U.S. housing bubble has the potential to blow up real good

HARRY KOZA - Senior Analyst for Canadian markets at Thomson Financial/IFR.
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"I don't subscribe to the theory that because of a couple of benign recent U.S. housing statistics, there's going to be the fabled "soft landing" and now is a good time to buy a house."

"No, I'm in the camp that thinks we're only seeing the first leg down in what BMO Harris's chief strategist Don Coxe refers to as a Triple Waterfall Event (see http://www.donaldcoxe.com/triple_b.html). The portents of that parlous occurrence are not to be found in the official stats, but rather, on the margins of the housing market."

"Official statistics are so massaged and seasonally adjusted and weighted-averaged and smoothed that I often find them hard to believe. It seems like only yesterday (Dec. 12, 2005, actually) that the National Association of Realtors was predicting that the U.S. national median house price would rise about 6.1 per cent in 2006. After all, gushed NAR, over a full year, the national median price "has never declined since good record keeping began in 1968."

"After the recent "good" news about the U.S. housing market, the median price was still down about 2 per cent for the first 11 months of 2006. That makes that NAR forecast fairly embarrassing, but the market has discounted the actual small drop as a mere healthy correction, hardly the harbinger of an incipient downward cascade in house prices -- or at least, not yet." Full Article.