In addition, this data can be effected by miscalculations. This week the National Association of Realtors announced they had been double counting existing home sales and therefore reduced 2007 sales by 11%, 2008 by 16%, 2009 by 16% and 2010 by 15%!!! This makes one wonder how much NEW home sales have been over estimated.
As if that were not enough weak news, we are starting to see banks selling homes they have foreclosed on hitting the market. An incredible 46% of November 2011 home sales were foreclosure related! This will likely keep a lid on home prices for 2012.
And the kicker is home prices have continued to drop with an additional 3.5% reduction for November 2011! Perhaps more importantly this data suggests that NEW home sales, which create a ton of jobs, are still finding a bottom and any growth of significance is beyond 2012.
Fewer applications for unemployment is not the same as job creation. Without an increase in NEW housing sales NEW job creation will flounder as will consumer spending. The daisy chain of economic data of present does not seem to jive with the Rosy market outlook of late.
I would suggest there is a potential for 10% upside in this year end rally, yet the risk on the downside could be 20-30% , or more. We are likely to know much more about 2011 trends and their effect on 2012 by the end of January 2012.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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