As anyone reading this blog knows, housing has a long way to go before bottoming out. I have been thinking about this for a while. What is truly scary about housing is not the fact that it's gone down. But that it has gone down without any major problems in labor markets.
Now, there are rumors that Citibank is looking to layoff 45,000. Just imagine what happens when there are more layoffs announced.
Forget the ARMs for now. Just think how many families are dependent on two incomes. Even if one of them were to lose their job, it would severely effect them being able to pay the mortgage.
Here is a story in WSJ today about a couple in Long Island, NY that is cutting down on gifts and vacations to save their house. The story is kind of sad because of the sickness (multiple sclerosis) of the spouse. Again, I wish they had saved their money early on so they would have been prepared for financial emergency.
You can kiss goodbye to all those Equity ATMs. That is going to curtail spending. That will lead us to more layoffs. That will lead to more downward pressure on housing.
It's a scary downward spiral. Get ready for a roller coaster ride.
http://online.wsj.com/article/SB119603767388403471.html?mod=hps_us_inside_today
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