Posted by
Contrarian Guitarist on Thursday, May 29, 2008 3:21:43 AM
I recently was reminded of a gag David Letterman did on his show back in his NBC days, that of an actual face-to-face duel between a humidifier and a de-humidifier. Clever bit. I'm afraid I can't recall which won.
OK. I believe we will see some softening of commodity prices. Oil, precious metals, grains, pork bellies (whatever those are). I agree with George Soros (first time for everything) that we are experiencing a
commodities bubble. Bubbles burst.
It seems though in the meantime that everything is up. The cost of living is way up. Right? Or is it? What are most households largest expense? Their monthly rent/mortgage payment. A lot of emphasis has been placed on homeowners in trouble, what about renters who are going to buy in this buyers market. But houses are cheaper this year than they were last year.
About 14%. If you can get into a $300,000 house at a 14% discount, you are saving around 42,000 smackeroos. That'll buy a lot of gas, gold, milk, eggs, tortillas, wood for the deck, metal for the shed, and still have some left over for the kids college education. Some areas have seen a much greater drop in prices, in other words "deflation". We are in a the midst of inflation-deflation duel.
Factor into that much lower interest rates (heck the Fed rate is down 60% in a year) and the savings is much greater!
If you add new home sales of about
1.2 million to existing home sales of about
6.1 million, that's 7.3 million projected in the next 12 months. What percentage of those are first time buyers? Don't know.
I imagine if we ran the numbers, over all, spread out over everyone, costs are down. This is why we don't have a technical recession. Banking turmoil rarely results in recession. Not in my lifetime anyway.