Wednesday, March 14, 2018

Free Trade or Unfair Trade

Let us examine the recent tariff's on steel and aluminum. Today, there is nothing but lies in the so-called free market. If the foundation of modern trading is based on lies, where do we begin?
Gold Standard
When modern nations entered the 20th century, countries traded as today, but the market had a control device in the British pound. The pound was backed by gold which kept currencies stable. This kept an even keel in the ebb and flow of trading. There was little room for currency manipulation until central banks and politicians began to push the envelop of manipulation. In addition, modern industrialization increased production and productivity. This led to undercutting and the undercut tee, to find a solution. These combined actions eroded the value of the pound and the English central bankers panicked. They raised the value of the pound above gold. Idiots!
Then, nation's with fiat money, exchanged their pounds for British gold until the English gave up. They exited the gold standard. This left a vacuum in world trading. As global trading declined, unemployment rose. In seeking to grow exports, countries began to tinker with their export/import policy.
Now, what I have not mentioned in this overall picture is the actual internal process to export or import in the main industrial nations. Every nation, I repeat, every nation except the US, used as a foundation with their largest firms, state support. An exporting company could count on their government for financial support like loans below market rates. They received protective measures in the form of laws and regulations that made importing competition extremely difficult. Then, they added a layer of license procedures and finally, they implemented a standards policy. Now, I will say that the standard policy has value in today's market with GMOs and artificial ingredients, but overall, this is just another level of protectionism.
One aspect that I won't get into in this piece is theft of intellectual property, disregarding of patents and the illegal copy of brand names. In the past Japan didn't respect our patents. S. Korea is always a threat to steal intellectual property, but the clear violator in today's market is China. They steal, copy and even when they receive permission to produce a product, they cut corners by substituting cheaper materials...Back to the historical progression...
Our individual companies were competing against nation backed entities who used fiat money and in the past, we used the gold standard. Our government should never have allowed a convertibility of fiat for gold. One is real and the other is fake. Idiots!
While this occurred, our nation saw a collapse in the stock market. In seeking to bolster jobs through exports and to help American farmers who throughout the 20s suffered with low prices and drought, politicians acted.
Smoot-Hawley Tariff Act
So, in 1930, Congress passed the above act. It heavily favored farmers to export their crops. The global community followed suit with direct taxes on imports along with all their already in place protective measures. World trade declined. The world turned to violence.
As the war moved into its apparent conclusion, the allied nations held a summit in New Hampshire. In this gathering, the members agreed to make the US dollar that was backed by gold, the new central point to value currencies for market trading. This conference also established the IMF and World Bank. They were suppose to act as a layer to keep market balance in the pluses and minuses of trades between nations. This mechanism held up very well until personal egos with foreign policy among nations caused riffs. The worst were the French and Swedes who demanded US gold for their dollars. As our nation's deficit grew, our politicians panicked. In 1971 president Nixon shocked the world by ending the convertibility of dollars for gold. This killed the gold standard and began our nation into the decent into fiat currency. I could write a book on this section. The US decline from gold really began in 1913 with the formation of the Federal Reserve, but blog space is limited. Bankers are for fiat to which our founding fathers were against. Enough said!
Nixon found an answer in Saudi Arabia. Since oil became crucial to modern economies and it is the most traded commodity, Nixon agreed to back the House of Saud who in turn would only use US dollars in oil. This began the petrol dollars to which today, global nations trade.
The oil trading platform held up until the world began to use China to stop inflation at home by importing cheaper products from the Chinese. This is how China surged to lead the world in trading. If our so-called market were free to act, the Chinese money would be so high that no one would take their exports due to the value of their currency. How come it isn't? Because trade is UNFAIR! Also, it is worth mentioning that oil is losing to technology along with geopolitics which will kill the petrol policy of trading.
The market is not free, but totally out of synch. If one looked at US steel production, it only gets crumbs in world production. At one time, it led in world production. US aluminum was number one too, and today, it only produces 1.2% of world production. I could mention almost every industry. We invented the radio and TV, but state sponsored companies killed our companies. We invented solar, but foreign nations run the industry. We invented the computer, but all production went overseas. The story is the same with textiles, furniture, auto parts and auto manufacturing. Almost every aspect of our once self-sufficient economy is now imported or manufactured somewhere else. It is so bad that we import food. Can you believe that?
In addition, I could mention the many times where nations used their state sponsored companies to dump their product, mainly in the US, to which is in the timeline of our economic decline.
Germany and England in the 70s. They sold steel less than they charged for it at home. This began the rust belt in the US. We lost high paying jobs. This destroyed our unions to which killed labor and this also began our decline in our standard of living. We also have the shills at home and idiots like the Brooking Institute. We now can trace our decline to global trading under the lie of free trade to which the people like Brooking, say yes too. By the way, they never admit that they were wrong. Dear reader, The EU is nothing more than an economic barrier for US exports. NAFTA is nothing more than an exporting machine for Canada and Mexico at our expense and greed. The Trans-Pacific Partnership Trade deal is nothing more than a new fiat layer that will allow foreign nations to lift their standard of living at our expense. Whenever we get into these trade pacts, it is done by lawyers who are shills for fiat currency and greed with no concern for what is best for America. It is always done behind closed doors. Enough said!
Trump is right, but he is giving into pressure. We should tax all imports and suffer with temporary inflation until we can return to a self-efficient country. Then, when the world realizes that they can no longer use us as a dumping ground, we can allow exemptions. However, we should never allow us to be pawns in the hands of global trading who like Jefferson predicted, "our sons will be born into captivity by foreign powers."

