Its been four years in a row now that some economists have been calling the U.S. housing bottom without success. Lead contributor to Profit Confidential Michael Lombardi believes that the real estate shadow inventory and the fact that homeowners are paying mortgages worth less than the value of their homes are continued risks in the housing market.
Until these issues play themselves out, Im afraid the housing market is far from reaching a bottom here in the U.S., says Lombardi.
In the article Why U.S. Housing Prices Will Fall Further, Lombardi analyzes the economic data to back up his theory.
Looking at the Case-Shiller index, Lombardi concludes, It fell again and the economists who created the index point out that, even though the rate of the fall in home prices slowed, home prices still managed to hit a new record low.
Although there are improvements, Lombardi notes that 17 of the 20 major cities the index follows are still in a downtrend in terms of housing prices.
The other critical factor is the shadow inventory that will hit the housing market over the next few years, says Lombardi. The shadow inventory is comprised of bank-owned real estate and current homeowners who are delinquent on their mortgage payments.
The number of homeowners who are delinquent over 60 days has increased from last year, says Lombardi. The real key is how quickly those bank-owned homes will hit the market.
What is clear to Lombardi is that there are a lot of homeowners in distress in the housing market, and there are many homes in the hands of banks.
If prices were to rise, some of these homeowners will then try to sell, further putting pressure on the housing market and home prices, says Lombardi.
Profit Confidential, which has been published for over a decade now, has
been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under 300 an ounce. In 2006, it begged its readers to get out of the housing market...before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
To see the full article and to learn more about Profit Confidential, visit www.profitconfidential.com.
Profit Confidential is Lombardi Publishing Corporations free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardis current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.