The housing/credit bubble is bursting. Today the economic report states that "the inventory of unsold homes rose 3.2% to a record 3.856 million, a 7.3-month supply at the July sales rate, the highest since April 1993. The past year has seen the sharpest increase in inventories on record. The median sales price has risen 0.9% in the past year to $230,000. It matches June for the weakest price growth in 11 years. Prices fell on a year-over-year basis in the West and the Northeast."
It's looking grim. Soon there will be a stampede to sell and as no buyers come a-callin', reality will set in over America. That reality spells "not-as-rich-as-you-thought-you-were." But it gets worse because Americans are over-extended on credit too (credit cards, risky and not-so-risky mortgages and loans) and the bills will keep coming. Here's more fuel for the perfect storm: Wages have stagnated! Earnings for workers with four-year degrees fell 5.2 percent between 2000 and 2004 when adjusted for inflation. Why? Probably due to off-shoring. Why pay an American triple what you can pay an equally (if not more so) talented individual who doesn't require health care?
So what can we do about all of this? I will be giving this matter some deep thought and post what my musings construct in future posts.