Wednesday, March 7, 2018


This transcript is from a discussion from the PBS Show, Nightly Business Report. The date was 22cd of February of this year. The host, Tyler Mathisen shows great courage to address a volatile topic and greater character to suggest that as a nation, we are losing our democracy. His guest was Bill George, former CEO of Medtronic(MDT) and a senior fellow at Harvard's Business School.
Dear reader, I have stated many times that our government is corrupt as it condescends the people under a label of populism. They do not listen to us and this is why I call for the creation of a new third party. The original platform will stand for peace as a nation. We will no longer be the police force for the world. We will only enact laws that protect American workers with the ideas of the constitution to "promote the general welfare in the pursuit of happiness." We will strive to return to the gold standard and we begin by demanding a balanced budget every year. There are many other issues facing America, but our nation needs a starting point and the LIBERTY PARTY is it.
Tyler: The school shooting in Florida last week has refocused many controversial discussions and conversations in America. One of them is the power that industries and their lobbyists have over the nation's political process.
I don't know whether you happened to see the CNN town hall last night. But at one point during the discussion, one of the questioners asked one of the senators, I believe it was Mr. Rubio, this basic question. If the NRA has such power over the political process in the US, they being an arm of an industry, the gun manufacturing industry, is democracy broken?
And I suppose you could ask a similar question about the pharmaceutical business, which has tremendous power over drug policy in the country and drug pricing in this country. Or you could ask a similar question about the banking business and its power over regulators and Congress.
Talk me through this one. Do companies and their lobbying arms control our democracy to too great a degree today?
Bill: Well, I certainly think they do in the case of the school shootings. The NRA has enormous power, Tyler. And it's very discouraging to me when over 80 percent of the American public is urging restrictions on assault weapons and yet you see that Congress seems hamstrung to act. I'm not optimistic they will.
And frankly, I'm urging CEOs to get out there and organize in their local communities, with their mayors, their city councils, get the state legislatures and governors involved, and take action locally. I'm much more optimistic of that.
After all, these are our children. These are our employees and their families. And these are our communities. And the obligation we all have as CEOs to protect our local communities and to make sure that our students are safe.
I do feel like this time it's different. We are at a tipping point perhaps in the thinking of the American public. But, I think we are going to get more action locally to make schools safe and to take of guns coming in school. I think it's horrible.
Tyler: Let me come back to my earlier thesis if I might just a little bit.
Bill: O.K.
Tyler: And that is the idea that I think a lot of voters, individuals, feel as though the system works for large corporate interests, but doesn't work for the general population, and because there is so much corporate money or PAC money flowing in to the pockets, the coffers, the campaign committees of men and women who run for the House or Congress or Senate or state legislation, that people have lost control of their government at the expense of corporate interests.
Bill: Well, there is truth in that. Ever since Citizen United, it isn't just corporate interests, Tyler. It's individual wealthy donors are giving huge, hundreds of millions of dollars or more to political campaigns because we took all those restrictions off. Yes, I think it's having too much influence.
And I do think that our congressmen and women and senators need to be listening to the people. I'm delighted to see the students stepping up and lobbying. I think the parents have to go with them to do that to do that. But that's still going to be a long pull. We have come a long way to give too much power to moneyed interests.
I think we have got to change that as a country and get it back to a democracy and stop listening to all the lobbyists. There is so much power in our lobbyists throughout the country. But nowhere is that lobby greater than the NRA.
Tyler: All right. Bill George, always interesting to talk with you. I enjoyed your conversation. We appreciate it.
I'll Go Further...
This is beginning to which we should all become aware that our two political parties are corrupted by money and their personal egos. They will never do what is right. Instead of seeking voters to put something on a ballot, let us seek to form a new political party that stands for us. I call it the Liberty Party. Can I get an Amen?

