Friday, January 7, 2011
Double Dip Housing Recession is Here
The U.S. residential housing market is now in a double dip recession, something I predicted would happen in June 2009 in this blog.
Not June 2010.
But June 2009, or nineteen months ago.
What took the lamestream media so long to read all the obvious economic signs? Simple. They cheerlead markets. I forecast them. They wear rose colored glasses. Mine are crystal clear. They are trying to sell you something, like books, home study courses, houses, REIT shares, apartment buildings, whatever real estate has to offer. I have nothing to sell to you. Ask yourself who has the financial bias when reporting the news?
Here's an excellent article explaining what a double dip recession in housing looks like, especially the consequences of continued falling housing prices on economic growth.
All the real estate action in 2011 will take place over Class A commercial properties. The REITs and private equity buyers have lots of cheap money courtesy of Ben Bernanke and this is genuinely an opportunity to pick up some world class trophy properties on the cheap. Here is one example concerning Blackstone and a London property.
But the U.S. residential market is a falling knife through 2013 and even beyond. Don't try to catch it. The idea of buying houses to rent them out for a retirement plan is so obsolete and quaint the notion would be charming if it hadn't ruined so many people's financial lives.