While all the world's investors are focused on what's happening in the Middle East and Japan, they should take a look at the state of US housing. If housing is the barometer of an economy, you can hear the warning bells of another recession.
US home sales have fallen 17%, and 57% across north east America . No one is buying and the collapse threatens to crush any bit of recovery in the US economy. No one is expecting a recovery until 2013 at the earliest.
Vacancy rates are soaring. People are being thrown out of their homes and the banks are foreclosing. Astonishingly, the US Census Bureau last week revealed that nearly 18% of houses in Florida are now vacant. That's 1,567,778 homes now standing empty.
Celia Chen, a housing market analyst for Moody's Analytics says it's all caused by houses that were ridiculously over-valued during the boom times, and by the recession which has not actually gone away. Alarmingly, she says Las Vegas home prices will not return to their pre-recession peak until after 2032. In Phoenix, the rebound will take until 2034. And Salinas, California, and Naples, Florida, prices will not come back until sometime around 2038. Notionally, Moody's says house prices won't recover until 2021. So in other words, don't expect any recovery in the US economy for at least another 10 years, maybe even 25.
Housing led the US out of seven of the last eight recessions. This time, it may kill the recovery because the housing market and broader economy are closely intertwined.
When the crisis with Libya blows over, when Japan is powering along on its rebuilding, investors around the world will start to realize that.
The housing stats coming out of America tell us that the US is sliding back into recession and the American government, burdened with debt, is powerless to stop it.
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