Tuesday, February 27, 2018

Back Tracking Double Talk

The other day, Goldman Sacks(GS) made a public announcement on the market, specifically centered on the effects of rising interest rates. They stated that if rates rise to 4.2% on the 10-Year Note that equities would fall a minimum of 25%.
There are always opinions on the market and if one had access to the trading floor, one would hear of rumors all the time. Some of these stories can move the market, but most are just short term, knee jerk reactions. With that said, the big institutions like Morgan Chase, Morgan Stanley and Goldman can move the market or put thoughts on the influences that move the market like the Federal Reserve. Isn't it an opportune time to come "public" the day before the new head honcho, Powell speaks before Congress? It won't be the first time, but the media never calls out these phonies who benefit from a rising market with cheap money. Let's review.
*In 2014 when the 10-Year rate was 1.75%, Goldman declared that the recovery which was in its 6th year, could be threatened. Rates fell below 1.5% after their claim.
*In 2016. GS stated that 2.75% would be the danger level. When this level was within reach, GS raised its call to 3%.
*Then, one year ago, GS said 3.25% was the new danger zone. Lately, the 3% mark is within striking distance. So, the other day, they raised their warning level to 4.2%. So far, in all cases rising rates have not deterred the market.
Why 4.2%?
I'll tell you why. They benefit from rising equities and cheap money. Consider our economy in the 90s? We transformed from manufacturing to service orientated. The information age from new technology was beginning as well as personal computers. Things were better overall during that time as compared to today. Guess what? The rate on the 10-Year note averaged 6%. Savers were not punished like toady which GS could care less about. Even as late as 2005, the average rate was 5%. So, I ask again, why 4.2%?
Lies and more lies...
There is one index that with a quick glance that tells you all you need to know about the global economy. There is a difference with it when you consider an individual company or even an entire nation. Why? Because if history has taught us anything, companies and nations lie about their earnings and GDP. It is very difficult to fudge the BDI.
When these lies are exposed, the market reacts, and generally for the worst. If you look at an historical chart of the market, many corrections could be tied to news in the market.
This is the poster child for lying. When their market found out about the lies of their real estate situation, their investors ran for the hills. Their market was about to collapse. The Chinese instituted market controls and held off a meltdown. This did not stop world markets from joining the selling panic.
The European Union faced a financial crisis in 2008 with the Greek economy and its excessive debt. They flooded the market with QE and other stimulus to stop the bleeding. Our market has its largest correction in August 2008.
How about our banks lying on NINJA loans? How about Enron? The list could fill a book and dear reader, I suspect this same lying is happening as I write this blog.
The Baltic Shipping Index(BDI) holds the key. It tracks world commerce by shipping on the high seas. Yesterday, it stood at 1185. What does this number mean?
Well, it is way below what would be classified as a normal economy. The way our stock market hits new highs as well as world markets, this index should be over 4500 on its way to 5,000. It is not. It is in a downturn from a not recoverable level. It reached its high in December of 2017 at 1750. This was an uptrend from a low in 2016 of 300 which is a depression level as well as the current level. Let me repeat that, we are still in a DEPRESSION LEVEL!
This index is telling us that the global economy has not recovered and the highs in the market is the result of cheap money and low interest rates. Earnings are masked by company buybacks This leads me to one conclusion, Goldman Sacks can never be trusted. I always fear whenever they talk about precious metals because they are for fiat currencies, but even with that said, I agree with them that 4.2% is as dangerous as a four-deuce attack by Charley back in the day. Continuing, I must clarify. I agree with them because by that time all the accounting tricks will be exposed. Housing will be negatively effected and oil will be hurt by electric cars.  However, it is better to attempt to get the market back to normal levels than let fear keep us addicted to cheap money which destroys our standard of living and allows politicians to spend which also destroys our currency. If you have not earned it, you cannot spend it!

