Tuesday, January 01, 2008

Happy 2008! Buckle-up, this is going to be one scary ride down.....

I read this article over at the Wall Street Journal Online and made a few comments, along with many others who commented as well. Everyone is trying to figure out how and when housing is going to land. I am concerned by those same issues, but I consider housing to be but one of the major economic issues we need to think about. Housing is the fuse, the question in my mind is when will the bomb blow-up and what other components of the economy will be destroyed along with the housing bubble?

http://blogs.wsj.com/economics/2007/12/31/will-home-prices-hit-bottom-by-june/

My post from the WSJ Online:

"Some macro-trends that very few seem to be considering as it relates housing demand and valuations:

1. Retiring baby-boomers and their changing requirements for housing. In my opinion, likely to only further aggravate and put downward pressure on single family residences.

2. Recession? Stagflation? One or both are underway. A lot of consumer spending activity will dry up from the combination of evaporating equity in real estate in conjunction with higher costs for everything from gasoline to simple commodities and food products. Also need to factor in the prospect of severly declining employment levels as corporate earnings fall short and companies start adjusting workforce levels in an effort to prop up earnings and better align capacity with falling demand. I’m sorry, but I don’t believe that increasing exports will materially offset declining domestic demand.

For what its worth, my personal projection (primarily based on midwest perspective) is that a bottom won’t be seen until deep into 2009 at best, and that assumes no recession/stagflation/inflation impacts. If any or a combination of those occur, we could easily be looking at a scenario where real estate markets don’t begin to significantly recover until well after 2010."

I may be somewhat more of a pessimist on this than many others, but I do believe the mainstream Wall Street media has a lot invested in fooling the innocents into thinking that things are not as bad as they really are. I am simply trying to read between the lines to obtain a more balanced perspective of just how much potential trouble we are facing. I personally do not expect politicans and Wall Street professionals to be sincere and honest in their perspectives.

Let me know your thoughts.

Vito Boscaino

No comments: