the government will do anything to keep troubled borrowers in their homes, taking care of the property, and keeping the potentially foreclosed house out of the current housing supply.  Just how much has the government supported the mortgage market so far?  Just take a look at their trillion dollars of mortgages that they have already bought in a year’s time:

The fed has supported the market in 2009 and the recent Fannie/Freddie buyout programs will support the market for the next 3 months

So if you want to buy a house, by all means go ahead as prices are much more attractive than they have been for a long time.  If you are buying a house for a quick rebound in prices, I think you are looking in the wrong place.

Posted in Economics, Markets.

Tagged with , , , , , , , , , , , .

Copyright © 2009-2013 SurlyTrader DISCLAIMER The commentary on this blog is not meant to be taken as an investment advice. The author is not a registered investment adviser. There is no substitute for your own due diligence. Please be aware that investing is inherently a risky business and if you chose to follow any of the advice on this site, then you are accepting the risks associated with that investment. The Author may have also taken positions in the stocks or investments that are being discussed and the author may change his position at any time without warning.

Yellow Pages for USA and Canada SurlyTrader - Blogged