Wednesday, February 21, 2018

First Real Estate Warning Signs

Last week I viewed a segment of NBR on PBS. The reporter, Diane Olick offered an example of a high-end home for sale in Denver, Co. It appeared on the market that Thursday and by Saturday it had 37 visits to view. It was listed for $587,000. It had a contract by Monday.
She demonstrated that this is still a seller's market. The reason is because there is limited supply. You can get high prices. Low interest rates help the market. However, the Federal Reserve has indicated that there will be at least three rate hikes this year. Mortgage rates are rising with 5% on the horizon. Historically, this is considered a low rate, but home prices are well above wages received by middle and low level workers. As you will see, entry level homes are eroding at a rapid rate.
She goes on to say that buyer's in this current atmosphere will have to endure at a minimum, of at least two rejected offers before a successful bid. The above contains two real estate warnings and more will come as you continue, dear reader.
Skylar Olsen, a senior economist with Zillow says, "The actual supply side of the market is stable. The problem has been our growing population and builders adding only one-fourth of new homes in relation to the historical average."
In numbers, today we add 1.25 million homes and in the past, the number was well over 5 million. Inside the numbers are more alarming numbers. Most of those new additions are either high-end or multifamily. Entry level homes which is the starting point in real estate ascension is lacking, terribly.
Consider for example, the level of multifamily homes in 2017. The number reached a 40-year high with completions jumping 46%. This is more than double the long term average according to Real Page(RP).
Greg Willett of RP says, "Builders are adding the wrong type of homes. They are going hard into the luxury category and not affordable area." He goes on to say what builders cry about, "Land scarcity with high costs, the rising cost of materials and labor."
Builders have concluded that the above costs are similar everywhere and there is no profit margin in affordable, thus luxury is the winner.
Toby Bozzuto, the CEO of Bozzuto Group repeats this warning. He understands the situation. He realized from studies that the middle and low class buyers are trapped by high rent costs. This blocks their ability to save for a down-payment. In many areas they spend 50% of income on rent. In addition, there is a limited number of rentals available and as such, landlords can continue to raise rents. I have stated the same concerns and I point the finger at the Fed. They do not include shelter in their inflation matrix. This is why they claim that we have not reached our 2% goal. So much BS!
Bozzuto handles 70,000 units and it is no wonder that most fall into the high-end category. He does have a concern that this will effect the real estate market in a negative way. Non-luxury rents continue to rise because even with last year's additions, the market is vastly unsupplied with pent-up demand. Bozzuto fears this will hurt the normal progression in housing from smaller homes to larger residences. I agree. When higher interest rates hit the market, the pool of buyer's will shrink. This will result in declining sales which will hurt housing values and real estate in general. This will ultimately hurt the economy. It will also hurt the concept of the American dream of home ownership. Not good.

