The worst is yet to come for the U.S. housing market.

The jump in 30-year mortgage rates by more than a half a percentage point to 6.74 percent in the past five weeks is putting a crimp on borrowers with the best credit just as a crackdown in subprime lending standards limits the pool of qualified buyers. The national median home price is poised for its first annual decline since the Great Depression, and the supply of unsold homes is at a record 4.2 million, according to the National Association of Realtors.

?It?s a blood bath,? said Mark Kiesel, executive vice president of Newport Beach, California-based Pacific Investment Management Co., the manager of $668 billion in bond funds. ?We?re talking about a two- to three-year downturn that will take a whole host of characters with it, from job creation to consumer confidence. Eventually it will take the stock market and corporate profit.?

It?s official. Mark your calendars. The crash of the U.S. economy has begun. It was announced the morning of Wednesday, June 13, 2007, by economic writers Steven Pearlstein and Robert Samuelson in the pages of the Washington Post, one of the foremost house organs of the U.S. monetary elite.

Pearlstein?s column was titled, ?The Takeover Boom, About to Go Bust? and concerned the extraordinary amount of debt vs. operating profits of companies currently subject to leveraged buyouts.

In language remarkably alarmist for the usually ultra-bland pages of the Post, Pearlstein wrote, ?It is impossible to predict when the magic moment will be reached and everyone finally realizes that the prices being paid for these companies, and the debt taken on to support the acquisitions, are unsustainable. When that happens, it won't be pretty. Across the board, stock prices and company valuations will fall. Banks will announce painful write-offs, some hedge funds will close their doors, and private-equity funds will report disappointing returns. Some companies will be forced into bankruptcy or restructuring.?

Further, ?Falling stock prices will cause companies to reduce their hiring and capital spending while governments will be forced to raise taxes or reduce services, as revenue from capital gains taxes declines. And the combination of reduced wealth and higher interest rates will finally cause consumers to pull back on their debt-financed consumption.

Scottacus wrote:
Quote:

Yeah, that'd be a great way to bury the information so no potential suckers...errr, I mean RE buyers, might read current news on the RE crash

Or maybe it would just be a way so that people who aren't obsessed with real estate can carry on other discussions on JCList without having to wade though 90 real estate related threads. It's not like this board is primarily focused on real estate.

Threads exist for a reason -- so that people who are interested in a topic can find it and those who aren't don't have to wade through irrelevant messages.

Yeah, that'd be a great way to bury the information so no potential suckers...errr, I mean RE buyers, might read current news on the RE crash

Scottacus wrote:
I think the name thing was more of a play on words than a non sequitur.

I do agree with skwirriking that since there is already a (quite long) thread on the health of the RE market, it would probably be nice to keep posts on that subject in that thread.

The two shills for the Real Estate Industry could not possibly come across any more sleazy, wormlike, and disgusting. Not only is their analysis incredibly stupid, their unprofessional behavior is embarrassing. This is who the RE industry trots out as their "economists". Pathetic.

Major hat-tip to Diana Olick at CNBC for doing five questions with HP. It's gotta be tough to do her job folks - by reporting the truth about housing, she's now being shunned by some of the REIC top dogs, and as she calls herself in the HP interview, is the "Usama Bin Laden of real estate" to the REIC.

But in the end, what do reporters get paid to do? You got it - report the damn truth. And the truth of this housing crash doesn't allow for sugar coating and spin anymore - well, unless you're the NAR and Lawrence Yun of course.

Check out her CNBC real estate blog for more insights into the housing market, and also her role as a reporter for America's leading business news station. Good stuff, good blog.

Here's the HP interview, in its entirety. I hope you join me HP'ers in welcoming Diana to the blog, and thanking her for her hard-edged reporting.

______________________

HP: Do you feel the Real Estate Industrial Complex attacks on the media's role in popping the housing bubble are fair?

DO: Absolutely not. I can't speak for everyone, but I report numbers, facts, statistics and on-the-street evidence.

I find that the REIC is ready to blame me no matter what I say. Last year I was "a shill for the Realtors, helping to pump up the market." This year I'm the Usama Bin Laden of real estate, blowing the housing market to bits with my reports.

CEO's of the major public home builders who were jumping at the chance to get on our air 18 months ago, are now shirking us with force, and when I argue, they say I make them all look like fools. This, after I did several pieces on all their buyer incentives...which one could argue is better than a commercial.

