More Evidence Of A Goshdarn Double Dip Recession In Real Estate

Okay. Here's what you might hear on the news this evening. Or, you might read it in the newspaper on Wednesday.

But remember, you heard it here first. (Finally, I get to scoop the St. Petersburg Times!!!!)

Numbers just released about noontime today indicate that existing home sales took a 2.2% dip in May compared to April. That's a big goshdarn drop in one blanketyblank month. (Remember, this a a G-rated blog.) That number is for the nation as a whole, not just for Pinellas County. Think it is serious? The housing news drove the Dow down about 150 points this afternoon on fears that housing will lead the country into the aforementioned double dip recession. So, I'd say the news was devastatingly bad. And remember, this is on top of that terrible report last week about new home start-ups taking it on the chin in May as well. So, both new construction contracts and existing home sales fell sharply in May. Dadgumit!

If you read my last story about a double-dip recession for real estate, I kinda played it down and was hopeful that it was just the pessimists in the world who were seeing the dark side of things and concluding that the real estate market was once again sinking into a recession.

Well, this drop in sales -- and the size of the drop was much larger than expected -- may indicate that my optimistic hopes for real estate may be wrong. Here's why:

• We have a weak economy that is not improving as rapidly as the President would like.
• We have huge unemployment.
• We have funky things going on in Europe with their euro currency and sovereign debt.
• Many European countries are about to have a big austerity program which will restrict their financial ability to buy much real estate here.
• Loads of houses are still on the market nationwide and millions of people are upside down in their current mortgages so they can't sell their house and buy a new one.
• Mortgagees are holding hundreds of thousands of homes off the market. When they release these homes for sale, the danger is that those homes will drive prices down even farther.
• Bankers still continue to make it very difficult for mortgage holders with distressed properties to close a sale -- which is why I read recently that only 1 in 10 short sales successfully close. (Frankly, I don't know if that statistic is accurate, so don't quote it too much.)
• And, on top of all this, the United States is going to see higher taxes beginning in 2011 so people will be taking home even less income.

Boy, this does sound kind of gloomy doesn't it?

Happy Selling!

-30-