Well things just keep getting better.
Just to offset all this European focus lets take a peek at US real estate.
And its the same story in both Commercial and Residential – a small bounce in demand and value, which was trumpeted from the tops of sky-scrapers as ‘THE RECOVERY IS HERE’, turns out not to have been anything of the sort. In fact, it was exactly what sceptics claimed all along – stimulus and tax credits for buyers had merely pulled forward what little demand there was.
Now that tax credits and other government subsidies are drying up and ending Commercial Real Estate is almost as LOW as it was in October ’09. In other words we are very nearly back down at the crisis rock bottom. So could some ‘smartest guy in the room’ please point out to me the ‘recovery’ bit of this?
Expect a LOT more regional banks to die in the next few months. And I do mean a LOT. Expect the FDIC to go bankrupt again as the losses on ‘perfectly’ solvent banks keep turning out to be massive.
In US Residential the picture is not much better. Despite low interest rates applications for first time buyers is at its lowest level for 13 years. Applications have decreased about 20% in the last month and the rate is accelerating as it nears the ground. Known as a nose dive.
With all the states in absolutely dire financial positions, their state pension plans dying on their knees and tax take looking drier than Death Valley in the summer time – all is definitely not well.
UPDATE – the Fed just announced it has rejected a planned sale of housing related assets – now there’s a surprise! What did I say – There will be no stimulus withdrawal, no ‘exit strategy’ because there has been no recovery. Any ‘Exit’ would mean un-plugging the patient. Instant death.
Sure Europe has Greece about to fall out of the Euro and restructure its debt, and we have Spain, Portugal and Italy, sure…
But is it fair that Europe should hog the lime light. After all the US has Fannie and Freddie. How many TRILLIONS are they now? What are they going to do – start buying again? Another stimulus?
There’s room in the spotlight for us all. Come on down.
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