Wednesday, February 14, 2018

Signs of a Disturbed Mind

Do you recall that during the presidential campaign, Donald Trump said, "I could stand on the corner and shoot someone and still get elected?" Everyone dismissed this as a confused moment except the Democrats.
Last week, the day after his first State of the Union speech, he had another confused moment. He told an audience that those Democrats who did not clap during his speech were un-American. He stopped and changed his thought to, "Treasonous." This is UN-AMERICAN! It is a form of freedom of speech for everyone to decide what they favor or oppose. It gets worse.
The next day Trump declared that he wanted a special military parade. He said that he got the idea from France in watching their state parade in his honor when he visited the country. I hate this on many levels.
First, special, big parades cost a fortune. Our national deficit is bad enough. Trump is still fighting to increase the debt level because it is reaching un-repayable levels. He knows that Congress will increase the debt ceiling. So, what does he do? He wants to splurge and spend. He can declare it is a tribute to the veterans. He can rationalize and use his bully pulpit, but this is pure waste.
Secondly, it will appear foolish as there is nothing to celebrate like maybe the end of all the wars in the Middle East. Donald, we celebrate the Fourth of July as proud Americans! We don't need phony pomp, especially from France and Europe-as they dress up like the old aristocratic class. This is stupid following dumb.
Other Signs
He suggested that he won't sign anything unless he gets his funding for the "WALL." He brazen attitude will turn away any democrats who just recently allied themselves to his side. If he thought that he could "play" the Democrats, his pushing and backing of the concealed weapon bill in Congress is stupid off the charts.
This bill would allow anyone to carry a weapon in public. The second amendment allows us to have a weapon in our homes for protection. Society is trying to advance and be truly civilized. Our government ended dueling over a hundred years ago because it was stupid loss of life. Society slowly took guns out of public activity and this action benefitted everyone. However Donald, we still have a violent society with deep prejudices on many levels--faith, color and regional. We have road rage, dysfunctional families, homeless and poverty. Violence will break out and this violence will force everyone to get a gun. The only winners will be the gun producers, lawyers and undertakers. The nightly news will only have time for a quick weather check and the daily body-bag count. Donald, THINK before you tweet and shout!
If this gets signed into law, I predict a rocket surge in gun related deaths. Road rage will someday look like a winter pile-up of cars except the drivers will be shooting at each other. The worst case scenario will be a race war to which we all lose. Donald, THINK before you shout and tweet!
Donald also said a lot of things during his state of the union message and many of those points are issues that his Republican party has a history of not supporting. This outsider is becoming a deep insider. His budget is full of over inflated revenue projections and spending even the Democrats wouldn't attempt. Our national deficit will hit $25 trillion before his term ends. He is guilty of grandstanding, appeasing the military complex like with his excessive budget increase, while cutting clean air initiatives. All this in itself, bodes poorly for the future, especially for peace.  He will alienate support from both parties. His mind indicates when he realizes this turning point, he may do or declare some rash decision. What it is, I do not know, but he needs to step back, catch a breath and THINK before you tweet and shout!

