Housing market crashes 27%--what it means for you
In the largest single monthly drop since 1968, the year such records began to be kept, the U.S. housing market plunged by 27% in July. The nosedive occurred in spite of the fact that mortgage rates are at historic lows.
The news headlines by mainstream media outlets, however, mask the depth of the crisis. Several misleading statements were made by not only the AP and NPR but the National Association of Realtors, leading readers to believe that the July crash is merely the worse in 15 years.
Reading beyond the headlines to the second paragraph or beyond will reveal the actual dire picture. Sales of EXISTING homes are the worst in 15 years. But when sales of NEW homes are added to that figure, NAR admits that July is the worst month since 1968.
ABC News reported this bad news, but one had to get to page 2 of the article in order to find it. ABC's headline did, however, include the words 'the worst since 1968.'
More importantly than the state-run media's continued attempt to paint Obamanomics in a positive light is what all of this means for you, the citizen.
In short, it means that Americans have no confidence in this economy. The housing market has always been a reliable bell-weather as to trends in the financial sector. And, in spite of mortgage rates being the lowest in U.S. history, Americans are not buying. Citizens are hanging on to their money out of uncertainty about the future.
This fact is only confirmed by the trends in investments. As the stock market teeters in response to several months of bad economic news, Americans have been increasingly investing in precious metals, namely, gold and silver. Historically this has been THE tale-tell sign that Americans sense big trouble in the economy. They opt out of stocks and bonds and buy gold and silver instead.
Further, July's housing figures point to big trouble just ahead in the markets. This is not a good time to invest in the stock market.
In addition, it is no longer true that housing is a 'good investment' or a 'means to build wealth,' as consumers have so often been told.
As the fog continues to fade from the smoke-and-mirrors 'boom' of the 1990s and the first 7 years of the 21st century, it is becoming all too clear that the housing boom was an artificially created bubble--a brainchild of the Clinton Administration, which used Fannie Mae and Freddie Mac as a welfare agency, pressuring lenders to grant mortgages to anyone whether they could afford them or not.
Now that the bubble has burst and the mask is off, Americans are waking up to realize that owning a home is not the 'pot of gold' they have been told.
This is not to say that owning a home is not a good idea. It only means that it is not a good way to 'build a nest-egg for the future.' Owning a home is about shelter and not about getting rich. Once Americans accept this fact the housing market will stabilize, but it will never again be viewed as the primary source of building wealth or a 'hedge against inflation.'
As many have been warning for over a year, prudence dictates that citizens prepare themselves by whatever means necessary for the very rocky road ahead.
Be sure to catch my blog at The Liberty Sphere.
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