U.S. Stocks Fall as Housing Slump Deepens; Countrywide Drops

[NVMojo]

Sept. 7 (Bloomberg) -- U.S. stocks declined for a second day on mounting evidence that a housing slump is putting the brakes on the economy.

Countrywide Financial Corp., the biggest U.S. mortgage lender, led financial shares lower after KB Home and Beazer Homes USA Inc. said earnings will be below their forecasts and an industry group said home prices may drop for the first time since 1993.

``Housing has fallen more dramatically than anyone would have thought,'' said Linda Duessel, an equity strategist who helps manage $218 billion at Federated Investors in Pittsburgh. Investors are ``worried about an economy that is slowing more than expected.''

Federal Reserve Bank of San Francisco President Janet Yellen, who said inflation may decelerate ``faster than many forecasters expect,'' gave the market no support. Yellen also said policy makers ``must have a bias'' toward higher borrowing costs even though the pace of growth is waning.

The Standard & Poor's 500 Index fell 6.24, or 0.5 percent, to 1294.02. The Dow Jones Industrial Average retreated 74.76, or 0.7 percent, to 11,331.44. The Nasdaq Composite Index dropped 12.55, or 0.6 percent, to 2155.29.

The S&P 500 has declined 0.8 percent this month on signs of weakness in the housing market and accelerating inflation. A report yesterday showing rising labor costs added to investor concern.

more...

http://www.bloomberg.com/apps/news?pid=20601087&sid=aZtaDn4s9sKo&refer=home

and you can keep up with the Housing Bubble here:

http://thehousingbubbleblog.com/

[Joe Bacon]

1. You ain't seen NOTHING yet!

Just wait till the so-called "bankruptcy reform" starts to kick in full with people who have Adjustable Rate Mortgages! Get ready for another 1932 Bank Holiday!

[Warpy]

2. 'Fraid you're right, Joe

along with all those recent buyers who are finding themselves owing a lot more money on their houses than the places are worth, plus the unsecured credit bomb due to go off, too.

All this happening while labor is increasingly underpaid and jobs that used to feed families are disappearing overseas and you have a recipe for another very real disaster.

[Delphinus]

18. And no jobs to be had.

That has to be factored in ... although, if I can remember what I read last night, there was a story I need to find and see if it links with it.

[NVMojo]

4. the bankruptcy law was enacted right when this whole thing was

starting last year. The bastards in congress knew what was coming and gave Americans to the corporate mortgages and bankers ...

[Erika]

5. Yep

Kick them out with nothing.

[Neshanic]

3. I posted on this days ago, was ignored. It's a housing death spiral.

Was talking to developers here in Phoenix. People are walking away from their earnest money on homes in record numbers. Just taking 5 to 10 grand hits to get out of the house deal, because they know that the resale value is dropping daily. Also the developers are bcoming canabalistic, by offering more incentives and pulling the people away from earnest money in another home, and then they get a pool, appliances, better terms, cheaper house.

All the large developers are shitting bricks.

High end has dropped off completely. I have two cancelled projects. 250 homes, exclusive gated communities....client not doing them now.

[enid602]

6. 'burbs

I would think a lot of the softness will appear in the outlying areas of Phoenix, where there are few jobs but plenty of new 'drive-by' development. I hope central Phoenix will hold up better.

[Tandalayo_Scheisskopf]

7. I know this is hurting you...

And I am sorry for that, but I cannot shake the schaedenfreude that permeates all of this. All drunken sailors know that the leave has to end.

[diamidue]

8. I believe that!

"High end has dropped off completely."
...............
Here in CA, my sister told me a co-worker listed his large home for $1.2 million several months ago - the going price at the time. He said he is now down to $750,000 and still has no bidders. My sister's home and my own home are seeing their value plummet weekly from the highs back in December. We are astonished that this is happening everywhere around here, but the media appears to be willfully ignoring the magnitude of it. It has to be devastating to many.