Wednesday, February 7, 2018

State of Union: Independent View

The Republicans control the ball as Trump gave his first state of the union speech. He is becoming more of a politician rather than an outsider. The Democrats gave their response and here, I will offer as what I feel is the independent view. As my readers know, I believe that both of our political parties are corrupt and only by forming a new third party can we hope to save our republic.
Republican View:
Give Donald his do. His corporate tax plan will help American industry, create better paying jobs and it will help the economy. There is still a battle over unionism versus non-union employment. This cannot be dealt with over-night, however the pendulum's positive move will help wage earners with higher wages. Our nation is already seeing some of the positives from the corporate side. Many companies are giving their workers higher pay or bonuses. Apple said it plans to build a US based plant and create 20K jobs. I say, finally! This will be a first by that company. They sell here, but they never offered manufacturing jobs here. We can only hope more will follow.
The only problem with Trump's tax plan is on the individual side. As always, the Republicans lie about spending which they blame on the Democrats. This tax bill increases our national debt as it is really a spending plan. The bill should have raised the tax bracket on the wealthy as they already benefitted from the corporate side. They are the owners of stock, corporate positions of rank and pay as well as other benefits of the upper class. If Trump raised their taxes, the tax bill would have been neutral to our deficits. He didn't. He could have taken some money from the military complex too, but he didn't. In fact, he increases our debt by adding to their budget. He appeased the military complex.
He used phrases like "...steel spine that will pull through together." This implies many things of which one is actually steel. The problem is our steel industry is up against state sponsored companies with little protection. State sponsored is protectionism. Trump implies this understanding, but so far, he is all talk and no action with helping our manufacturers or trade deals. The Republican Party is for these corrupt trade deals. Trump may eventually claim some renegotiated trade deal to save face, but I don't have any faith in the final outcome. I see the same old same old.
His politician side became more apparent when he included the phrase, "In God we trust." He used it in conjunction with the NFL protests during our national anthem. He claims our economy grew $8 trillion in his first year. He said he produced the greatest tax cut in our history and he repealed the Obama medical mandate. I was against Obamacare. I was for First Payer. As for the greatest tax cut, the Federal Reserve has destroyed our currency, so the numbers always grow. One must look at percentages. He did noting on the individual side except increase our national debt. As stated, Trump appeased the military complex by asking more for them. He called for an infrastructure program of $1.5 trillion. The country needs this, but it does not need outside investment. At present, foreign companies build local roads and tax the locals to death with excessive tolls. This needs to be stopped, but Trump favors this approach.
Trump claims that he eliminated the most regulations in history. He is hurting alternative energy in favor of old energy like oil and coal. Drinking water will be a big problem in the future and it will trace the negative tide to Trump's veto pen. He also spoke of the Opioid crisis, and he said that he will continue the "War on Drugs" campaign. This is more money down the drain and bigger deficits. I'm waiting for Sessions to attack the cannabis industry in California and elsewhere. Then, I'm going to buy a weed stock.
He reminded everyone that he recognized Jerusalem as the capitol of Israel. He stated that future foreign aid will be for allies only. In his campaign he said no foreign aid as this is money down the drain. He said he pushed the FDA to approve new drugs with a politician slogan, "The right to try." I can see the late night lawyer TV adds in ten years about compensation over so and so new drug on the market. Drugs should always be tested to ensure all of our safety. If someone wants to risk a new experimental drug, I say okay as long as that person or family agrees that they cannot sue afterwards if things go wrong. Finally, Trump aggravated the Democrats by declaring he favors issues that usually only Democrats suggest. He says he is for family leave and more opportunities for ex-cons, by giving them a real second chance. This is just rhetoric to which no Republicans stand behind. It gets worse. The next day Trump becomes guilty of grand-standing in the worse way by saying Democrats are un-American and even treasonous for not clapping during his speech. This is demigod actions. Nevertheless, I did love his ending thought, "The people dreamed this nation and it is its people that made America great." Note: he never mentioned the "Wall" or its funding unless he considers that infrastructure?
Democrat Reply
Basically, they claimed that the economy recovered thanks to Obama. There is still work to do and that Republicans do not talk about those issues. The emphasis was on that Democrats favor or originated many of the issues that Trump claims domain. Since unemployment is low and the economy is doing better, it was more like, "Me too!" in tone. This speech made the "Wall" a focal point that Democrats oppose. There was no mention of trade deals like NAFTA which Clinton signed into law. It is like I said, the two parties are corrupt and they will say anything for your vote, but they never do what the nation really needs. As for my other points on issues, I stated my belief directly after offering the view of the political party. 

