The Next Housing Crash Is “Coming Soon” – Dave Kranzler

If you’ve bought in the last two years you will be underwater sleeping with the fishes like Luca Brasi (from “The Godfather”) in the not too distant future.  – Jim Quinn, The Burning Platform

TND Guest Contributor:  Dave Kranzler | 

Anyone seeing a surge in “Coming Soon” signs on top of realtor signs?  I drive all around Denver almost everyday surveying the housing market from a “boots on the ground” perspective.   I’m seeing both a lot more “coming soon” and “for rent” signs in every neighborhood.  For those who don’t know, “coming soon” just means that one broker has an exclusive right to sell a home for short period of time before it’s listed officially in the MLS database.  It represents “for sale” inventory that does not get picked up by NAR estimates for about three months (NAR inventory numbers lag).

The housing market has already crashed.  The crash occurred in 2005-2006.  The visible evidence of the crash emerged in 2007-2009 when foreclosures piled up and prices crashed.   The reality is that  were are in the middle of housing bear market that was interrupted by several trillion dollars of market intervention – direct and indirect – by both the Federal Reserve and the U.S. Government.   Several trillion dollars and this is all we get for a dead cat bounce?

You can read the rest of my analysis here:   April New Home Sales, Homebuilder Sentiment And Overvalued Homebuilder Stocks.

One aspect that no one is discussing is the fact that in the last several months, a preponderance of home sales volume has been driven by “mom and pop” speculators.  While historically “retail” flippers have been using cash to buy homes, current data shows that the most of them have resorted to using mortgage debt.

We’ve seen this movie before.  This Fed-fueled dead-cat market bounce in housing is just about over and the next leg down will particularly brutal, especially for anyone who has legitimately bought a home to live in over the last couple of years.

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About Dave Kranzler:

 I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics.  Occasionally, I publish on Seeking Alpha too. As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.

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