Profit Confidential Warns of Two Key Indicators Pointing to a Depressed U.S. Housing Market in 2016

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Profit Confidential says two key indicators suggest the U.S. housing market will decline for the first time since 2011.

Profit Confidential (www.ProfitConfidential.com), an e-letter of Lombardi Publishing Corporation, a 30-year-old consumer publisher that has served over one million customers in 141 countries, explains why two key indicators point to a housing market decline in the U.S. for the first time since 2011.

“With January already behind us, the U.S. housing market looks like it’s on shaky ground. This could be the year when home prices decline for the first time since 2011,” says economist and lead contributor Michael Lombardi. “I don’t expect the U.S. housing market to witness an outright collapse like the one we saw between 2007 and 2011. But I do expect prices to soften.”

Lombardi explains that two things are needed for home prices to go higher: there must be demand from buyers (especially first-time homebuyers) and homes must be affordable for consumers. As it stands, both of these factors are working against the housing market and housing prices. First, the demand for homebuyers is waning. In November (the most recent numbers available), existing-home sales registered at the slowest pace in 19 months—plunging 10% from the previous month and 3.8% from a year ago. This was also the first year over year decline in existing-home sales since September of 2014. (Source: “Existing-Home Sales Suffer Setback in November, Fall to Slowest Pace Since April 2014,” National Association of Realtors, December 22, 2015; http://www.realtor.org/news-releases/2015/12/existing-home-sales-suffer-setback-in-november-fall-to-slowest-pace-since-april-2014.)

“First-time homebuyers accounted for 30% of all existing-home sales in November—down from the previous month and a year ago. In a normal market, first-time homebuyers should account for 40% of sales,” Lombardi adds.

Housing affordability is another issue. A number of key issues came out of the quarterly Housing Opportunities and Market Experience Survey, in which households (renters and owners) are asked about the housing market. Of the renters, 53% said they couldn’t afford to buy a home; 65% of households that are currently renting said it would be somewhat difficult to obtain a mortgage; and 45% of renters believe the U.S. economy is currently in a recession.” (Source: “Housing Opportunities and Market Experience Survey,” National Association of Realtors, last accessed February 3, 2016; http://www.realtor.org/reports/housing-opportunities-and-market-experience-survey.)

“To be blunt, 2016 is not going to be a stellar year for the U.S. housing market. A strong U.S. dollar will make it more expensive for foreigners to buy homes in the U.S., and the collapse in oil prices will affect oil industry-based states like Texas,” Lombardi explains. “Like every other industry, the housing market will suffer in 2016 as the economy continues to weaken.”

Founded in 1986, Lombardi Publishing Corporation, which has served over one million customers in 141 countries, is one of the largest consumer information publishers in the world. More information on Lombardi Publishing Corporation can be found at www.LombardiPublishing.com.

Contact Info:
Name: Wendy Potter
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Organization: Lombardi Publishing Corporation
Address: 350 5th Avenue, 59th Floor, New York, NY 10118
Phone: 905 856 2022
Website: http://www.profitconfidential.com/

Release ID: 103311

CONTACT ISSUER
Name: Wendy Potter
Email: Send Email
Organization: Lombardi Publishing Corporation
Address: 350 5th Avenue, 59th Floor, New York, NY 10118
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