Quote of the Day
"If that doesn't pan out, I've got the
Macro Effects of the Housing Slump
When Builders Go Broke. “Homebuilders [who] have filed for bankruptcy in the past several months include Neumann Homes, Levitt & Sons (LEV), Tousa (TOA) and Kimball Hall… Still operating, industry leaders DH Horton (DHI), Pulte Homes (PHM), Lennar (LEN), and Centex (CTX) are losing money, too. Any turnaround seems far off… Home starts in May fell 32% from a year earlier… Neumann's creditors may never get their money back, subcontractors forced under by the failure of their biggest client, villages like
Worst Of Both Worlds. “Rising energy prices are putting pressure on American wholesalers to try to raise prices, data for May showed Tuesday, but with the housing market mired in post- subprime doldrums and creating a drag on the overall economy, it will be increasingly difficult to make them stick. [More] evidence that the American economy has entered a period of stagflation, with recessionary and pricing pressures combining to squeeze consumers. [Now] the Federal Reserve, can neither raise rates to combat inflation without hurting growth prospects, nor lower them to aid the economy without hurting the dollar and putting upward pressure on prices.” (Forbes, June 17th)
Avoiding A Lennar Meltdown.
Bankruptcy Rising Among Seniors. “American Association of Retired Persons’s [AARP] Consumer Bankruptcy Project: Swamped by debt and rising medical bills, elderly Americans have been seeking bankruptcy-court protection at sharply faster rates than other adults, a study to be released today indicates. From 1991-2007, the rate of personal bankruptcy filings among those ages 65 or older jumped by 150%. The most startling rise occurred among those ages 75-84, whose rate soared 433%... Elizabeth Warren, a Harvard Law professor and co-author of the Consumer Bankruptcy Project study: "In past generations, older Americans were more financially secure. Now, instead of going into retirement loaded with assets, Americans are hitting their retirement years loaded with debt." (Big Builder Online, June 17th)
Single-Family Housing Permits Slide 4 Percent. “Census Bureau: Housing starts fell 3.3%, to a seasonally adjusted rate of 975,000, compared to the previous month. Year-over-year, total starts are running 32.1% behind May 2007. Permits, a forward-looking indicator of building activity, also slowed. Compared to April's figures, total building permits dipped 1.3%, to a seasonally adjusted annual pace of 969,000. This level of activity is more than one-third (36.3%) slower than April 2007... In terms of single-family numbers, those permits sank 4% to 623,000. That represents an (ouch) 41.4% year-over-year drop. Regionally, single-family building activity as measured by permits dropped everywhere but the West, which posted a 0.7% gain.” (Builder Online, June 17th)
Boomers Plan to Stay in Current Homes. “AARP study: The formerly vibrant new-home buyer market of empty-nesters has decided instead to feather their current nests. Nearly one-third of middle-aged and older Americans say they are making changes to their current homes so that they can live in those homes for longer rather than buy a new house or downsize to an apartment… This group does not appear to be worried about losing their homes, [rather] about the effects of the housing slump and foreclosure crisis on their neighborhoods (64%) and the
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