Real Estate Market : The Mother of all Crashes is Coming on a Global scale

Existing Home Sales Tumble In September, Despite Low Mortgage Rates. The mother of all crashes is coming on a global scale. And the Fed knows it. They are already starting QE. It's like putting a bandaid before getting cut. But it won't matter when the whole arm is going to get cut off. In fact, this wound will be fatal to financials, but we already knew this, didn't we? I'd say by the end of next year. We'll be in the storm. You already see the true health of the economy; the numbers are bad and heading lower in every sector. The Fed can't spur optimistic sentiment in consumers. I mean, Trump pushed it and squeezed it as far as it could go. Corporations are already getting anxiety at the thought of a democrat in office. Imagine we, the people. Welcome to The Atlantis Report. Despite historically low mortgage rates, sales have not commensurately increased. September existing-home sales in the Northeast fell 2.8% to an annual rate of 690,000, a 1.5% rise from a year ago. The median price in the Northeast was $301,100, up 5.2% from September 2018. In the Midwest, existing-home sales dropped 3.1% to an annual rate of 1.27 million, which is nearly equal to August 2018. The median price in the Midwest was $213,500, a 7.2% jump from a year ago. Existing-home sales in the South decreased by 2.1% to an annual rate of 2.28 million in September, up 6.0% from a year ago. The median price in the South was $237,300, up 6.3% from one year ago. Existing-home sales in the West declined 0.9% to an annual rate of 1.14 million in September, 5.6% above a year ago. The median price in the West was $403,600, up 4.5% from September 2018. There is a lack of supply because banks are sitting on inventory, and they have been doing so since the 08 crash. If they were to release the houses in their stock, it would surely bring down the market. It's supply and demand engineering. No different than the inventory car dealerships are saddled with at this time. Anyone out hunting for an affordable home today knows that the pickings are slim – and they are about to get slimmer. Housing inventory hit a record low about two years ago, but a lull in home sales over the past year helped build back much-needed supply, especially in the mid-priced range. Then a sharp drop in rates this summer brought demand back and depleted that supply dramatically. National housing inventory fell 2.5% annually in September, a sharper decline than August's 1.8% decrease, according to Supply has always been leanest on the low end, as investors have been very active in that price range since the foreclosure crisis. Roughly 5 million mostly entry-level homes have been turned into single-family rentals, and strong demand for those rentals means investors are unlikely to put the homes up for sale anytime soon. In addition, an unseasonably strong surge in demand at the end of summer and into this fall now has the supply of homes priced below $200,000 down 10% compared with a year ago. The demand is being fueled by lower mortgage rates. The average rate on the 30-year fixed surged over 5% last November and stayed above 4.5% through March, according to Mortgage News Daily. That made for a lackluster spring housing market, traditionally the busiest time for buying. Rates then began falling in May and particularly sharply in July and August. By the start of September, the average rate was around 3.5%, and sales of both new and existing homes were surging back. Clearly, there was substantial pent-up demand from the spring. Demand also surged in the move-up market, causing supplies there to fall as well. The supply of homes priced between $200,000 and $750,000, which makes up 60% of the market, flatlined in September, after 18 months of strong inventory growth. Supply is now expected to decline in the months ahead. A large part of what is driving this downward path of the real estate market is the retirement of the Boomer Generation, which is only going to accelerate over the next decade. They are retiring and aging. Therefore the pursuit of promotions and things is to be replaced with a holding pattern. They have a home, and their family is all out of the house, so they do not need to seek more square feet, as a matter of fact, many are downsizing. I have a couple renting next to me, who liquidated the large house they owned, and are building one that is much smaller, one in which they will greet death. There will be no more moving up for them. Their children and grandchildren have been priced out of the bubble, which naturally occurred in their generation, and due to prices that are inflated too high and wages that have remained stagnant, they won't be signed up to keep the bubble blowing. Ray Dalio predicts somewhere between a 30-50% price correction, and it seems a real possibility. Things are a-changing. The population is shrinking big time. Keep building, building, and building, hoping "they'll come." When "they" don't even exist, that pipe dream will be difficult to bring to reality. Infinite growth and demand in a finite world only work so long on the matrix dwellers. Even though they want to believe 2+2=5, it just NEVER is. In America, the government, coupled with a slew of builder and Realtor associations control the housing narrative. Huge discrepancies exist in the cost of housing in the various markets across America, and while price variations are not uncommon, they should be seen as a reason for caution.

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