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alstry (36.32)

Now The Real Housing Crash Begins!!!!!

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November 01, 2009 – Comments (8)

Remember the Tsunami in Indonesia....the first wave came in, did a bunch of damage, and washed back out.  Many were killed and injured, but most were spared.  As the waters pulled back, scores wandered back on the beach to view the spectacle.....only to be washed away when the BIG one came ashore.

We may be about to experience the BIG ONE regarding residential real estate....where housing prices really start to decline to values not seen in over 50 years.  We are already there in many areas of the Midwest including Detroit, Ohio, and many parts of rust belt.

You see, without jobs, people can't afford housing without government assistance....and if they can only afford housing with the help of government, they can't afford much of a house....especially if government is forced to cut back due to declining revenues.

Despite the government reported 10% unemployment figure....it has been Alstrynomics assessment that the real functional unemployment in America is closer to 25-30% not including welfare and other government programs which did not exist during The Great Depression which would bring numbers closer to 40-50%.

Confirming the Alstrynomic perspective is a decline in INCOME TAXES of OVER 20% in the past year.  A year ago, unemployment was over 6%.  Now with income taxes down over 20% from that point......it confirms that a lot of people are no longer making anywhere close to the income they were making a year ago......a lot more than 3-4% of the workforce.

A 20% reduction in income taxes... if we were to translate it into only 20% of the workforce......it would mean about 30 million people lost their incomes over the past year factoring a workforce of about 160,000,000 people.  That would be about 550,000 people losing their jobs every week......WHAT A COINCIDENCE.....THAT IS ABOUT HOW MANY PEOPLE ON AVERAGE HAVE BEEN FILING FOR FIRST TIME UNEMPLOYMENT CLAIMS.....WHO WOULDA THUNK???????

Now many of these people are drawing down on their savings.......with 8 million homes already in some stage of foreclosure....we could have tens of millions waiting in the wings getting ready to be listed or foreclosed.  The flood of potential inventory would be very similar to the flood resulting from the rising waters of a tsunami.

This time though....prices will plunge to levels not seen in decades with many times more inventory hitting the market than buyers. 

As new home builders finish up liquidating their finished lots....and absorbing the last remaining viable aready built out lots......tough decisions will have to be made going forward.  Building out new communities from raw land is very expensive, sucks lots of cash, and takes years to recover costs...especially in a slow selling low margin environment like we have now......even if the builders get the land for free!!!!!

My guess is with the flood of inventory likely to hit the market over the next six to nine months......and many of the first time subsidized buyers out of the market....we could see a crash in residential housing prices that made the recent crash seem  like high tide to a tsunami.

Pay attention to jobs....there is no such thing as a jobless or job loss economy in an environment were services is the driver of the economy.  If we continue to lose jobs at anything close to the rate we have experienced over the past year.........we will begin to see distress that makes The Great Depression look like a minor recession with tax receipt evaporation already at peak depression levels.

Remember, it is not the end of the world.....it is just the end of the world as you know it.  You are about to enter the Alstrynomic Revolution...Where what you know is what you feel and what you feel is reality.

Imagine that....back to reality....unless something distracts us before reality sets in......

 

 

8 Comments – Post Your Own

#1) On November 01, 2009 at 10:19 PM, AaronGaz (23.70) wrote:

This is you:

 

http://2.bp.blogspot.com/_Ka_vdcAq2is/RsMDUIW8n0I/AAAAAAAAAis/4DxZ0GytvJQ/s320/144.+Lisa+the+Iconoclast.bmp 

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#2) On November 01, 2009 at 10:25 PM, alstry (36.32) wrote:

Actually...Alstry is the Doctor of Alstrynomics and the founder of the Institute bearing the same name.

Now, if the Dow would cross 5000.....he could be one of the most accurate prognosticators since Nostrodamous....accurately forcasting the housing collapse, the pension collapse, the municipal collaspse, the banking collapse, the explosing in unemployment to levels never seen before among many other accurate forecasts......

Remember...its a revolution.....not the end of the world....just the end of the world as you know it.

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#3) On November 01, 2009 at 10:42 PM, Rasbold (90.70) wrote:

Yeah, we can still look out and see the high watermark of that beautiful tide - I can't believe I paid guys with NO experience 20 bucks an hour to drill and rope a house. Tracts were best. You could win bids blind. Site unseen, we couldn't lose, and didn't until 07.

Damn, those were some great years. Now look at it.

What a turd.

 

This will make it worse:

http://whatwouldwarrendo.com/wwwd/?p=1022

 

Christ, when we all leave, they will have to write down!!!

Then we'll buy again for half of the half that is already gone!

Time to rent.

 

Good Luck, and May Your Dow Never Jones!

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#4) On November 01, 2009 at 11:28 PM, lquadland10 (< 20) wrote:

Oh they will just cook the books.See my blog for the full story.

New guidelines for examining commercial real estate loans issued by the FDIC appear to allow examiners to go easy on banks as they account for what would be, under many circumstances, considered non-performing commercial real estate loans. This may help banks with their balance sheets and solvency, but it also misleads bank investors and the public about the seriousness of the huge problem in the commercial real estate lending business.

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#5) On November 02, 2009 at 1:23 AM, alstry (36.32) wrote:

As Goes Country Clubs...So Goes Housing

Twin Lakes Country Club, a private golf and dining club and an institution in the Kent-Ravenna area since 1923, closed for good Saturday and is going into Chapter 7 bankruptcy.

Tim Trowbridge, who serves as club president in a volunteer capacity, announced the closing in a letter to the membership this past week.

Twin Lakes had been in Chapter 11 bankruptcy protection since earlier this year and lowered its dues in an effort to gain the 250 members the bankruptcy court deemed necessary to keep the club operating.

According to Trowbridge, the membership campaign succeeded in raising the number of members to 180, but, he said, “it just wasn’t enough to pay the bills.”

Because the club is often used for holiday parties, he said club staff and officers were working to help those who had scheduled gatherings to find other locations.

“It’s a loss to the community,” he said, “but country clubs are closing all over the country. Lifestyles change.  Country clubs are no longer the center for social life they once were.”

http://www.recordpub.com/news/article/4701461

It is not the end of the world.....just the end of a world as you know it.

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#6) On November 02, 2009 at 1:46 AM, alstry (36.32) wrote:

Welcome to the Revolution...Where your money is government's money as tax receipts evaporate:

California to withhold a bigger chunk of paychecks

The amount goes up 10% on Sunday as Sacramento borrows from taxpayers.

20% DOWN FROM LAST YEAR SEEMS LIKE THE MAGIC NUMBER(from CRisk).....

Just 62% of companies nationwide are planning holiday parties this year, down from 77% last year and 90% in 2007, according to a survey by outplacement firm Challenger Gray & Christmas.
...
Restaurants and hotels that count on this lucrative business say their private party business is off by about 20% this year, compared with a dismal season in 2008.

SMALLER PAYCHECKS....LESS BUSINESS....LOOKS LIKE THE RECOVERY IS IN FULL SWING

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#7) On November 02, 2009 at 2:54 AM, checklist34 (99.73) wrote:

curious:  were women counted as part of the work force in the 1930s?

housing has bottomed, deal with it.  far from being the prescient forward looking thing that discounts the future with its amazing insights that it likes to call itself, wall street acts as though the moment will continue forever.  As if what is today will always be. 

housing was bottoming along with the stock market.  

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#8) On November 02, 2009 at 7:57 AM, alstry (36.32) wrote:

Housing is not close to the bottom.....under current Zombulation policies.

Once we push the ball of first time buyers and investors through the snake....AT LEAST another 50% decline.

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