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Must Reads: Gas, Plat, Homes (Updated:4/26/08)
By JD Bluefield | April 24, 2008
Lots of sky is falling news out there, here are a couple of the headlines. Read through them if you want, but I threw in the main points in bullets with my 2-cents at the end.
New-home sales sink 8.5% to 17-year low
- “Median sales prices for new homes have fallen 13.3% in the past year to $227,600, the biggest decline in 38 years. Average sales prices are down 11.3% to $292,200, the biggest drop since the record book begins in 1963.”
- “Over the past five months, sales have been on a 590,000 annual pace, 35% slower than a year earlier. In all of 2007, 776,000 new homes were sold, down from 1.05 million in 2006.”
Gasoline could hit $7 a gallon in four years: CIBC
- “They forecast that these tighter supplies and continued strong demand will drive oil and gasoline prices to roughly double their current levels by 2012. ‘It is increasingly clear that the outlook for oil supply signals a period of unprecedented scarcity,” said Rubin. “Despite the recent record jump in oil prices, oil prices will continue to rise steadily over the next five years.’”
Homebuilders: No recovery until 2009
- “Housing production will continue to drag on the economy until the first quarter of 2009.”
- “The median home price in the United States has tumbled 12.8% since the record high reached in July 2006, and existing home sales have been in a virtual free-fall since July 2007.”
- “But when the housing market crashed, new housing permits “fell off a cliff,” according to Seiders, returning to levels not seen since the 1991 recession. That left a huge glut of unoccupied new homes on the market without many potential buyers.”
- “We would expect the higher end of these ranges to coincide either with further difficulties in South Africa or gold prices breaking strongly through the $1,000 level,” GFMS said in its Platinum and Palladium Survey 2008, which was released on Thursday.
“We remain positive for gold also and see this as a real possibility in 2008,” GFMS said.
In my opinion, I still think that the housing market has much farther to go and a 2009 rebound is a very optimistic. If you are looking for a home to buy, between now and the next year, you will definitely have much more leverage and choices as a buyer. I’ll tell you this much, I get weekly emails from a homebuilder on homes that are “back on the market, act now, $5,000 buyer credit, builder financing 1% below prime rate.”
If you do buy a house, go nuts with the low-balling. Screw $10k less then asking, go ahead and offer the $50k or $75k less. A friend of mine buying an apartment offered $50k less than asking and eventually closed around $25k below asking.
To make the gas situation a little better, get a smaller car and get a credit card that gives a big rebate on gas, like the Costco credit card.
As for Platinum, its a critical commodity in car manufacturing to control emissions. With everyone going “Green” and China/India buying more cars than ever, expect demand to continue to rise.
With all this bad news coming out, you can discount them completely, do nothing or figure out how you can benefit from it. What are you doing?
More on the newly emerging food crisis, tomorrow.
Topics: Investing, Personal Finance |
2 Responses to “Must Reads: Gas, Plat, Homes (Updated:4/26/08)”
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April 24th, 2008 at 5:54 pm
I feel sorry for people that just bought homes, but Im glad that prices are coming down. I hate that people make money off realestate. For people that have money its great but for poor people it really sucks. Like when I wanted to buy a house, I was lucky enough to qualify and put 10% down. But there were investors that put in for the house that wanted to buy it with cash. I needed the house to live in and this rich bastard is just going to hold on to it for a while and sell it. It just sucks.
I know its hipo crits of me to say that cus if I was rich I would do the same thing but it sucks to be the poor guy (the guy in need) in that situation.
Conspiracy theorys:
What if a rich bastard just for fun bought up all the rice coming into Hawaii. Making rice scarce and inflating the price. then sold it when people start switching to bread or potatoes. What if thats whats happening to oil/gasoline? Maybe these companies own fields that get choke gas but say oh no more, so they can make more money by limiting the amount that they give out. I dont see that much news about how these huge oil companies are looking for alternatives cus they think oil going run out. Its just like how some fisherman hold on to Ahi when its close to Christmas & new years.
April 26th, 2008 at 4:13 pm
Your Conspiracy Theory is kind of what’s going on. Due to the mass interest in ethanol as a fuel, more food crops are going to produce it than feeding people. Also, growing countries like India and China are on the expansion and require more food to feed their growing middle-class. Its a perfect storm going on.
Oil companies are looking for new sources of oil, but the problem is that they are very hard to get to, far offshore, tar sands in Canada, etc. Since they are harder to get to, they are also much more expensive to develop. Also, it take years from the point of discovery, to the point of production.