United States of Bubble Makers
At breakfast today the Fox morning show reported that “pending home sales plunged a seasonally adjusted 16% in November, the first drop in 9 months”. They then switched to another news blurb.
We wondered…. what would cause a drop like that? We couldn’t think of any reason. But I now know why…
"Pending home sales plunged a seasonally adjusted 16% in November as a highly popular tax credit for first-time buyers was set to expire on Nov. 30, the National Association of Realtors reported Tuesday.
Basically, the government bribes of future generation’s money if they just bought a house today ran out.
Unfortunately, the government doubled down on the subsidy – extending it through mid-year 2010 and expanding it to people who had already bought a house in the past.
The unfortunate news is that this confirms that the housing market still has plenty of fall in it once the government bribes expire (and they will).
So the housing game, yet again, becomes a “time the bubble popping” game. Good luck.