Wednesday, January 31, 2018

Housing Conundrum

Still having computer problems. This has allowed me to "look" over my posts. I noticed a few drafts that I never finished. This one is very interesting. It goes back to June 2015. You can read some of my observations and feelings about the market and economy at that time. To recall, it was a period of super low interest rates and the Fed using QE buying. Take note to the chart on copper. The commodity has risen to the present 3.20 level and it is now in an uptrend from the downtrend back in 2015. That being said, the Baltic Shipping Index is turning down and it has never recovered or sustained an uptrend. This leads one to say that we are now in a period of consolidation.

D.R. Horton(DHI)who sells more homes than any other homebuilder posted earnings for the second-quarter. They sold 22% more houses compared to the same period last year and they made 7% more for similar models. The stock is up 17% for the year. It is even higher now.
Their competition, Lennar(LEN) is also doing well.
Housing Recovery
USG Corporation(USG)thinks so. The largest drywall distributer had huge profits. USG's stock is up 10% this year. It too is even higher.
Another company gaining on home sales is cabinet maker, American Woodmark(AMWD). It's stock has surged 62%. Wow!
All of the above point to the housing recovery except for one little, no, make that a big thorn. According to the Census Bureau, the homeownership percentages has declined to 63.4% from the peak in 2004 of 69.2%. It has fallen every year from the peak and is testing its lows from way back in 1965 when LBJ instituted the "Great Society." This story has not changed. Housing is unaffordable and rents are insufferable!
This is a Conundrum.
Home ownership is at 50 year lows while builders and suppliers are doing well in 2015. Prices in 2018 continue to rise. Why or how can this be?
We know...
that house flippers changed their approach from straight demand to buying distressed properties, repairing them and then, reselling. This is a new segment in our economy.
We also know that large hedge funds entered the fray to capitalize on low, distressed properties and then, renting them. Rents have risen every year from the financial crisis in 2008. Blackstone Group(BX)has purchased over 50K units since 2012 and they were buying selectively even before that time.
We also know that the average medium home price is rising in all parts of the country. Real estate varies by location, however in the Northeast it is over $240K. In the Midwest it is over $163K. In the South it is over $188K and in the West it is beyond $305K. The average new home costs well over $328K. This is a new all-time high. Together, this spells trouble. Why, you ask? Because this is the same type of price action that led to the financial crisis in 2008. Prices are too high in relation to wages which remain stagnant and new revelations are pointing to dark clouds approaching. This cloud is still out there and prices are even higher as we roll into 2018.
are losing money on low-end properties and more and more are turning to million dollar investments. This segment has no financing problems, but buyers are demanding and most importantly, are a small percentage of customers. If you can't sell, the flipper has to make a large payment and he has limited resources. Big future problem.
Blackstone is slowly thinning its portfolio because they realize that baby boomers are retiring and downsizing which means more properties on the market. At present, it has been a seller's market, but the ratio is changing, rapidly.
If you like a second opinion, I have Dr. Copper here. Look what his chart is saying along with Mr. Lumber.

This shows that there is really no demand. The homebuilders are following the example of the airlines who cut flights to fill seats with limited flights scheduled. Homebuilders are barely adding a million units a year and most of that number is skewered toward multi-family which is rental. Back in 2005 and the years prior to that year, builders put up over 5-million units per year. This truth is never discussed in today's media or by economists.
Bottom line: If there are no buyers in the store, you make no sales. You can do tricks like discounts, offering freebees, etc., but declining revenues foretell lean times and if the deflationary attitude sinks
into the conscious of buyers, they will wait for lower prices before they purchase. Warning clouds are forming. Conundrum solved. I was way off in my summation, however the present market faces higher rates and sales will shrink due to interest rates. Builders may take the bite for a period, but not for long. Housing is the most important segment in our economy and the clouds are getting darker. If one were to reread this piece one year from today, the landscape will look very different.