[splat]

12. What's the media got to do with it?

I see them all over it, but writing about it doesn't fix anything. It's those guys running for office now we have to pin down to do something about it.

[KayLaw]

13. What, though?

I really think things have gotten so far out of hand there's not much that can be done.

[hatrack]

17. The media? Why, they're airing "Flip That House" on HGTV

:eyes:

[gasperc]

14. wow, now image the people that paid $1.2million

maybe they are hoping Bush will bail them out with another massive tax cut like the last one that has already cost the Tresury $2 Trillion dollars since 2001

[NorthernSpy]

9. remember when us bubbleists used to get bashed...

... by those who said that our views on inflated real estate prices, flipping, and unsound lending practices were merely an expression of our "envy" for other people's "nice homes" and lofty financial aspirations?


:eyes:


They should have listened to us.

[gasperc]

15. there should have been a crack down on adjustable mortgages

just raising rates was weak

[Porcupine]

10. Low end housing getting kicked in the crotch also.

I live in a section of N. California that had silly price inflation over the last ten years. Literally a doubling of prices in that time.

At present there is a surplus of low end rentals with no takers in site. Investers who purchased these buildings in the last five years are in a panic. Many have no cash to make improvements needed to rent and no renters in sight without improvements mades. My employer has also been destroyed in a frenzy of bottom feeding.

I'm losing my job on this any day now.

[grasswire]

21. won't those who lose their houses...

....need an inexpensive place to live?

[Porcupine]

24. Familes will contract into existing housing.

Right now I have some college students renting a whole 3 bedroom house by themselves because their families can afford it and rents where they come from make it seem like a deal.

Middle class families will contract into original houses. No longer will it be the norm for an extended family pay for 19 sleeping rooms for 9 people. Empty houses will abound in the midst of overcrowding because the minortity with the money will refuse to share or lower their rents.

Squatting is becoming more common and more sophisticated. In the winter we have squatters who check out the apartment rental ads and get keys to units. They enter vacant units after 7 pm and leave before 7 pm. Some even clean up after themselves. In poor neighborhoods people mind their own business and don't report squatters.

AmeriKa is a different place than when I was a kid. There is going to be a reaction to the continual squeeze the poor get. It wont' be pretty.

[Eurobabe]

11. Oh my watch this video Peter Shiff of Euro Pacific Capital

The US is heading for a serious recession next year. Look to the right of the main page at the videos section. (The moderator is a koolaid drinking BushBot Brew apologist.)

http://www.bloomberg.com/apps/news?pid=20601087&sid=aZtaDn4s9sKo&refer=home

[diamidue]

19. Another interesting article

American Housing Horror Show: Twice As Many Units Built Than the Demand!
by Jas Jain

......"As the Housing Over Supply Horror Show plays out over the next year or so, no one will be able to prevent the US economy from slipping and sliding into a recession, which will easily become a depression due to the Peak Debt coming into play...."

....."Soon, the US will have 20,000,000 "empty housing units year round." Construction industry will be in a depression for a very long time once the current pipeline is finished (some will not be finished, though)."

http://www.safehaven.com/article-5841.htm

[wicket]

16. Thanks for the housing bubble website link

Very very interesting (and scary at the same time).

[David__77]

20. Lie: it's "fallen more dramatically than anyone would have thought."

That is a lie. Many economists and others have forecasted this. It's plainly unsustainable. People selling are holding out for now, but eventually necessity will kick in and then prices will really start to fall. I'm waiting for that personally.

[Ishoutandscream2]

22. Glad I locked in in 2002

I know several here at my work with ARMS, living in so-called "Mcmansions," attempting to keep up with the Jones'. Actually, the community I live in is like this. And of course, they are all Bushbots.

[Barrett808]

23. Read Nouriel Roubini's blog

For scary analysis of the numbers:

http://www.rgemonitor.com/blog/roubini