HP: Many in the media were cheerleading the bubble on the way up (remember the infamous Time Magazine housing cover?), and quoted NAR press releases as news. Just as many in the media jumped on tanks and ra-ra'ed the Iraq war. How would you rate the media's performance during the housing bubble and crash?

DO: I do my best, but look, the overall media jumps on whatever the hype-du-jour is. They have to because that's what the bosses want.

I have read some stuff out there about housing that is just positively false. During the subprime meltdown I watched a lot of material from local reporters and even network correspondents who clearly didn't fully understand the issue.

To be fair, the mainstream media is just that, mainstream, and having been one of those for many years, I know it's very hard to jump into a complex issue, often given one day to do it, and not just follow the hype.

The mortgage market is extremely complex. I have the advantage of being a specialist at a business channel, so I have more time to learn as much as I can about the sector.

HP: Many "analysts" are predicting the housing crash will finish up this year. What do you think?

DO: I think housing is a tricky storm and a slow moving one at that. Housing will recover of course, but it will do it locally and anecdotally at first. There is still a lot more fallout from readjusting ARMs and subprime loans.

I expect things to look better in 2008, but I wouldn't look for any dramatic improvements, overall nationwide, this year.

HP: What do you think about the housing bubble blogs? Do you read them yourself? Do you think they've played a role in deflating housing expectations and the bubble?

DO: I think blogs are wonderful. I have one myself (http://realtycheck.cnbc.com/), but the fact is that blogs are opinion and just that.

Many blogs include data and can be very informative, but as with anything, check the source, consider the blogger, and be careful.

I've learned a lot from blogs, I've also found some blogs to be wildly inaccurate. I don't, however, think that blogs are mainstream enough in the real estate market yet to have a profound effect on current sales. I say yet.

HP: What's the chatter at CNBC? I assume almost everyone there owns a home - are you getting any pressure to lighten up on the real estate crash, since it's costing everyone there some money? And do you think reporters like yourself should have to disclose whether they have real estate investments when they do a real estate article, just as they do with stocks?

DO: Well thanks for the compliment, but I don't think anyone truly believes that I can move the real estate market.

No, nobody at CNBC has told me to dial up or down on anything. As I said before, I report data, I interview experts, industry professionals and corporate leaders. I chat it all up in my blog, but on TV I am a reporter, and I do my best not to skew anything any specific way.

Look, I own a house. Do you think I want the value to go down? No, but I also don't think my reporting of real national and local numbers are going to change any values out there. There are far greater forces than me moving the housing market.

I do not have any real estate investments, other than my own home, and I, like all CNBC reporters, am not allowed to own any individual stocks, so I could not invest in a public home builder even if I wanted to.

I don't think the downturn in housing is "costing" regular homeowners any money, unless they are about to sell their homes. Investor, speculator, flipper-types are a different story.

Scottacus wrote:
Also, not to accuse anyone unfairly, but Tazmanio and Stratocaster seem an awful lot like the same person. Like eerily so.

Don't want to start anything, but a certain user did get temporarily banned for what was initially thought to be having 2 screen names.

JSQ wrote:
Quote:

So, what's happening on Wall St. (you know, the people that employ 99% of the immigrants in JC)?

Did you actually mean it? Because the Afghan hashish sellers didn't seem to work on Wall St, nor the girls at C-Town....

No immigrant will go home and return, pay 5000 (do you know how much is that for these people?), and live on a visa that doesn't change their lives in any way for 8 years. OK, they can go home and get back safely, but how many illegal immigrants from NJ afforded home travels anyway?

Almost no illegal immigrant has the money for a cheap house in, e.g., Camden. This law will have zero effect on RE.

So, what's happening on Wall St. (you know, the people that employ 99% of the immigrants in JC)?

nugnfutz wrote:
Market forces not logic will decide. My bet, downtown JC prices will double over the next 3-4 years.

From American Banker, two days ago ---
Some facts instead of speculation on why some housing markets are strong. Immigrants Seen Fueling Market for Homes ...Demand for housing in the United States will accelerate in the next decade as immigrants, whose status has been hotly debated in presidential campaigns and in the U.S. Congress, look for homes, a Harvard University study said.

nugnfutz wrote:
Market forces not logic will decide. My bet, downtown JC prices will double over the next 3-4 years.