Have you been hearing all the blather about the housing recovery lately? The shills and shysters on CNBC and trotted out from the NAR and Wall Street criminal banks have been proclaiming a turnaround in the housing market. Home builder stocks have been soaring because they just know things are getting better. Well the story shit the bed this morning. You see 2011 finished with lowest new home sales in the history of record keeping. There were a total of 302,000 new home sales in all of 2011. The records go back to 1963 when 500,000 new homes were sold. There were 189 million people living in the U.S. in 1963. Today there are 310 million people. So the population is 64% greater and new home sales are 40% lower than in 1963. I wonder why? Could it be that our country is drowning in debt today and in 1963 we had virtually no debt in our society? No credit cards in 1963. People worked and saved until they could afford a house or a car. They paid cash for stuff they wanted or needed.
The storyline about a housing recovery is complete bullshit. December sales of 21,000 was also the lowest December sales in recorded history. And this was in a month when the weather was warm and not snowy across the country. I’m surprised some CNBC shill isn’t blaming the poor sales on good weather.
The median price of $210,300 is down 12.8% in the last year and is down 20% from the 2006 peak. The median price is now the same as it was in 2003. We’ve had a nine year round trip and we’re not done yet. Obama pissed about $30 billion of your tax dollars down the drain with his home buyer tax credits and loan modification programs. And now he wants to try again. The whole idea of converting houses into rental units using Fannie and Freddie is nothing but a backdoor bailout of the banks and will cost the American taxpayer another $100 billion.
Existing home sales are also still in the shitter. They are down 36% from the top and are at levels seen in 1998. They should go up in 2012 because the Wall Street criminal banks have been sitting on over 2 million foreclosures that they either can’t or won’t finish. They are waiting for Obama to come to the rescue. There are approximately 10 million homes in the shadow inventory that don’t show up in the actual inventory for sale.
So you have a massive supply of homes that will flood the market at the initial signs of improvement. Prices are already down 30% nationally from the top and you have 25% of all the homeowners with a mortgage underwater on those mortgages. I still think the law of supply and demand still works in the real world. Just taking a gander at this chart below shows that we are still a long way from the average over the last 35 years. Reversion to the mean is a bitch.
There is absolutely no reason to expect housing to recover in the next year. Sales may tick up over 2011, but prices will surely fall. The cycle of lower prices leading to more foreclosures is not close to ending. There will not be a real recovery in housing until prices fall another 20%. Put that in your pipe and smoke it.