The Economy Is Tanking, Housing Is Next – Dave Kranzler

TND Guest Contributor:  Dave Kranzler |

Do not get pimped into buying house now.  Wait 6 to 12 months if you really want to take on that expense because you will get a much better price.  The housing metrics promoted by Wall Street, industry associations and Bloomberg/Fox Biz/CNBC are just as bad as the Government’s seasonally adjusted, annualized rate pig vomit.

Denver is turning into one big “New Price” sign.  Also, I’ve never seen more homes “for rent” in central Denver than now.  Ma n Pa investors will take it in the back side on those homes and I bet many of them are stuck flippers or “swing traders.”  Unfortunately for everyone, many of the Ma n Pa retail price chasers started using mortgages to make their “investment” purchases.  Many of them also checked the “vacation home” box on the mortgage application to get better financing terms.  This will not end well.

Inventory now is piling up across the price spectrum more quickly than the brown stuff waiting to hit the fan blades.  The upper-end price segment of market has more inventory listed than I can recall seeing 2008.  Some small enclaves with psuedo, over-priced mini McMansions have 15-20% of the homes on the market (see Highlands Ranch Golf Club area, for instance).

I wrote an article for Seeking Alpha which explains how some of the “lower profile” housing market metrics are telling a completely different story than the pump and dump headlines on which most of the world reacts:

The bounce in home sales since mid-2010, which has been driven by the Fed’s near zero interest rate policy and $3.6 trillion in QE, has lasted longer than I expected. However, data released recently suggests that the housing market may finally be rolling over. Both mortgage purchase applications and pending home sales declined unexpectedly in July. This data followed a large unexpected drop in new home sales in June (released at the end of July).

You can read the rest of this article here: Renewed Downturn In Housing Starts

Hovnanian will be the first homebuilder to hit the wall this time around. But I have two research reports on companies that will be #2 and #3. I believe one of them may not see 2016’s Christmas. You can access these reports here:  Homebuilder Short-Sell Reports

#2 is the report posted in February.  While it’s not easy shorting anything in this market, patient traders will make a lot of money shorting the homebuilder sector.  The stock prices of these companies have completely dislocated from the underlying fundamentals.  When fundamental reality hits, it will be a bloodbath.

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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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