U.S. Housing Market Likely to Fall 1%, Hasn’t Happened Since 1930s

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The National Association of Realtors in the United States says problems in the residential property market are worse than it thought. Instead of the average, existing house declining 0.7% this year as it predicted, the drop is likely to be closer to 1%, says the NAR. Not since the ’30s has this happened, it noted.

And ‘if it weren’t for a favorable economic backdrop,’ the situation would be much worse.

A one-percent fall doesn’t sound to us like something anyone would worry about.

Meanwhile, foreclosures in April were twice their level in 2006. Warren Buffett says these problems are big problems for the people who are in the middle of them, but they’re not likely to affect the rest of the nation.

We suppose it’s a bit like being in a big battle. It’s probably exhilarating and interesting – as long as you’re not one of the people who gets killed.

Should the people pay any attention to official warnings?

Didn’t Alan Greenspan famously warn of ‘irrational exuberance’ in 1996? And didn’t it turn out that the exuberance wasn’t so irrational after all? The Dow went up for four more years… corrected in 2000-2002… and has been going back up ever since.

And remember when Carlos Menem, president of Argentina, told the world that it had nothing to worry about with the peso. “One peso, one dollar. Full stop.” We were just there; we got three pesos to the dollar.

“When the authorities tell you to do something, you should probably do the opposite,” says our neighbour, Pierre. But what if… occasionally… the authorities didn’t lie?

Yes, it would be a dirty trick… but we wouldn’t put it past them.

Bill Bonner
The Daily Reckoning Australia

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
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2 Comments on "U.S. Housing Market Likely to Fall 1%, Hasn’t Happened Since 1930s"

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Bill Gardner
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Great reading your Dailyreckoning,.enjoy it.
I am an Farmer from Australian,.wittiness our currency falling in 1998-2001 as our trusting Central Bank sold off our Kids Golds at bargan price,.like the UK.
Who brought it i wounder,.the Chinese?
We had the roughest times since i don’t know when after our grain price hit rock bottom last 2000-05,..my last year 2006 crop market prices had risen over 100%!!! we couldn’t believe it.
I also trade 1st and 2nd line Aussie Gold Stocks,..OXR,DYL,LHG,..CTO,CME,BDG&SBM.
Silver MMN.

john bonnell
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Bill –

Greenspan’s comments on irrational exhuberance turned out to be not so irrational>?? Have you considered the NASDAQ. Once valued at some 5,000 points, today it hovers around 2,500 points. Would it been rational or irrational to invest in NASDAQ at 5,000 points?

John

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