Housing Bubble 2 Already Collapsing for the 99%

[marmar]

By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Testosterone Pit.

This is precisely what shouldn’t have happened but was destined to happen: Sales of existing homes have gotten clobbered since last fall. At first, the Fiscal Cliff and the threat of a US government default – remember those zany times? – were blamed, then polar vortices were blamed even while home sales in California, where the weather had been gorgeous all winter, plunged more than elsewhere.

Then it spread to new-home sales: in April, they dropped 4.7% from a year ago, after March’s year-over-year decline of 4.9%, and February’s 2.8%. Not a good sign: the April hit was worse than February’s, when it was the weather’s fault. Yet April should be the busiest month of the year (excellent brief video by Lee Adler on this debacle).

We have already seen that in some markets, in California for example, sales have collapsed at the lower two-thirds of the price range, with the upper third thriving. People who earn median incomes are increasingly priced out of the market, and many potential first-time buyers have little chance of getting in. In San Diego, for example, sales of homes below $200,000 plunged 46% while the upper end is doing just fine. But the upper end is small, and they don’t like to buy median homes [read… Housing Bubble 2 Veers Elegantly Toward Housing Bust 2]

Yet it’s going according to the Fed’s plan. Its policies – nearly free and unlimited amounts of capital for those with access to it – have created enormous wealth in a minuscule part of the population by inflating ferocious asset bubbles, including in housing. But now electronic real-estate broker Redfin has made it official: in 2014 through April, sales of the most expensive 1% of homes have soared 21.1% year over year, while sales in the lower 99% have dropped 7.6%. ........................(more)

The complete piece is at: http://www.nakedcapitalism.com/2014/05/wolf-richter-housing-bubble-2-already-collapsing-99.html

[Doctor_J]

1. No matter how they dress it up, or spin it, or try to hide it,

be it housing, or health "insurance", or mcjobs counted as real jobs, the 1% make sure the rest of us take the brunt of it. Every single time.

[riqster]

2. THIS^^*

[wryter2000]

3. I know it's anecdotal

But my very modest house in Oakland soared in value before 2008 and then crashed miserably. It's gone up gradually since shortly after Obama took office, but no bubble. I haven't seen the value drop significantly recently.

[kickysnana]

4. MN is doing OK but we have been working hard on our economy...

the Red States ie WI want to continue the recession while Obama is in office.

Early news on Al Jazera (sp). Mobile homes are making a come back where they are allowed.

[SheilaT]

6. From everything I've read or seen

there is no current housing bubble. Yes, prices have gone up in many areas, but not the kind of increase that's an actual bubble.

I bought my place in Santa Fe in 2009, and I think it decreased in value a little the first year or so, but right now I could probably sell it for a little more than I paid. Meanwhile, I have built equity -- it helped that I put 20% down -- and I can afford the payment. It also helps that we never really had a huge bubble here. Apparently, from what I've been told, the kind of predatory lending that existed in so many other places just didn't happen here.

[pscot]

5. Housing is the only free market left in America

but it's a huge one. Prices will adjust to what people can afford. A vacant house is a wasting asset.