(By Dave Kranzler)
The housing market is collapsing. The big investors have stepped away and, now, flippers done: All-Cash Sales Fall to Six-Year Low. The demand-side of the market is in collapse.
“I spent well over an hour surveying the housing market in my area (south-metro Denver) and the market is flooded with homes for sale, with many mid-range ($500-$750) homes being lowered 5-10% in price and still sitting on the market. Zillow is estimating the average home listed in my area is now down 8% from original listing. This is an area that has been one of the hottest areas of Denver in the last year. Homes over $1 million are piling up like dogs under a cat stranded in a tree.” – A colleague of mine who has been looking at the market as a buyer for a year
He sent me a link to the typical home listing he is seeing: Lowered 4 Times In Last Year
It’s not just confined to Denver:
– All cash sales fall to 6-yr low in June – that’s your investment buyer/flipper
– NEW home mortgage purchase applications plunge 9% in August – that’s your homebuilder home sales going down the drain, per the HOV/TOL 10-Q disclosures
– Interest rates are moving higher, quickly – that’s cuts off the remaining poor credit, FHA borrowers who borrow money to put down the required 3.5% to get taxpayer subsidized mortgages
– Inventories are climbing, sales are hitting the wall, prices are dropping, foreclosures are going up again.
This is 2005/2006 all over again. You can ignore reality, but you can’t ignore the consequences of reality.
Article by Dave Kranzler at Investment Research Dynamics.
SRSrocco: Dave also published this article Foreclosure Activity Picking Up – Just In Time For Market Collapse, which he states the following:
“[Foreclosure activity] is reason to wake up and realize the housing recovery we’ve seen over the past two years is not as strong as it might have seemed.” Daren Blomquist, RealtyTrac
Beginning in the Fourth quarter of fiscal 2013, we have experienced a leveling in demand that continued through the second quarter of fiscal 2014 and has more recently become a weakening in demand. – Major homebuilder CEO
The homebuilder stocks represent the best short-sell opportunity I have seen in any stock market sector since the peak of the tech bubble in 2000. The homebuilders are trading at insanely overvalued levels, with p/e ratios several multiples higher than the p/e ratios these stocks had at the top of the housing bubble in 2005/2006.
When the S&P 500 starts to really sell off, it will exert particularly brutal downside force on the homebuilder stocks. At the very least, institutional/professional money managers have a fiduciary to re-examine their assumptions behind their homebuilder stock position.
SRSrocco: Dave believes the U.S. Housing Market will Crash again like it did in 2007-2008. He offers some HOME-BUILDER RESEARCH REPORTS which provides information on how to profit from this upcoming crash. It’s worth a look if you are interested in that sort of trade.
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