Saturday, August 28, 2010

The U.S. Housing Market Is Headed For Complete And Total Collapse

The U.S. Housing Market Is Headed For Complete And Total Collapse

Michael Snyder, The Economic Collapse
Aug. 20, 2010, 11:24 AM

The U.S. housing market is dying. You will only hear hints of this on the mainstream news and from the politicians in Washington D.C., but as statistic after statistic continues to roll in, the reality of what is happening is becoming very difficult to deny.

Up until the end of April, the giant tax credit that the U.S. government was bribing home buyers with helped stabilize the real estate market, but now that the tax credit has expired the decline of the U.S. housing market has resumed. Mortgage defaults continue to set new records.

Foreclosures continue to set new records. Home repossessions by banks continue to set new records. The number of homes being constructed and the number of Americans applying for home loans is at stunningly low levels.

For decades, owning a home has been touted as the very heart of "the American Dream", but today that dream is out of reach for an increasing number of Americans. Why? It is because there are not nearly enough jobs for everyone.

Without a jobs recovery, there simply is not going to be a housing recovery. Unfortunately, as the U.S. economy continues to come apart like a 20 dollar suit, even more Americans are going to lose their jobs and the U.S. housing industry will continue to experience a very painful decline.

The truth is that this is not a short-term downturn in the housing market. During the past two decades, an insane amount of debt fueled an artificial housing bubble that drove home prices to ridiculous levels.

Now the U.S. housing market is trying to correct itself, and no matter how many trillions of dollars the U.S. government throws at the problem the fundamentals of the marketplace are still going to have their way eventually.

The U.S. economy is in decline. The employment situation is going to go from bad to worse. Americans without jobs are Americans that cannot buy homes. Millions of Americans who are employed are finding it increasingly difficult to make it from month to month.

The truth is that there is no way that Americans can afford the ridiculously inflated home prices that we have seen over the past decade any longer.

So, yes, the U.S. housing market is headed for a complete and total nightmare.

Home sales at depressing lows

Sales of new and existing homes in the U.S. are at depressingly low levels. For example, during the month of May sales of new homes in the U.S. declined to the lowest level ever recorded. Yes, you read that correctly. The U.S. Department of Commerce began tracking sales of new homes back in 1963, and since that time the number of new homes sold has never been as low as it was in May.

Not only that, but existing home sales (which had been faring a bit better) are also showing signs of serious decline. In the month of July, sales of existing homes in southern California fell nearly 22% from a year earlier.

In Austin, Texas sales of homes declined 25% from a year ago in the month of July. The truth is that home prices are still way too high. As prices begin to decline that should help home sales a bit, but the truth is that the days of the real estate boom are gone and they not coming back.

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