The current Housing Market reflects 2005- Prepare for Adjustments

By the Lending Lies Team

The major news sources refuse to address the possibility of a housing bubble, however analysts who don’t drink the mainstream Kool-aid say the markets look eerily like those of 2005.

 
Back in 2005 the mainstream media dismissed the warning signs and encouraged people to keep buying houses due to record-low interest rates and to invest in the stock market. Businessweek magazine interviewed several prominent economists in their June 22, 2005 issue about the possibility of a housing bubble and all dismissed the fact that prices were soaring unsustainably and a bubble pop was on the horizon.

 
The top broker’s on Wall Street are quietly advising clients that the optimism surrounding the housing markets has grown delusional and the market is timed for a reversal. However, the media refuses to acknowledge that when a market is artificially stimulated prices top and then come tumbling down in free-fall.

 
The reality is that the U.S. housing market looks shockingly comparable to the mid-2005 housing market numbers. Now that government-sponsored lenders are once again offering 0% down mortgage loans to people with subpar credit scores- what could go wrong?

 
There is a pattern showing that housing prices and demand are on the verge of a crisis not seen since the beginning of the Great Recession. In fact, despite high unemployment, low wages, and escalating food and fuel prices- Americans enthusiastically buy into inflated housing bubbles. It defies all logic.

 
June 2016 was the 50th straight month showing national home price appreciation. In fact, according to a CNBC August 29th report, home prices have rebounded to just shy of their 2006 peak prices.

 
However, the sales stats are starting to show a sales slowdown. In Miami-Dade County sales declined in July on high-end properties falling 20.8%. The National Association of Realtors reports that existing homes sales dropped 3.2% from June to July and the trend does not look to have abated.

 
In Southern California during the same time period, sales dropped 10.7%. The prediction is that housing prices will start to fall and they should fall to more realistic levels. Some areas in the country saw 60% price increases over the past 8 years. In Naples, Florida for example, homes in the Naples city-limits rebounded 60%. A home that was listed for $540,000 in 2010 recently sold for 1.2 million within days. Price increases like this are not practical, sustainable or rational.

Also remember, that loan originators and servicers have not changed their securitization methodologies.  At some point the market will have to contend with the fact that millions of Americans have corrupted titles due to the shoddy securitization and sales of mortgage loans.

http://www.npr.org/2016/08/30/491984212/economists-point-out-abnormalities-as-housing-market-appears-to-heal

http://www.houstonchronicle.com/business/real-estate/article/Houston-housing-market-takes-summertime-hit-9135274.php

Tags: housing market cools, irrational housing prices, real estate bubble
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