Housing Bubble 2 Already Collapsing for the 99%

[marmar]

By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Testosterone Pit.

This is precisely what shouldn’t have happened but was destined to happen: Sales of existing homes have gotten clobbered since last fall. At first, the Fiscal Cliff and the threat of a US government default – remember those zany times? – were blamed, then polar vortices were blamed even while home sales in California, where the weather had been gorgeous all winter, plunged more than elsewhere.

Then it spread to new-home sales: in April, they dropped 4.7% from a year ago, after March’s year-over-year decline of 4.9%, and February’s 2.8%. Not a good sign: the April hit was worse than February’s, when it was the weather’s fault. Yet April should be the busiest month of the year (excellent brief video by Lee Adler on this debacle).

We have already seen that in some markets, in California for example, sales have collapsed at the lower two-thirds of the price range, with the upper third thriving. People who earn median incomes are increasingly priced out of the market, and many potential first-time buyers have little chance of getting in. In San Diego, for example, sales of homes below $200,000 plunged 46% while the upper end is doing just fine. But the upper end is small, and they don’t like to buy median homes [read… Housing Bubble 2 Veers Elegantly Toward Housing Bust 2]

Yet it’s going according to the Fed’s plan. Its policies – nearly free and unlimited amounts of capital for those with access to it – have created enormous wealth in a minuscule part of the population by inflating ferocious asset bubbles, including in housing. But now electronic real-estate broker Redfin has made it official: in 2014 through April, sales of the most expensive 1% of homes have soared 21.1% year over year, while sales in the lower 99% have dropped 7.6%. ........................(more)

The complete piece is at: http://www.nakedcapitalism.com/2014/05/wolf-richter-housing-bubble-2-already-collapsing-99.html

[Erich Bloodaxe BSN]

1. We never recovered after bubble 1.

I hope that means we don't get touched by bubble 2 either, but 'm also cynical. I'm only 4 years out from having the place paid off, so I'm not 'underwater', but if I were to try to sell, I'd probably end up having to sell at a 20% or more discount or so from where I bought in '99.

[Puzzledtraveller]

2. I never had a doubt

we would see this again.

[socialist_n_TN]

3. Well, bubbles (asset inflation, then a collapse) have always been.......

a part of capitalism. That these bubbles are coming closer and closer together is what happens during end stage capitalism. Along with imperialism and wars between capitalist blocs over market share and dwindling resources.

As Trotsky once said it's a choice between socialism or barbarism.

[xchrom]

4. du rec.