Saw some very interesting comments this morning from John Mauldin's newsletter and from Professor Nouriel Roubini of NYU. At this time, the fall in the housing market suggests to them that the US could be in for the worst recession (if not outright depression) since the Great Depression 77 years ago. Consider these points:
1. Approx 30% of all employment is related to housing, including contractors, building materials, real estate brokers and agents, and employees in the mortgage finance industry.
2. Still more people are employed by furniture and home appliance manufacture.
3. Guess who buys more Ford trucks then anyone else? Contractors.
4. The economic expansion of the last few years was powered primarily by home refinances.
5. This year the cost of borrowing for nearly 1 trillion dollars of ARM's is rising sharply.
6. Next year nearly the borrowing cost of nearly 1.8 trillion dollars of ARM's will rise sharply.
7. Rents are increasing to keep pace with the cost of construction.
8. The same indicators are occurring in Europe.
Hang on to your hats, this may be a wild ride. If you have the cash available when the roller coaster hits bottom it will be a good time to buy real estate.
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