Five years after the housing market peaked, conditions are not improving in most areas. The latest data shows housing prices are still down and housing sales are sluggish. New home sales hit a record low in February and the S&P/Case-Shiller home price index suffered it's sixth-consecutive price slump in January.
Unfortunately, the halcyon years of real estate will not return, no matter how much stimulus is pumped into the economy, says Harry Dent founder of HS Dent. Demographics and debt can no longer support it, he argues. "Housing is not coming back. Baby boomers are done buying housing." Simply put, "housing is dead," he declares.
Worse yet, the bursting of the housing bubble will continue until we're back to pre-irrational exuberance levels, he tells Aaron in the accompanying clip. "Just to erase the bubble, (housing) has to drop 55% [from the peak], not the 33% we've seen on the Case-Shiller thus far."
The drop could be as bad as 65% from the peak before Case-Shiller bottoms sometime in 2013, he says.
The trouble with housing is a global phenomenon. "This is a worldwide real estate and credit bubble. We're going to see a worldwide crash," Dent predicts. Shanghai, Hong Kong and Mumbai are especially fragile, noting home price to income levels have reached 40 -to-1 in Shanghai.
There is no subprime rot in Asia as there was in the U.S.. The problem in the emerging markets is based on over speculation by the relatively small wealthy class. "The wealthy are speculating in housing, even if they're putting down more cash. This is a bubble of the wealthy and it will burst."
- emerging markets
- Hong Kong