I’ve been reading Piggington for a looong time now, and I have seen a lot about how the housing market won’t come down in price unless there are sginificant job losses, and the low unemployment rate is often cited as a “this time is different” reasoning.
However, as Rich has pointed out, employment has largely depended on construction, and therefore is vulnerable to the housing downturn (less construction=less construction jobs)- but what about the other industries that have made a killing because of homeowners’ enormous “equity,” such as the manufacturers of toy haulers and RVs (which I bet are two popular home equity loan buys)? If their equity has dried up, there’s no more money to spend on that $100K RV, and job losses would result from this, essentially kicking out the last leg from under the rickety table of Real Estate.
Ironic … everyone is harping about house suppliers and house builders stocks taking a bath.
IMHO … the worst hit of the lot is going to be … starbucks.
Why … its the 100% discretionary spending almost entirely fueled by vanity and the wealth effect. Oh yea those damn gay magnets that serve lousy burnt coffee have insane overhead and their coffee is … well lousy and $$$ and guess what … burning it, costs more than roasting it to the right amount … but then every one will see how shitty the coffee is actually instead of thinking its so bitter, it must be great coffee.
Its gonna get ugly …
Cool.
Cow_tipping.
That’s a really ominous sign as RV sales are a good leading indicator of the economy and the stock market. I think that RV sales peaked about 6-12 months before the tech bubble burst.
I agree that theres gonna be a lot of rvs for sale here soon, and I also agree that there will be much higher unemployment numbers, and many layoffs coming soon. But even IF employment stayed the same, the housing markets will still crash. There are far too many other fundamentals going against housing besides employment to keep prices insane like today.
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