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Snipe Hunting In The Housing Market

  • Written by Syndicated Publisher 36 Comments36 Comments Comments
    October 20, 2011

    nahb-index-101811At one time or another most people have been subjected to a “snipe” hunt.  That fictitious creature that looks like a combination of several different animals that forever roams the world but has only been seen by those instigating the farce upon some hapless sole.   So goes the unabated “snipe” hunt in the housing market searching for the elusive bottom that never seems to come.

    Jim Cramer has called housing bottoms in 2009, 2010 and 2011 and prices still decline.   Home builders have “hope”, which springs eternal, that somehow an over leveraged, over built and bleeding market will somehow began to grow again.  The problem is that household formations are at near record lows, unemployment remains at historically high levels and banks are in death throws with months upon months of supply of foreclosed properties sitting on their books.  The clearing of the excess will take far longer than most imagine.

    home-sales-to-jobs-101711Yet this doesn’t deter the “snipe” hunt of the mainstream media clinging to each data point as if it were the last life preserver on the Titanic.  The reality, however, is that the recent uptick in homebuilder sentiment is less reality than it is statistical noise.   The reality is that the housing market has more than a decade of struggles ahead of it as the deleveraging of the excess continues.   With home owners trapped in homes with values below their mortgages this reduces mobility to move where the jobs are.   Banks in an ongoing battle of their own survival sit on massive amounts of delinquent properties rather than pushing them through the foreclosure process as the capital impairment would be too great.   Potential homebuyers are now faced with an economy plagued by high unemployment and lower wage structures and credit is now restricted to them.   Without 20% down and a strong credit rating it is unlikely a loan will be offered to them.

    These are just the realities of the housing market as it exists today.  Unfortunately, new home building is a critical element to the long term prosperity of the economy along with manufacturing.  With manufacturing outsourced to every low cost labor supplier in the world and home starts near historic lows you can only imagine that economic growth going forward is going to be “less than expected” by mainstream economists and analysts.

    However, it certainly doesn’t hurt to hunt for the elusive and endangered “snipe” as long as you don’t lose sight of the reality of it all and how it will ultimately impact your wealth.   For everyone else who continues to see a bottom every time data bounces along its downward trajectory, if you can’t find a “snipe” you can come to Texas and hunt for the “Jackalope”.

    From Snipe Hunting In The Housing Market.

    Images: Flickr (licence attribution)

    About The Author

    Lance Roberts – Host of Streettalk Live

    lance robertsAfter having been in the investing world for more than 25 years from private banking and investment management to private and venture capital; Lance has pretty much “been there and done that” at one point or another. His common sense approach has appealed to audiences for over a decade and continues to grow each and every week.

    Lance is also the Chief Editor of the X-Report, a weekly subscriber based-newsletter that is distributed nationwide. The newsletter covers economic, political and market topics as they relate to the management portfolios. A daily financial blog, audio and video’s also keep members informed of the day’s events and how it impacts your money.

    Lance’s investment strategies and knowledge have been featured on Fox 26, CNBC, Fox Business News and Fox News. He has been quoted by a litany of publications from the Wall Street Journal, Reuters, The Washington Post all the way to TheStreet.com as well as on several of the nation’s biggest financial blogs such as the Pragmatic Capitalist, Zero Hedge and Seeking Alpha.
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