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The Real Estate Bust Part 2 (Plus A Resurgence In Mining Stocks) – Dave Kranzler

Friday, October 16, 2015 12:41

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(Before It's News)

We’ve seen a big slowdown” said RE/MAX Unlimited realtor Ronda Courtney. “I have a listing that I’ve had to reduce twice in the past month…Sellers are starting to chase the market down,” said Anthony Rael, chairman of the market trends committee with the Denver Metro Association of Realtors. – The Denver Post – Link1, Link2

TND Guest Contributor: Dave Kranzler |

Kerry Lutz of The Financial Survival Network invited me back on his show to discuss the housing market and mining stocks. The housing market since 2010 has experienced what can at best be described as a “dead cat” bounce from its plunge that began in late 2005/2006. This was to be expected given the trillions thrown at the housing market by the Fed and the Government.

While YTD in 2015 home sales overall are up a bit from 2014, home sales volume actually declined if you compare 2015 to 2013. The only reason 2015 is up vs. 2014 is that FNM and FRE reduced their down payment minimum from 5% to 3% in January and, along with the FHA, all three agencies reduced the amount premium payment required to fund mortgage insurance for low down payment mortgages (i.e. down payments under 20%).

Furthermore, the primary component of the sales volume this year has been individual “retail” investors looking to generate rental income or to flip.

As we discuss in the podcast, this is the “retail” investor dynamic of “piling at the top of a market” after the sophisticated money has decided to sell, as the institutional fund money has disappeared from the market and many funds are now looking to sell part or all of their rental portfolios in response to a failed business model.

I will have a lot more to say about the housing market in the weeks ahead, but suffice it to say that, unless the Fed can push mortgage rates a lot lower and the Government uses even more taxpayer money to subsidize new home buyers, the housing market is about to shock a lot of people to the downside.

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About Dave Kranzler:

I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics. Occasionally, I publish on Seeking Alpha too. As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.