Here’s Another Reason The Housing Market Will Re-Collapse

83% of the college graduating class of 2014 do not have a job:

83% of graduating seniors said they didn’t have a job lined up as of April 2014, despite 72.7% reporting that they were actively looking for one. This is a jump from the 80% of graduating seniors who didn’t have a job lined up at the same time last year. (Article Link)

This is your first-time buyer cohort which historically has represented 40% of the housing market.

The housing market bulls are making a big deal out of the fact that the percentage of cash buyers is rising.  This is actually very bearish.  As the number of true, organic buyers declines, its mathematically guaranteed that cash sales as percent of total sales will increase.

Why is this bearish?  Because according the NAR statistics, the majority of cash sales go to individual “investors,” i.e. “flippers.”  If real, end-user buyers don’t show up to buy, to whom will the flippers flip?

In other words, the housing market has become analogous to a Ponzi scheme.  But when the music stops…

8 thoughts on “Here’s Another Reason The Housing Market Will Re-Collapse

  1. China and foreigners taking over our markets is one flip side of our overregulating and taxing our jobs and brainpower offshore. Maybe China’s new think tank won’t be so short-sighted that they sell out their own people: http://news.xinhuanet.com/english/china/2014-05/11/c_133325712.htm
    Many college graduates flip the bird to traditional colleges and universities in favor of online courses or grassroots startups, but let’s keep English as our official flippin language.

  2. As crazy as this may sound and as much as I hate to think about it, housing will go up in price while staying the same in value. It’s called inflation and housing is a hard asset. Homes are basing and they may go down a bit but they won’t collapse, the collapse has occurred. In 2011 houses were back to where they should have been in most municipalities (exuding the NE corruption belt). We’re now seeing inflation induced consolidation.
    Value wise, they are still going down, dollar wise, they are consolidating.

    1. Housing doesn’t keep up with inflation over very long periods of time. You can use google to find the 120 year Shiller chart. That housing prices go up and is a store of wealth is a brainwashed idea that was introduced after Nixon closed the gold window. It’s the fiction of a fiat and fractional banking based system.

      As the ability of buyers to take out debt and keep paying higher prices for homes goes away, housing prices will collapse down to their long term mean price level over a long period of time. “Long” means many decades before 1971 or even Bretton Woods

  3. This is the real “tell” from the article about how bad the economy really is.

    “These numbers don’t vary significantly, even for more “marketable” majors—81.6% of engineering, technology, and math majors didn’t have jobs lined up, and business students didn’t fare much better with 85.1% saying they hadn’t lined up jobs either.”

    The 18% of engineering majors that do have a job lined up are probably 4.0 GPA with an affable personality. Companies can now cherry-pick the best and cast off the rest.

  4. US retail sales grew by just 0.1% in April, compared with growth of 1.5% the month before, latest figures from the Commerce Department show.

    Consumers cut back primarily on purchases of electronics and furniture.

    The slowdown surprised many analysts, who were looking for continued growth after the harsh winter hit spending. The weak figure may cause concern, as consumer spending accounts for about two-thirds of total economic activity in the US.

    Excluding sales of petrol and cars, retail sales actually fell by 0.1% in April.

    Some have attributed the slowdown to the lack of growth in wages, which have barely increased since the 2008-09 recession.

    http://www.bbc.com/news/business-27397806

    can’t blame the weather anymore!

    1. If I write a post on retail sales, I might use that source link so people can see media reports that outside of the U.S. MSM

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