One-Two Punch To Housing
Good thing Jim Cramer called the bottom in housing a year ago. The latest economic data for housing is out and it’s not pretty.
First, mortgage applications have dropped to a 13-year low. This is the pure result of the tax credit ending. Tax credits and incentives do not create demand, they move demand. In this case, the tax credit moved demand forward which creates a void when the incentive ends, thus a 13 year low in mortgage applications.
Second, delinquincies and foreclosures are still rising. I think we’re now into the game where people are voluntarily walking away. The whole strategic default thing. More on this in the article tomorrow Friday.
Deflation is alive and well in the land of housing.