It is said that by the time movie and television producers notice that a trend exist, the trend in question has already evaporated like the morning dew.
Such is the case with cable television's fascination with housing prices. Shows like Flip This House, House Flippers, My House is Worth What and Property Ladder dot the cable television schedules. The premise of all these shows is remarkably similar: there's a lot of money that you can get out of your house by doing updates. The additional money will allow you to purchase an even bigger home that you can flip for even more money.
But the problem with the current Bush economy is that it has been propped up by home selling at a rate that couldn't last forever. Now it seems that the thrill ride is just about over.
Recent sales figures for new and existing homes showed a decline of 6.6% and 3.8% respectively. And the bad news does not end there. Mortgage holders are defaulting at a rate of 58% more than the same time last year. The impact of these defaults has been felt as far as Wall Street, where the Dow Jones tumbled 281.42 points which comes out to 2.09% of the Dow's overall volume.
The culprit was identified as homeowners who couldn't pay the high-interest home loans they had been approved for.
"Market players are focusing on evolving developments in the U.S. subprime crisis, with equities the preferred barometer for market risk aversion," said Michael Woolfolk, a senior currency strategist at The Bank of New York. (Source)
So let us review: there is a surfeit of television shows telling homeowners that they can get rich from their existing home and move into a bigger home even as mortgage money becomes less available. It does not take a clairvoyant to see that this is a recipe for disaster in the not-too-distant future.
The set of circumstances we find ourselves in should convince everyone that the Bush housing-based economy is nothing more than a house of cards.
That realization may come too late for a lot of people seduced by the lure of easy money. They may be reduced to dwelling inside the very cardboard boxes that once housed brand-new stainless steel kitchen appliances.