There has been no improvement in underlying consumer liquidity conditions. Correspondingly, with no fundamental growth in liquidity to fuel increasing consumer activity, there is no basis for a current or imminent recovery in the housing market. – John Williams, Shadowstats.com
The title quote is from a supplier to the homebuilding industry in south Florida, which had been one of the hottest housing markets in the country. He said his business has suddenly fallen off a cliff and development projects that had “been on the board” have been postponed indefinitely. Isn’t it a lot better to get information about what is going on at “ground zero” in the housing market rather than from some snake-oil salesman who bills himself as the National Association of Realtors’ chief economist or the sleazeballs on the financial “news” networks?
Make no mistake about it, regardless of the degree to which you want to put faith in the “seasonally adjusted, annualize rate” home sales reports generated by the National Association of Realtors and the Census Bureau, the housing market is a 10 mile train skid on a nine mile track.
Something is blowing up big time in the banking system. Everyone is talking about the interminably collapsing price of Deutsche Bank stock, but Bank of America, down only 2% right now, was down as much as 6% earlier today – same with Citi. The price plunge in these banks occurred in absence of any news reports or events that to which the sell-off could have been attributed.
The BKX bank stock index is down 25% from its high in mid-July:
While the entire U.S. financial media/community seems to be obsessed with the sell-off in Deutsche Bank stock, I’ll note that Barclays stock is down 50% from its 52 week high and Citigroup and Bank of America are down over 33% from their 52 week highs. Because of the incestuousness that has developed in the monstrous derivatives market, all of these banks are genetically connected. It’s really irrelevant which bank blows up first because when one goes, they’ll all go.
I am tying together housing and the big banks because the Central Bank money printing has reincarnated the housing bubble Frankenstein and the big banks – via the catastrophically massive Ponzi derivatives scheme – have been the transmission mechanism of printed money into the housing market.
The unexplained 25% collapse in the bank index is telling us that the financial system is melting down and that’s the most direct evidence that it’s not just a Deutsche Bank problem. Perhaps DB is merely 2016’s “Bear Stearns.”
The entire global financial system, including and especially the U.S., is headed for a collapse that will be worse than what occurred in 2008. In fact, it will be nothing more than an extension of an unavoidable collapse back then that was deferred with QE and Taxpayer money. The concerted Central Bank move to take interest rates negative are telling us that the QE rabbit is no longer available to pull out of the hat. Negative rates are telling us that the skidding train mentioned above is on the 9th mile of that skid.
A colleague of mine called me today and told me that he’s been monitoring the housing market activity on the west coast of Floriday, a previously white hot housing market. He said inventory is up about 15% from year end he is getting a constant flow of “price reduced” emails. I am seeing the same thing and getting the same number of “price reduced” emails from the MLS-based website I use to track the Denver market. And a reader posted this comment yesterday about Las Vegas, which also had been red-hot market for home sales and buy-to-rent schemes:
Supply is building quickly (no pun intended) and sales are in the toilet. Housing in going to be one of, if not the lead horses that take this economy down. A friend of mine who lives in L.A. and lives in Vegas 3-4 days per week for business, just rented a furnished luxury two bedroom condo with all utilities including cable and internet for $1250 per month. He also said that there were many choices available in the Las Vegas area. We are just at the beginning of the end.