This housing BUST is here for a LONG time

This is no longer a housing slump. It's officially a housing bust. The economy is taking a dump, yet people like the Fed's Chairman, Ben Bernanke and Treasury Secretary Henry Paulson continue to view the housing market through their rose colored glasses.

Let's face it, statistically, by looking at the indicators. The stock market has dropped 263 points in the last 11 days. The price of gold is rising. Consumer confidence is as poor as the new home builder's confidence. Existing home sales have screeched to a crawl. Interest rates have increased. The US dollar has lost 30% against all major currencies.

And I haven't even mentioned the kajillion resets in ARM's in the next few months.

The real estate business is trying to scare people into buying homes right now, stating that the market can turn quickly and there's still a lot of inventory to choose from. This market is not going to turn quickly, period. Incomes are not in accordance with housing prices. If they were, then incomes would have doubled or tripled in the last 5 years.

I'm currently tracking 58 homes in 3 different cities, but mainly concentrating on one city in general.

24 of the 58 homes were bought between 2000-2004 for less than $200k.
All of them had an existing in-ground pool, 4 BR and over 2000sf.

The median price of these homes is $299,500
The median year they were bought was 2002
The average asking price is $295,170
The average price the current sellers bought them for was $167,927
Average SF is 2202 sf
Average Asking Price per SF: $134.32

I sampled the first 25 out of 388 houses sold between July 1 thru July 31, 2005 in the one main area that I'm looking to buy, as per the Hillsborough County's Property Appraiser's "Sales Search".

Here are the numbers from July 2005:

The median price of these homes were $276,000
The average asking price is $272,876
The average price the current sellers bought them for was $167,927
Average SF is 2392 sf
Average Asking Price per SF: $114.05

One of the houses I'm tracking was bought in 1991 for $108k. It has a Just Market Value of $203k and is on the market for $287k. Its idiots like this that are so greedy, in thinking their house has appreciated $179k in 16 years, that there's such a glut in the market. If the house was being sold at market value, I might consider it. Apparently, the seller must think there's a moron out there dumb enough to overpay that much for his home.

There are too many houses on the market for the price of houses to rise. That won't happen anytime soon in the Tampa area, and I'd bet just about everything I own on it, if I were a betting man.

MY PREDICTION: This slump will take its toll on the existing home market, due to:
1. the increasing amount of preforeclosures, foreclosures and REO's.
2. new home builders slashing their prices
3. lowering of the comparable market value due to foreclosures.
4. Increase in interest rates.

There's not a glimmer of hope anywhere on the horizon for this housing bust to end in the near future, or even within the next year.

If you see this as a sign of the RE market improving, then you may be Lawrence Yun in disguise.