Posted on 03/22/2011 10:58:09 AM PDT by blam
GARY SHILLING: And Now House Prices Will Drop Another 20%
Gary Shilling, A. Gary Shilling & Co.
Mar. 22, 2011, 12:46 PM
Image: A Gary Shilling & Co.
Last October, when everyone was jubilant about the housing "recovery," Gary Shilling of A. Gary Shilling & Co., predicted that house prices would fall another 20%.
In the five months since, house prices have resumed their decline.
In his most recent research note, Gary sticks by his "20%" decline prediction. We've included a summary and updated charts from his argument below.
(Gary is offering a special discount on his research service for Business Insider readers. To learn more, please visit Gary's web site or call 1-888-346-7444. Please mention Business Insider.)
Housing: Great Expectations vs. Reality
Last spring, many believed that not only was the housing collapse over but that a robust rebound was underway. Investors were crowding into foreclosed house sales and bidding up prices in California, often the bellwether state for new trends.
The tax credit of up to $8,000 for new homebuyers that expired in April spurred buyers and promised to kick-start housing activity nationwide. TheHomeAffordable Modification Program was trumpeted by the Administration to help 3 million to 4 million homeowners with underwater mortgages by paying lenders to reduce monthly payments to manageable size and then paying homeowners to continue to make those payments.
But then a funny—or not so funny—thing happened on the way to housing recovery...
(Excerpt) Read more at businessinsider.com ...
Numbers were posted here long before he came up with them. Just a simple time and value of money thing. Not only did we have over building but over valuations, you still see idiot agents pricing 50 year old houses at the same rate as a new home. Market has to correct for stupid as well.
That and throw in the rising commodities; we haven't even hit flood season yet.
Sadly he knows his stuff.
It won’t be much longer before I can buy a decent home with the change in my pocket.
COROLLARY: ... and a gallon of gas will cost you $7.
It won’t be much longer before I can buy a decent home with the change in my pocket.”
Make sure it’s got a big yard for your farm, cause you won’t be able to buy food.
Shilling has been the constant voice of reason on the Kudlow CNBC program for years. I see no evidence were his prognostication would be wrong. Things are still really ugly in the real estate business.
I hope everyone is enjoying the New Economy.
combined with the reduced value of the dollar, America’s financial balloon has been shrinking quickly
It depends entirely on where the houses are located. Thousands of empty houses in Florida and California are of no use to those who need a place to live in Texas.
Not sure what to make of this statement. Based on the McMansion's I have seen recently against a same size 50 year old home, I'll go for the older home first in half a heart beat. They were just built better.
Raw land prices havee not dropped. The floor is the value of the dirt the house sits on.
LOL, location, location, location.
The silver lining is that, it is coming to a point when I can simply get out of this crazy state (Massachusetts) and go live somewhere that has sane thinking people in reasonable proximity.
There is probably as many lots ready to build on as there are vacant and to be foreclosed homes. Everytime I drive down the road I see new empty home developments and beside them will be acre after acre of lots with utilities stick up out of the ground. But I also heard the latest con on the radio. The bank has just release these few foreclosed lots. It doesn’t work like that people, file a complaint with the state real estate commission, someone is committing fraud.
The corollary is that I will have my property taxes reduced an additional 20%. LOL.
It’s going to be tough for the banks and Fannie and Freddie to unload the thousands of foreclosed houses that are empty and deteriorating in neighborhoods from coast to coast. The USA will soon be on the auction block.
This whole housing sham has been fraud from the beginning.
All those ‘get refinanced now’ endless radio ads. The flipping shows on the Home channel. On and on.
But it is bigger than that. There is a HUGE shadow inventory. I saw and read about it on ZeroHedge last spring. In my area alone, there were over 6,000 homes that were foreclosed on, that WERN’T listed! The banks are holding back the flood, to TRY to hold UP the house prices.
And it gets worse. There are two homes on my street that have been foreclosed on. They keep going up for auction, every three months since last summer. I only recently found out what is happening to them. 90% of the homes bought in foreclosure can’t get financing. So, even the homes that ARE foreclosed on, aren’t being auctioned off.
It is a TOTAL mess out there.
It will take at LEAST three or more years for the housing market to hit a bottom.
bfl
Between Clinton refinancing the US debt with SHORT term notes,
and overturning depression era banking rules,
to ACRON suing banks over redlining,
and the extortion by Hank Paulson for TRAP,
the US dollar will be toast. The question will be...when?
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