Bonner On Housing
Just a quick snippet from the Daily Reckoning:
Bonner on housing
We are still here...still keeping a close watch on housing, reading the news, chuckling to ourselves, and wondering how it will all turn out.
“American borrowers’ rush into debt has been accelerating,” writes colleague James Ferguson in this week’s MoneyWeek. “It took more than 30 years to raise the debt-to-income ration 30 percentage points, from 40% to 70%. It then took only 15 years to raise it the next 30 percentage points to 100%. But is has taken just five years since the end of 2000 to jump the most recent 30 percentage points, to a new all-time high of 129%. This has surely been one of the most remarkable debt-financed spending sprees in the world, ever.”
This debt, says Ferguson, is largely concentrated on a single sector - and a single consumer asset: housing. It is debt that has made house prices rise - not new families or higher incomes. But, debt cannot rise forever. Ferguson thinks he sees the end of it:
“Now there are signs of a concerted, possibly even coordinated, monetary tightening by the world’s central banks...” whose consequences are already apparent.
“The data of new family houses in the U.S. in February was shocking. U.S. new homes sales fell 3.4%. In the economically vital Western U.S., new home sales in February plummeted 29% compared with the same period last year.
“According to David Rosenberg...in the last 309 years there have been eight such double-digit drops in new home sales. Six times, these drops signaled recession the next year and one drop led to GDP growth halving from 4% to 2%.”
Bonner on housing
We are still here...still keeping a close watch on housing, reading the news, chuckling to ourselves, and wondering how it will all turn out.
“American borrowers’ rush into debt has been accelerating,” writes colleague James Ferguson in this week’s MoneyWeek. “It took more than 30 years to raise the debt-to-income ration 30 percentage points, from 40% to 70%. It then took only 15 years to raise it the next 30 percentage points to 100%. But is has taken just five years since the end of 2000 to jump the most recent 30 percentage points, to a new all-time high of 129%. This has surely been one of the most remarkable debt-financed spending sprees in the world, ever.”
This debt, says Ferguson, is largely concentrated on a single sector - and a single consumer asset: housing. It is debt that has made house prices rise - not new families or higher incomes. But, debt cannot rise forever. Ferguson thinks he sees the end of it:
“Now there are signs of a concerted, possibly even coordinated, monetary tightening by the world’s central banks...” whose consequences are already apparent.
“The data of new family houses in the U.S. in February was shocking. U.S. new homes sales fell 3.4%. In the economically vital Western U.S., new home sales in February plummeted 29% compared with the same period last year.
“According to David Rosenberg...in the last 309 years there have been eight such double-digit drops in new home sales. Six times, these drops signaled recession the next year and one drop led to GDP growth halving from 4% to 2%.”
4 Comments:
I'm interested to see that people who's opinions I have come to respect (like Grim and other regulars here) occasionally reference the Daily Reckoning. I have been on their mailing list for years, and while I can't honestly say I read everything they send (it's a lot to digest), I have learned a lot from DR contributors like Bill Bonner, Gary North, etc.
When I go blogging, it often ends up a fruitless journey. I often think I'd do better if I just stuck with my own real estate sites ... and then I come across a blog like yours, and it make the trip worthwhile. Thanks. Visit my site if you have a chance.
Hi there, I was surfing the internet and I found your blog. I like the way how this all works.
I'll come by again.
Many thanks,
condo for rent
I have been following a site now for almost 2 years and I have found it to be both reliable and profitable. They post daily and their stock trades have been beating
the indexes easily.
Take a look at Wallstreetwinnersonline.com
RickJ
Post a Comment
<< Home