Segment 1: Investing in Cryptocurrencies SEGMENT BEGINS AT 00:41 About a decade ago, trading coach Jerry Robinson was introduced to cryptocurrencies and after careful research, he decided to make Bitcoin a very small component of his overall investment portfolio....
by Jennifer Robinson | FTMDaily Staff Writer
HOUSTON, June 16
Unless you have been asleep for the past several years, you know that the United States housing market is in the midst of a downturn of historic proportions. According to Case-Shiller, one of the leading housing data analysts, housing prices dropped 1.9 percent in the first quarter of 2011, revealing evidence of a clear double-dip in prices. The fall in prices even led one economist to claim that the housing crisis has been larger and faster than the one during the Great Depression, according to a recent CNBC article.
Robert Shiller, Yale professor and leading housing analyst, stated in a recent interview that prices could even fall further, potentially 10-25% lower over the next few years. Shiller also claimed that the direction and magnitude of housing prices is harder to predict than the weather. (See the full interview with Robert Shiller).
Prices continue to spiral downward despite increasing affordability. The rate for a conventional, 30-year mortgage is around 4.5 percent, just above the historic low of 4.2 percent, which was recorded back in October 2010. The mortgage-to-rent ratio and the house price-to-income ratio are both below below their norms.
Further constraining the housing market are new underwriting standards that are making loans more difficult to attain. Four out of five mortgages now require 20 percent down, and credit history standards have become more restricting to potential buyers.
What does all this mean for you? Well, if you are looking to enter the home buying market, or if you are a real estate investor, here are seven vital (perhaps shocking!) facts about the housing market to keep in mind before making any decisions.
1. Zillow has announced that the average price of a home in the U.S. is about 8 percent lower than it was a year ago and that it continues to fall about 1 percent per month.
2. U.S. home prices have now fallen a whopping 33% from where they were during the peak of the housing bubble.
3. New home sales in the U.S. are now down 80% from the peak in July 2005.
4. Historically, the percentage of residential mortgages in foreclosure in the U.S. has tended to hover between 1 and 1.5 percent. Today it is up around 4.5 percent.
5. During the first quarter of 2011, fewer new homes were sold in the U.S. than any three month period ever recorded.
7. 4.5 million home loans are now either in some stage of foreclosure or are at least 90 days delinquent.
Many individuals will look at these statistics and get scared…and that is OK. However, this time period (and perhaps even in the months ahead) could represent one of the greatest buying opportunities in the housing market. Rates are near historic lows, and prices are continuing to drop. If you plan to rent out a home, or if you are already a landlord seeking new properties to rent, then this is a lucrative time for you. Rents are rising in comparison to mortgage payments in many parts of the country (find data on your metro area). I suspect that they will continue to rise as we move forward.
I remember my husband Jerry talking about this issue during 2008 and 2009. Jerry even wrote in his 2009 book, Bankruptcy of Our Nation, that a second wave of the housing crisis would come crashing down on the nation during 2011. In fact, here is an excerpt from a chapter of his book:
2009-2011 will bring more pain to many U.S. homeowners and the U.S. mortgage industry. For example, Option ARM’s (Option Adjustable Rate Mortgages) were sold to prospective homeowners with the use of low teaser interest rates. These lower teaser rates allowed homeowners to buy a more expensive home than they could actually afford. Many of these low introductory interest rates will begin resetting to higher rates in 2009 and these resets will continue through 2011. These higher rates will mean higher monthly mortgage payments for millions of Americans in the middle of a severe economic crisis. Additionally, the implosion of many Alt-A loans (Alternative A) are going to present a serious challenge to the housing market in the near future. Expect many more mortgage defaults and foreclosures in the coming years.
As Jerry has been saying since the beginning of the "economic recovery", we have not seen the worst yet. The data on the housing market is further proof that we are not in a recovery at all. Do not let your guard down when the mainstream media tries to sell you on the "recovery". Instead, continue to educate yourself and prepare yourself and your family for the economic hard times that are in store for the nation. Having a plan and executing that plan is the only way to put a bright spot in the economic gloom we see on a daily basis, and here at FTMDaily, our mission is to bring you strategies to help you weather the storm.
Here at FTMDaily.com, we are working hard to create solutions for you during these difficult times of economic crisis. We invite your feedback and comments on how we may serve you better. Feel free to contact me directly at email@example.com.
In The News Today…
1. MARKET WATCH: Stocks rose on Thursday as a mixed batch of data failed to deter buyers looking for bargains after a more than 7 percent selloff in the last few weeks. New US jobless claims fell to 414,000 on the week ending June 11, a decline of four percent from the previous week and US housing starts grew more than expected in May, rebounding 3.5 percent from April. Developments in Europe could define the market's direction. Treasury prices gained on Thursday, pushing short-term yields to the lowest levels on record as confidence in the political will to address Greece’s colossal debt burden deteriorated and drove investors toward the traditional safe haven of U.S. debt.
2. OWNING THE NEWS: According to an analysis of federal personal financial disclosure documents by the Center for Responsive Politics, about 60 U.S. senators and representatives, or their spouses, hold assets in at least 19 different news organizations or media conglomerates.
3. HOUSING WATCH: Builders broke ground on more new homes in May, but not enough to signal a recovery in the troubled housing market. Home construction rose 3.5 percent from April to a seasonally adjusted annual rate of 560,000 units per year, the Commerce Department said Thursday. Fixed mortgage rates stayed roughly flat after falling for eight weeks. The average rate on the 30-year loan ticked up from a yearly low of 4.49 percent to 4.50 percent, Freddie Mac said Thursday. The average rate on the 15-year fixed mortgage, a popular refinance option, fell to 3.67 percent from 3.68 percent. That's a low for the year. Most people can't take advantage of the low mortgage rates because they can't meet tougher lending requirements.
4. INDIAN RATE HIKE: The Reserve Bank of India on Thursday hiked interest rates for the tenth time in 15 months, lifting its key repo rate by a quarter point to 7.50% as it noted inflation pressures persisted even amid recent signs of cooling in the economy.
5. OIL WATCH: Oil prices steadied Thursday after recent sharp losses as traders tracked the Greek debt crisis, positive US data, an Indian rate hike and a demand upgrade from the International Energy Agency. New York's main contract, West Texas Intermediate (WTI) light sweet crude for July delivery, slipped 11 cents to $94.70.
Jennifer Robinson is the National Director of the Christian Advisor Referral and is a Managing Editor of the FTMQuarterly Newsletter. She is a business owner, writer, and holds her Master's degree in Finance.