U.S. Economy Wrecks Housing-- Forbes

[TexasLawyer]

Market Scan

U.S. Economy Wrecks Housing
Scott Reeves, 11.01.06, 4:47 PM ET

Weakness in the U.S. housing market could be turning the hoped-for soft landing for the economy into something a bit harder to deal with. Data released on Wednesday showed conditions in the housing market deteriorated in September, extending a slide that began early this year.

Interest rates in the bond market slumped, with the bellwether ten-year Treasury falling to 4.55% from 4.60% late on Tuesday. Because short-term rates are noticeably higher – two-year Treasurys returned 4.63% and three-month bills were at 4.92% – the credit markets seem to be predicting a recession.

The U.S. Commerce Department said housing starts fell for the sixth month in a row in September, and spending on all types of construction declined 0.3% following a flat August. Private home construction dropped 1.1% in September after falling 1.6% in August.

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"Overall, housing is still a huge drag and will remain so for the foreseeable future," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a research note. The number of building permits issued in September declined for the eighth month in a row, suggesting no immediate rebound in the new home market is coming.

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http://www.forbes.com/markets/2006/11/01/housing-economy-purchasing-markets-bonds-cx_sr_1101markets09.html

[TexasLawyer]

1. Lots of bad housing-related news today

Housing slump to take toll on economy
Wed Nov 1, 2006 3:50pm ET

NEW YORK (Reuters) - The U.S. housing market's slump is taking a toll on the U.S. economy and should continue to slow economic growth well into 2007.

U.S. construction spending fell an 0.3 percent in September, with private residential building dropping for a sixth straight month, the U.S. Commerce Department said on Wednesday.

"We expect the housing market correction has a ways to go, and should continue to detract from economic growth all the way through the end of next year," said Gina Martin, financial economist at Wachovia Corp. in Charlotte, North Carolina.

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http://today.reuters.com/news/articlebusiness.aspx?type=ousiv&storyID=2006-11-01T205031Z_01_N01566608_RTRIDST_0_BUSINESSPRO-ECONOMY-HOUSING-SLOWDOWN-DC.XML&from=business

[customerserviceguy]

6. The housing bubble

was caused by stupid people, bidding up the price of housing just because they thought there would be some other sucker stupider than they were, who would buy that overpriced crackerbox for even more money. Greed builds bubbles, and eventually running out of stupid people is what deflates them. The big money people got out early, they always know when they've whipped the frenzy up to the high water mark.

[Psephos]

11. Some things never change

You described the bubble phenomenon quite succinctly.

Peace.

[customerserviceguy]

19. Twenty five years in title insurance

before I became laptoprepairguy, I know it all too well.

[Deja Q]

2. If people had jobs, the housing bubble wouldn't have collapsed...

not so quickly, if not yet...

[physioex]

15. I respectfully disagree......

Although that is part of the problem, I think too many lenders gave too many people ARMs. When the interest rates reset.........well you know.

[tanyev]

3. But, but, the economy's strong! Vote Republican!

:sarcasm:

[ozone_man]

4. Should be U.S. Economy Wrecked by Housing

Where do they get these writers?

"Weakness in the U.S. housing market could be turning the hoped-for soft landing for the economy into something a bit harder to deal with."

"Weakness" in housing will eventually become a collapse of housing prices in a few years. But, it's starting finally. This will be devastating for the stock market and economy as a whole when in full swing. All that home equity loan driven consumer spending drying up that comprises 2/3 of GDP.

[kestrel91316]

5. "Strong" economy wrecks housing...................

With friends like this, who needs enemies? I'll take the "crappy" Clinton economy any day of the week.

[Akoto]

7. It isn't just the economy, at least where I live.

Down here in South Florida, the prices being charged for houses nowadays are absolutely insane. The asking prices on homes are two, three, even four times their actual worth. Half of them are in terrible shape on top of that, and people are just looking to score a buck.

They complain about stagnation in our local economy. Problem is, nobody will do anything about the price gouging on homes, so nobody can afford to move here to work. There are only so many apartment buildings around.

[Anakin Skywalker]

8. Be a Good Citizen! Spread ONLY GOOD NEWS!

Do you want to be sent to Gitmo?

[54anickel]

9. That is just the strangest headline.....n/t

[RUMMYisFROSTED]

10. It'll cost an ARM and a leg.

[Earth_First]

12. I feel awful for the folks who were talked into refinancing with an ARM...

When the Democrats regain control of our country, I'd like to see investigations into the lending practices of the mortage industry right along with the hearings and prosecutions of the criminal activity over the last 6 years.

[RUMMYisFROSTED]

13. My repub brother.

He should have listened...

[maseman]

18. Why anyone would have signed an ARM deal

while interest rates were at their lowest should be mentally examined. Yes I blame the lenders for BS advertising and probably misleading, but people need to be educated before making the largest purchase of their life.

[Neshanic]

14. HGTV new hit show. "Flip my Forclosure".

This is not going to be a "soft" landing. Cue Betty Davis quote.

[FernBell]

16. But don't forget, the mega-rich are doing great. Thank Dubya for that!!!

[radfringe]

17. yeah - the Bush Economy is a roll alright

too bad it's rolling DOWNHILL

[Gormy Cuss]

20. Headline blames the economy for weakening the housing market

but the article blames the housing market for weakening the economy.
Oddly, I think the headline is more accurate than the text -- the overall weakness of the economy has finally taken the air out of the artificial housing bubble created by keeping the interest rates low and by the use of 'creative' mortgage vehicles to allow more buyers to climb onto the mortgage debt wagon.