The Next Leg Of The Housing Crisis In Five Simple Charts

So maybe I shouldn't buy this $200K foreclosure?<p>Some actual actionable advice from a comment there:<p>"" If you are agonizing about whether to buy real estate now or later, maybe you'd better define "real estate"<p>It's hard to see the value in buying a "suburban middle class home in CT" right now, or a year or three down the line if/when prices dive again. You may as well rent it and save a lot of money (and headaches) if all you are gonna do is park your car, watch TV and sleep there. Call that "fake estate"<p>If you want your real property to produce anything of real value, the best time to buy was yesterday, and you could already be at work building the soil, planting fruit trees and garden beds, installing some distributed energy source like solar or wind, and improving the structure. It takes a few years at least to get this sort of thing going, especially if you are doing it after work and on weekends. Invest in infrastructure during this so-called "deflationary period" and take advantage of gov't subsidies and tax breaks for energy efficient appliances, insulation, solar panels, whatever.<p>If things really are gonna be so grim, you are probably soon going to be at best "underemployed" and maybe even a little hungry...<p>Here's another idea - rent your house, and buy some cheap agricultural land within an hour's drive or less (go in with your friends and/or family maybe and it'll be even cheaper) and lease it to an organic farmer. That property may actually appreciate quite a bit in the coming years.<p>Or if you are not cut out to be a farmer, buy a multi-unit that you can fix up, live in and rent out the other units.<p>The whole point of real estate ownership used to be that it was a factor of production, not a financial abstraction that magically provides some rate of return while you rent it from the bank. If you are not going to improve the property in some way, and realize some income from it, don't bother buying it. If all you are willing to invest in life is fiat currency, you may eventually get lucky and get it back by the wheelbarrow full, with many more zeroes on it. ""

The last point seems to indicate he thinks less new home sales volume leads to lower prices on houses in general.<p>This makes no sense to me. I see that as a good thing for home prices. If less new homes are sold then more existing homes will sell which means more demand and rising home prices.<p>The fact that there is less new home sales is just a result of home builders starting fewer communities out of realization that there is too much inventory already.

No one has mentioned this, but if you buy into the argument that the housing market is in for another downturn, there is plenty of opportunity to cash in. Not sure what the CDS market is like these days, but I know that congress hasn't got around to regulating it yet and a small number of investors made out really well by taking large positions last time around.<p>Some additional data on current housing trends here: <a href="http://www.nnnrent.com/2010/02/housing-crash-profits/" rel="nofollow">http://www.nnnrent.com/2010/02/housing-crash-profits/</a> ...charts galore too.

Take zerohedge with a HUGE grain of salt.

The ratio of existing to new homes makes sense since no one's been building the last couple of years, but that shadow inventory is definitely worrying.

<i>...the sole reason why mortgage rates have been as los as they have, has been due to the Fed's constant manpulation of the MBS market via the $1.4 trillion MBS/Agency QE purchase program. With this program set to expire in 2 months, rates are set to explode.</i><p>Uh, yes but it's old story - when the end of a program would mean the end of the economy ... the chance are they'll continue the program(duh).<p>That's not saying this crash isn't coming, it's just saying you can't be sure it will come on schedule. The US economy is becoming depend on more and more things - the state injecting money, China buying bonds. This kind of situation <i>can</i> go on, it can go on longer than you'd think. It just will eventually go under. The housing boom lasted five years. While the present ad-hoc, artificial economy seems much more fragile, we could plausibly give it a couple years to crumble. 2011, better watch out...