Monday, 28 November 2016
I cannot predict the future, but I can tell you of the past.
In 1980 America had Jimmy Carter, and things were bad. Very bad. If you had a job, it was low-paying. If you needed a mortgage it was 19%. Stagflation, misery index became 'the new normal.'
- Ronald Reagan inherited a real mess.
In 2008 (and again in 2012) America had Barry Soetoro alias Barack Obama, and things were bad. Very bad. Buh-bye jobs...95 million workers don't have jobs. Despite ZIRP and NIRP, good luck getting a mortgage without a job...or as a waiter/burger-flipper. Food stamps/EBT and poverty became 'the new normal.'
- Donald Trump has inherited a real mess.
Now, just like then, you can't see the forest for the trees.
See the Trees
You thought I was talking about ObamaCare didn't you? No, housing is even MORE unaffordable than healthcare.
- It now requires 45% MORE income than it did four years ago to buy a home to live in (if you need a mortgage, and you need a job to get a mortgage).
Assuming you have the standard 20% cash down, stellar credit, and a job (sometimes I crack myself up):
- To buy an average $274K existing home you need an income of $53K.
- To buy an average $361K newbuild home you need an income of $65k.
[With less cash down, or worse credit, you need MORE income and will pay a higher interest rate].
See the Forest
The attached Case-Shiller graphs of the last "housing bubble vs. today" tells us a LOT.
- Buckle up
- Put on a helmet
- Consider buying a nice RV to live in
What am I talking about?
- In 1927 a land-speculation boom went bust (starting in Florida and going nation-wide), and by 1929 the stock market crashed giving us the Great Depression which lasted until WWII.
- In 2007 the liar-loan/subprime boom went bust and the stock market dumped in 2008, giving us the Great Recession which has not yet ended.
- Now look at Case-Shiller's housing data again with fresh eyes and consider "what's next?"
From Theo Spark at 10:12