Ok, so the title of my post is a little childish. I get it. But when you think about it, so is the ever upbeat reporting of the current financial crisis.
Take this article from Reuters, quoting Ara Hovnanian as saying that housing values should stabilize in the second quarter, with a rebound in sales by Spring of 2009.
"The head of the Red Bank, New Jersey-based home builder said he sees U.S. home prices stabilizing in the first half of this year and that prices likely remain constant for a "couple of quarters." But where will they go after that, oh great one?
"He said sales will sharply rebound once the excess inventory of new homes is sold."
"At the end of 2007, the supply of new homes for sale stood at 9.6 months, according to the U.S. Commerce Department, more than double what is considered a healthy supply."
Ok, so does anyone see the contradiction here? We've got darn near a 10 month supply of new homes available and builders haven't stopped building. Couple that with the supply of existing homes, foreclosures that are soon to be on the market, natural relocation statistics, the contraction of credit and the fact that we have a wildly overpriced housing market, even with the current decline and ... well... I guess it's easy to make predictions when you're already a billionaire.
Take this article from Reuters, quoting Ara Hovnanian as saying that housing values should stabilize in the second quarter, with a rebound in sales by Spring of 2009.
"The head of the Red Bank, New Jersey-based home builder said he sees U.S. home prices stabilizing in the first half of this year and that prices likely remain constant for a "couple of quarters." But where will they go after that, oh great one?
"He said sales will sharply rebound once the excess inventory of new homes is sold."
"At the end of 2007, the supply of new homes for sale stood at 9.6 months, according to the U.S. Commerce Department, more than double what is considered a healthy supply."
Ok, so does anyone see the contradiction here? We've got darn near a 10 month supply of new homes available and builders haven't stopped building. Couple that with the supply of existing homes, foreclosures that are soon to be on the market, natural relocation statistics, the contraction of credit and the fact that we have a wildly overpriced housing market, even with the current decline and ... well... I guess it's easy to make predictions when you're already a billionaire.
Ara Hovnanian
I want some of whatever the hell this guy is smoking.
So let's move on...
The Philadelphia Fed Index declined yesterday from -20 to -24. As expected, "Wreconomists" got it all wrong. Expecting a rise to -10 (and that would be better?), many wreconomists were rather dismayed by the report.
"As far as this indicator is concerned, a recession, and a severe one at that, is already underway," said Paul Ashworth, at Capital Economics."
"The headline index is now consistent with a deep recession, if sustained at this level," said Ian Shepherdson, chief economist at High Frequency Economics in a note."
"It is one of the earliest readings on the U.S. economy in the month and has had a solid track record at predicting national manufacturing and future trends in actual output."
"The collapse in the outlook for activity six months out was particularly worrisome Merrill Lynch said. It posted the steepest decline in the 40-year history of this report, suggesting the United States is facing a recession on par with the early 1990s downturn rather than the milder 2001 contraction." Might I go out on a limb here and say on par with an even deeper recession... one that many of us don't remember?
Benjamin Tal, senior economist at CIBC World Markets "estimates 30% of below-prime mortgages taken out in 2006, including subprime and other exotic mortgages, are already in a negative equity position and that figure could climb to 50%. The urge to walk away from their homes will be high." Yep. Short lived this recession will be. Housing prices... no problem. They're gonna rebound in July this year!
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