Stick a fork in the housing market

Last year I wrote several articles about the decline of the US housing market.  I tried to point out that despite all the media hype and upbeat statements by politicians and businessmen, the sector was in dire trouble.

Now The Burning Platform gathers all the latest evidence, puts it all together (including several interesting - and scary - graphs), and comes up with a grim conclusion.  Here's an excerpt.

The report from RealtyTrac last week proves beyond the shadow of a doubt the supposed housing market recovery is a complete and utter fraud. The corporate mainstream media did their usual spin job on the report by focusing on the fact foreclosure starts in 2013 were the lowest since 2007. Focusing on this meaningless fact (because the Too Big To Trust Wall Street Criminal Banks have delayed foreclosure starts as part of their conspiracy to keep prices rising) is supposed to convince the willfully ignorant masses the housing market is back to normal. It’s always the best time to buy!!!

The talking heads reading their teleprompter propaganda machines failed to mention that distressed sales (short sales & foreclosure sales) rose to a three year high of 16.2% of all U.S. residential sales, up from 14.5% in 2012. The economy has been supposedly advancing for over four years and sales of distressed homes are at 16.2% and rising. The bubble headed bimbos on CNBC don’t find it worthwhile to mention that prior to 2007 the normal percentage of distressed home sales was less than 3%. Yeah, we’re back to normal alright. We are five years into a supposed economic recovery and distressed home sales account for 1 out of 6 all home sales and is still 500% higher than normal.

The distressed sales aren’t even close to the biggest distortion of this housing market. The RealtyTrac report reveals that all-cash purchases accounted for 42% of all U.S. residential sales in December, up from 38% in November, and up from 18% in December 2012. Does that sound like a trend of normalization? ... In the pre-crisis days before 2008, all-cash sales NEVER accounted for more than 10% of all home sales. NEVER. This is all being driven by hot Wall Street money, aided and abetted by Bernanke, Yellen and the rest of the Fed fiat heroin dealers.

. . .

Reality will reassert itself in 2014, with lemmings, flippers, and hedgies getting slaughtered as the housing market comes back to earth with a thud.

There's much more at the link.

My conclusions and recommendations?

1. If you're thinking about selling property in the short term, do so NOW, as quickly as possible - and don't haggle too much about the price.  You may get a whole lot less for it if you wait too long.  This goes double if you're relying on the sale of your large family home to fund your retirement.  Before long, it probably won't.
2. If you're thinking about buying property in the short term, DON'T.  I think prices are going to crater over the course of the next year or two.  You'll get much more property for much less money in the not too distant future.
3. If you're underwater on your mortgage right now, consider selling your property at a loss (particularly if you can negotiate a short sale arrangement with the bondholder), so as not to be even further underwater after the crisis hits.  It might take years for the value of your property to recover.
4. Cash is already king in the housing market (read the above article for more information), and will become even more so when credit dries up (as it's certain to do in a housing slump - banks won't want to lend large sums on buildings that are likely to lose value in the short term).  If you have liquid assets, hold on to them, and if you have other assets you can convert to cash, do so.  You'll be well placed to make a killing buying property at fire-sale prices when the crisis hits.

That's my $0.02 worth.  YMMV, and all that sort of thing - but I think the evidence is incontrovertible.

Peter