The first hard data on the condition of the post-free-government-money housing market came with today’s release of May pending home sales from the National Association of Realtors and the picture isn’t a pretty one – pending home sales plunged by some 30 percent from the month before. This report in Bloomberg has the details:
The drop was the biggest in records dating to 2001 and compared with a 14 percent decrease forecast in a Bloomberg News survey of economists.
The decline shows that the industry at the center of the financial crisis remains vulnerable in the absence of government support. A stabilization in housing will depend on gains in incomes and employment that may stem foreclosures and give Americans the confidence to start buying again.
“Demand will be pretty depressed in the next few months,” Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, said before the report. “We’re still going to have a big overhang of foreclosures. There’s potential for prices to slow down a lot more.”
Forecasts for the decline ranged from 4 percent to 25 percent, according to a Bloomberg News survey of 36 economists. Sales rose 6 percent in April.
Now there’s a real shocker – not a single one of the 36 economists polled by Bloomberg saw a 30 percent decline coming. What won’t they see coming next?
![[Most Recent USD from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_usd_en_2.gif)
The fact that 36 economists didn’t see this coming was — dare we say — unexpected. Seems to me as everyone moves to their next career (I’m looking for #4, myself) and finds that it pays half what their last career paid, house prices also need to drop another 50 percent. Or perhaps we’re moving to a new reality to where no one can afford a mortgage and the only way to get a house is to inherit one.
John S, I think your second guess may be the outcome, “perhaps we’re moving to a new reality to where no one can afford a mortgage and the only way to get a house is to inherit one.”
[...] Absent stimulus for one month, pending home sales drop 30%. (GreenspanMess) [...]
When I was a kid in the 50’s, it was still the norm for people to rent housing and credit cards did not exist. Car loans were rare and home ownership was not considered a ‘right.’ People were just fine renting a place and sharing one car.
But, the GI Bill changed that and allowed people to go into government-backed debt for decades in order to buy a home. This was the beginning of the “credit era” which soon expanded until average people were buying virtually EVERYTHING on credit. They owned nothing and only lived to make endless payments as wage slaves.
This led us to the point where our so-called “leaders” put the country in hawk up to its eyeballs and we’re finally seeing just how bad it can get. We went from the greatest nation in the history of the world to the greatest debtor in the history of the world in 65 years (1945 – 2010).