After European Home Sale numbers came out earlier this week with slightly higher performance and increases in home prices it is very disappointing to see a dramatic drop in pending home sales for the USA of 30 percent on average with higher numbers in all areas except southwestern states which have already seen dramatic cuts in new and existing home sales.
Pending sales fell by 33.3 percent in the South, 32.1 percent in the Midwest, 31.6 percent in the Northeast, and by 20.9 percent in the West.
This really is the type of number in any economy which will mean extreme hardship for many people.
Lets face it there are many people that need to sell homes for many reasons and the inability to sell the largest investment for most of us means potential bankruptcies, loss of credit rating and more then likely the loss of jobs.
This seems to be a perfect example and almost a scientific test for all of us to learn from.
Ford which did not go bankrupt but made cuts was able to work through their problems while GM which took the money to stave off a bankruptcy eventually did go bankrupt… and then put the tax payer on the line for their workers pensions, salaries and so on..
Earlier this week we saw that Europe or specifically the UK has better then expected home sales with ever increasing home prices. Their governments did not provide bailouts for specific groups of people for social economic engineering … and they did not come back and then buy those homes and give them to defaulting owners. They also did not spend over 3 Trillion dollars in less then a year.
As home owners or investors or people that work in the industry what are we suppose to tell people when the government is dangling incentives of 12K or 20K or more and then looking the other way while contracts are signed?
Actually the law says we can’t do anything as a seller.
If someone shows up with a check then you have to sell to them unless there are some extremely limited situations.
In the same sense when the President introduced the Cash for Clunkers deal no one had the forethought to restrict which vehicles could be purchased and the largest number of vehicles sold were Pickup Trucks with large engines getting 25mpg or less on the highway. At the same time they were saying that providing thousands of dollars for older vehicles would reduce emissions and our dependence on foreign oil.
Quite honestly it is a little bit scary that market analysts are saying that we can expect a second dip as large as the first when you consider most of the home building and restoration companies are on skeleton staffs or out of business.
Secondary markets such as suppliers have also been hard hit and another round of layoffs will mean even more people placed on part-time status or simply just fired.
This at a time where higher insurance costs have just started to kick in on July 1st 2010 where some people are now covered by laws that require insurance companies to cover unlimited claims and prescriptions.
It is very hard to believe that our economy will recover anytime soon.