Housing Market....It's Not Rescuable Anymore
“The housing market is looking sicker by the day. Economist Ian Shepherdson said that the housing market is so far gone that ‘it’s not rescuable anymore."
"Mortgage rates, shmortgage rates. No one's paying attention to the cost of borrowing money these days because it seems trivial next to the risk of losing money by buying high and selling low—catching a falling knife, in the Wall Street vernacular."
"Ian Shepherdson of High Frequency Economics, an early bear on housing, said in a conference call with clients on Sept. 7 that the housing market is so far gone that "it's not rescuable anymore. The housing market is beyond the control of the Fed."'
"He compared it to a football game played on a mountaintop. Once the football goes off the edge, he said, it doesn't stop until it reaches the very bottom (see BusinessWeek.com, 6/20/06, "Beware False Housing Hopes")."'
"Even the homebuilders, long an optimistic bunch, are all but throwing in the towel on the current market's condition. "We're running our business today as if we're in a prolonged downturn," CEO Ara Hovnanian of Hovnanian Enterprises told analysts Sept. 6."
The National Association of Realtors has been reliably upbeat on the market for months, but on Sept. 7, Chief Economist David Lereah said, "We'll probably see prices dip temporarily below year-ago levels as the market works through a build up in housing inventory."
What he means by temporarily is... "several years..."
"Atlanta-based Beazer lowered its forecast for fiscal 2006. It said net sales through the two months ended Aug. 31 were 49% below a year earlier, and cancellations of existing contracts rose to 50% from 26% a year earlier."
"Los Angeles-based KB Home also lowered earnings guidance as it said that preliminary net orders for the third quarter were down 43% from the year-earlier quarter."