Remember Cramer said: Housing will turn in June of this year.
Borrowing costs have soared as bond yields have risen, even as the Federal Reserve has sopped up hundreds of billions of dollars in bonds to keep rates low and stimulate the housing market.
The average 30-year fixed mortgage rate jumped 0.32 percentage point in the June 5 week to 5.57 percent. That was nearly a full point above the record low rate of 4.61 percent in March, the trade group said.
That's a serious problem. And Cramer is not the only one who has staked "their life" from an economics perspective on such a claim - the group who have done so includes Ben Bernanke, Treasury and President Obama.
But this is what the MBA says:
"I'm not optimistic for 2009 or 2010," Mark Goldman, real estate lecturer at San Diego State University and mortgage broker, said on Tuesday.
The swift percentage point rise in mortgage rates cuts the purchasing power of a borrower by about 10 percent, he estimated.
"Employment is still bad, wages are still low, interest rates are up. That's going to hurt the housing market," said Goldman.
Right.
But remember folks, without the housing market there is no economic recovery. Those jobs in construction and similar trades, including the "FIRE" economy (Finance, Insurance and Real Estate) that led to big earnings to support stock prices rely on housing turning around, and defaults ceasing.
They're not going to. They can't - The Fed tried to do the impossible - move interest rates lower.
They failed, and proved once again that they follow the market, not lead it, and that the so-called "determined central bank" simply got steamrollered by fiscal irresponsibility and investors saying "nuts!" to the folly in Washington DC.
The sputtering coming from analysts who pinned their entire thesis on a housing recovery for the stock market and economy in general is rather amusing to watch, and the sheeple who are piling back into equities when the foundation of what they were sold washes away like as sand castle in a tsunami has a known outcome - its not pretty. Picking up fish on the newly-denuded sand looks like a good idea only so long as you don't glance upward and see the 50' high curler roaring over your head.
Commodities have skyrocketed on the premise that "its all going to be ok" - so people are piling back into oil in particular.
But the thesis underlying that premise was that housing would bottom in June of this year. Clearly, that is now known to be wrong.
I have maintained that our "best case" scenario has housing flattening out sometime in 2011. Oh sure, the second derivative (rate of deterioration) will decline before then, but a bottom this year, this month as you were promised by Cramer and others, leading to a durable economic recovery later this year or early in 2010?
Bah.
