The Mets have completed the inevitable end of their momentous slide, giving more evidence to the momentum theory.
So the question is, will the housing market go the way of the Mets, or will it rally like the Red Sox did a few years ago?
There is no shortage of gloom and doomers who are now courageously predicting a calamitous collapse of the housing market. The American psyche is being bombarded daily with negative statistics from across the country.
Most of these experts of course, are not in a position to say “I told you so”, because at the top in July 2005 they were still proclaiming real estate to be a terrific investment. Behind chief ringleader David Lereah of Are you missing the real estate boom? fame, many home-buyers were duped into buying more home than they could afford, at teaser adjustable mortgage rates. Others borrowed excessively against their homes, leveraging new debt into second and third homes. These would be flippers are now motivated sellers, and have found themselves upside down in multiple properties.
The warning alarms that go off at market tops and bottoms, are usually silent. They are there, to be sure, but really can only be confirmed as time goes on.
While government printing presses working overtime may be part of the problem, excessive extension of credit and easy money most certainly is. The subprime mess is the poster child for greed and collusion and the jury is still out as to how far the contagion of falling dominoes will spread.
So now that we are here, what do we do about it?
Stay tuned, our next blog will address that, and we may surprise you with our answer.