The Housing Market Is About To Take A Hard Drop

For any of you thinking that your underwater mortgage is now covered by the value of your home or for those who were thinking they would take advantage of the housing market "recovery" and sell, you better take a look at facts. The facts are not what is being reported to you by the Government, Wall Street or the various housing industry associations. The facts are what you have to dredge up by wading the through the details of housing market reports. You have to go well beneath the surface of the headline media reports and fluffed up news broadcast sound-bytes.

It just so happens that I have done that and have been doing that. And just like I warned people in 2004 that the housing market would collapse - which it started to do in mid-2005 - I am warning everyone again that the housing market is about to take a long, hard drop.

How do I know this?  Because I look at the actual data that is being reported by homebuilders. The actual data buried in the bowels of their SEC filings. To begin with, the upper management of just about every single publicly traded homebuilder has been dumping stock en masse. They are not buying their shares. They are either taking their stock and option bonus awards - which get filed as a purchase - and dumping them as soon as they are allowed by law or they are dumping shares outright. I publicly challenged an official at Pulte Homes to have himself and his management cronies take after-tax cash from their bank accounts and buy shares outright. That was about two months ago. Not only did he not get back to me but, in fact, insiders there are dumping. Look for yourself:  Stock Bonus At Zero Cost Dumped At $18.35. They are all doing this.

For those of you looking to sell your home thinking it is worth what a broker might have quoted you three months ago, forget about it. Prices of new and existing homes are falling - not year over year as reported - but sequentially month to month, starting in the early summer. It is the latter data that is relevant - not the latest month's data vs. the same month last year. My links above have some of the data to prove that. In addition, you may have noticed more "for sale" signs popping up. This shouldn't be happening in December but it is - at least all around Denver. I have received emails from all around the country with readers telling me they see the same thing where they live. My bet is that there will be a deluge of homes listed for sale in early 2014, after the dust settles from the holidays. Prices are going much lower.