or more specifically ... housing had been the one dependable generator of consumer cash for the last few years, besides providing a huge amount of jobs in the construction and banking industry. In the last few months real estate demand and prices have stopped rising just as mortgage interest rates have started rising, ending the consumer cash engine. Now it appears that 'it's time to pay the piper', as homebuilders are losing control of new home prices.
The peripheral effects of distressed sales of recently purchased shakily financed individual homes plus bailout sales by 'trapped' speculators plus homebuilders selling new homes at 'liquidation' prices, thus creating a self-perpetuating downward spiral in real estate prices, will be widespread and nasty.
(snip)"n addition, the economy in general is far more dependent on home building that it was on telecommunications manufacturing. Not only does the former create employment directly through construction, landscaping, remodeling, furnishing, etc, but also indirectly through real estate sales, appraisals and mortgage lending industries. In addition, the added spending power associated with home equity extractions helped create jobs and incomes across the entire spectrum of the American economy. Therefore, a decline in new construction and home prices will not only crush the home builders, but also the entire bubble-economy that their reckless behavior helped to artificially sustain."



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