Bush’s Depression

Purchases of new homes in the U.S. plunged more than forecast in March to the lowest level in almost 17 years as stricter loan rules and falling prices caused buyers to dry up.

Sales dropped another 8.5 percent in the latest month to an annual pace of 526,000, the fewest since October 1991, from a 575,000 rate the prior month, the Commerce Department announced today in Washington. From December 2002, until December 2006, sales of new homes exceeded one million per year, peaking at the rate of slightly more than 1.3 million annual new home sales in July of 2005.

The chart from the U.S. Census Department can be found here.

I was particularly impressed with this bit of wisdom as reported in a Bloomberg news story, “The threat of a prolonged recession is growing as lower home values constrain consumer spending and persistent declines in homebuilding subtract from economic growth.”

Gee, do you really think so?

We’ve gone from a rate of 1.3 million new homes sold per year in 2005 down to just over 526 thousand per year as of 3 years later. Housing accounts for almost a quarter of the economy. It is a huge portion of our economy. And the new housing industry has shrunk by 60% in a 3 year period. The official news media views those figures as indicating a risk of prolonged recession. Those numbers are absolutely horrible. Home builders are going under by the thousands. Work has dried up for tens of thousands of tradesmen. And it is described as merely a risk of recession?

Don’t rely on the geniuses in the financial news to warn you of the real truth, that we are headed for an economic depression. I would rate their hindsight at 20/60.  I would rate their foresight at 0/0.

The economy is crashing. Derivatives abuse by Wall Street has raped the financial system. The dollar will be diluted continually with each passing month as the Wall Street fat cats get bailout money in “small” chunks of $50 to $75 billion at a time. And as a result everything will cost more.

Get prepared while you can, the worst is yet to come.

I read a story today about bus tours being organized by real estate brokers in Las Vegas for the purpose of bringing buyers around to see all the foreclosures available. This comment in particular made me upset, “RE/MAX CENTRAL believes it is a great time to buy Las Vegas Real Estate or a Las Vegas Foreclosure – interest rates are at near record lows, buyers have lots of choices due to abundant Las Vegas foreclosure inventory and lenders have great government assisted programs,” said John and Ruth Ahlbrand, Co-Founders of RE/MAX CENTRAL.

Yup, typical sales job. Say anything at all that will cause the sale to occur. Truth and facts don’t matter. The only thing than matters is making the sale.

I take particular exception to the statement that “it is a great time to buy Las Vegas Real Estate.” Well, it is a great time to Buy Las Vegas real estate if you are currently homeless in Las Vegas, have the money available to buy, and don’t mind seeing the value of the property that you just bough continue to drop in value by another 30%. If those conditions appeal and apply to you, then yes, it is a good time to buy.

But if you are looking to buy when prices are nearing their bottom, now is definitley not a good time to buy. There is a lot more downside adjustments in prices to come. We are not even 1/3rd of the way through this mess.

Of course, I just heard on TV that the bottom is in. I’ve only heard that every week since the summer of 2007. Give the TV talking heads enough time, and eventually they will be correct.

But not yet.