Despite What Cramer Said, Housing Has Not Bottomed 27 comments
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Aug. 12 (Bloomberg) -- Home price declines in the U.S. accelerated in the second quarter, dropping by a record 15.6 percent from a year earlier, as foreclosures weighed on values.
The median price of an existing single-family home dropped to $174,100, the most in records dating to 1979, the National Association of Realtors said today. Total sales rose 3.8 percent to a seasonally adjusted annual rate of 4.76 million from the first quarter and fell 2.9 percent from 2008’s second quarter.
Remember, Cramer said housing bottomed June 30th.
Jim, we haven't seen seen a decline in the second derivative. In fact, housing prices dropped by a RECORD 15.6% in the second quarter.
Record - you know, never dropped this fast year-over-year before? Yeah.
But remember Jim - you promised your viewers that it was over. That it was ok - and safe - to go back into the market. You in fact told everyone last night to buy stocks again, and you were in fact on an unmitigated pumpfest.
The facts don't bother you do they Jim? I'll lay odds you won't mention this report on your show, nor will you apologize for being wrong.
For the market to bottom it must stop going down in price. There is no indication that the rate of acceleration is even slowing, and in fact we had this embedded in the Bloomberg report:
I don’t think we’re at a bottom yet in home prices,” said Scott Anderson, a senior economist at Wells Fargo & Co. in Minneapolis. “There’s also a pretty big shadow supply of houses. People are kind of waiting for the bottom but there’s a pent-up supply out there.
He ought to know since Wells (WFC) is one of the many banks that has sent out thousands (if not tens of thousands) of NODs but then has not followed up with an actual foreclosure and resale - the event that would force them to mark their losses and eat them.
Never mind this bit of stupidity:
Home prices are falling even as a survey of economists indicates that the U.S. economy is recovering from the worst recession since the 1930s. The economy will expand 2 percent or more in four straight quarters through June, the first such streak in more than four years, according to the median of 53 forecasts in the monthly Bloomberg News survey.
Note that at the present price of the stock market it is pricing in not 2% growth for four sequential quarters but five percent, and this assumes that interest rates stay exactly where they are - that is, nothing disrupts the long end of the curve and forces rates higher (if that does happen, then P/E multiples get compressed and the "fair value" price of stocks will fall.)
Since it is effectively impossible for rates to go below zero, there is no possibility of P/E expansion from the interest rate environment - we're at the maximum.
Tout TV is at it again, despite the facts.
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Good work. Allow me to expound on a few things. I am forced to listen to the endless, mind numbing verbal diarrhea of Jim’s colleagues, ahem, all day long. At any rate, the financial industry continues to go through a flushing-out, but, the one segment that has been oddly immune if not bolstered is the financial press. Of course this is obvious, but it’s also tragic. Like its corporate cousins, the press is driven by bottom-lines, so, sensationalism is the norm, objectivity is an obstacle. We should flush out the cramers, carbrea-kuboso (sp?), and all the other dim and squeaky blowhards on TV. The failure of our system is letting them continue without reprimand and dismissal. I can remember this time last year having each of the CNBC anchors explode with optimism on TV. Now, for financial professionals and other more intelligent folk, this is easily discounted, but, some people to no fault of their own don’t do that. Like the bad executives and fund managers that fraudulently promoted their stocks/products we should hold the arbiters of information to similar standards. Cramer, w/ all his antics and marketing, undoubtedly crushed some investors akin to madoff – I say string him up by his nutz and all his incompetent balloon-heads at CNBC too.
www.thestreet.com/stor...
As for a housing market bottom, we're obviously nowhere near there, and there will be no recovery until we reach that bottom and start to climb back out. It's as simple as that.
Which is fortunate, because his understanding of financial reality is almost as thin as the average congressman's.
Read my column =
www.carliniscomments.c...
What i find to be bizarre is that they make projections that are likely to blow up on their face in the very short term. I am inclined to think that these folks, who make such absurd short term forecasts, do in fact believe their own BS. It must be a product of either sheer incompetence or of bad faith. Neither one would surprise me coming out of Washington, but hearing it on a major national network is disturbing.
What is happening now, is nothing to do with ratings and that is all that concerns Cramer.
And they are STILL sitting empty.
Bottom my arse.
On Aug 12 01:50 PM Alfredo Martinez wrote:
> I can't believe what an idiot Cramer would be to set himself up for
> failure like that. He must really believe his own press clippings
> if he thinks he can call the actual DAY of the housing bottom. I'm
> not a Cramer hater, but he's becoming more and more of an embarrassment,
> and his opinions about the current state of the economy are absolutely
> delusional.
>
> Cramer likes to brag about his record as a hedge fund manager, but
> any idiot could have been a successful hedge fund in the 1990's,
> a dart-throwing chimp could do the same thing.
>
> Until real estate prices come down to where they were about eight
> years ago, they haven't bottomed.
>
On Aug 12 01:36 PM ron_paulite wrote:
> Karl, do yourself a favor, don't mention Cramer anymore unless you
> don't want to be taken seriously.
"There are four items in place that are tricking people into calling a bottom, when in fact three of these items are temporary. The result is an artificial restriction of supply and artificial pumping of demand.
1) It’s the seasonally strongest buying season
2) There’s a foreclosure moratorium about to end
3) Federal tax credits offered for 1st time homebuyers
4) Historically low mortgage rates "
Read More: www.housingnewslive.co...
And once we get the bottom, say in 2012? When will the Fed start raising interest rates? Where will house prices go when mortgages cost 20% down and 12%? eeeek. Ya know what they say about picking bottoms, don't ya? You just get smelly fingers.
I knew deep down the housing bottom call of his was wrong, but it was a gutsy call just the same. Housing is screwed for years to come.