Thread: The ‘Catastrophic Change’ in the U.S. Real Estate Market

The ‘Catastrophic Change’ in the U.S. Real Estate Market

Housing-Market / US Housing
Sep 23, 2010 - 03:17 AM

By: Barry_M_Ferguson

We learned today (9/22/10) from our illustrious US government that new housing starts jumped 10.5% in August. Don’t get exited. Almost all of the gain was from apartment construction. This month-over-month burst in activity is still 9% below last year’s level. Nevertheless, the recession has been declared dead, the stock market has appreciated every day since the conclusion of Bernanke’s August Jackson Hole, Wyoming meeting, and the government needs affirmation of both events. But like most people with a functioning brain cell, I have eyes and ears. Here are my observations on real estate from my little vantage point.

Two weeks ago, the largest private luxury home builder in our area (population of over one million in metro area) called it quits. The company specialized in houses costing a half million dollars on up. They said they would finish what they had started but expected to be out of business by the beginning of next year (2011). They have been in business for over 30 years. In 2006, the company won the ‘Builder of the Year’ award from Professional Builder magazine. In their statement, the company’s president said that real estate had experienced a “catastrophic changeâ€

Best line in the whole article...

In truth, consumer debt is actually increasing as a percentage of net worth!

W

I thought this hit the nail on the head

Why does the government feel so compelled to intervene and manipulate? The ultimate answer is they need to prop up the economy to drive tax revenues to support interest coupons on the Treasury debt that justify the credit default swaps that allow for the perpetuation of the sovereign debt growth trend. In other words, we are broke but we can stave off the repo man for a few more quarters with some trickery.