Now THAT'S scary.
Also, the last time the markets went this high was in early 2007. That was when the housing market started to crash. Recession hadn't officially started until the end of 2007 and continued throughout 2008. Although technically the recession ended by 2009, it continued through the remaining years (as deficits, houses, unemployment, the markets, and GDP, interest rates, and everything else continued to remain depressed).
Well, here we are again. The markets are at all-time highs again. But unemployment (the real numbers, that include those who are no longer counted because they stopped looking for work, as well as those under-employed via part-time work only, and the underpaid due to pay cuts that have yet to be recovered) is still high. The government is still spending out the whazoo. GDP is still razor thin.
And housing? Well looky here:
"Bank repossessions, the final stage of the foreclosure process are down 29 percent from a year ago, but foreclosure starts, which are the first stage of the process, jumped 10 percent in February from the previous month. This after falling for three consecutive months.
"At a high level the U.S. foreclosure inferno has been effectively contained and should be reduced to a slow burn in the next two years," said Daren Blomquist, vice president at RealtyTrac. "But dangerous foreclosure flare-ups are still popping up in states where foreclosures have been delayed by a lengthy court process or by new legislation making it more difficult to foreclose outside of the court system. Foreclosure starts have been steadily building in those states over the last several months and likely will end up as bank repossessions or short sales later this year."
In hard hit Nevada, where a new state law criminalizing faulty foreclosures went into effect last year, foreclosures basically ground to a halt. In February, however, they hit a 17-month high, up 334 percent from a year ago, according to RealtyTrac, which means banks will inevitably repossess thousands more properties in the near future.
The jump in new foreclosures is not just in the formerly hardest hit states either.
Foreclosure starts jumped 319 percent in Maryland from a year ago, 172 percent in Washington, 139 percent in New York, and 70 percent in New Jersey. All of these states have large backlogs of delinquent mortgages due to new state laws governing foreclosures and/or the fact that they require a judge in the process."
The S&P/Case Shiller composite index of 20 metropolitan areas registered its biggest increase in home prices in December since July of 2006—just before the bottom began to fall out of the U.S. housing market… [pointing out] three problem areas... [chief economist for the National Association of Home Builders David Crowe said] it's still difficult for buyers to get a mortgage; many home appraisals are coming in lower than the asking prices; and conventional housing inventory is facing price competition from foreclosures and short sales.
Jed Kolko, chief economist for the real estate websiteTrulia, was also a bit cautious, citing the relationship between job growth and housing. "There are actually two different types of recoveries going on right now," he said. "In some markets, a lot of that price growth isn't driven by job growth. It's driven by investors." Institutional and private investors alike have been scooping up single-family homes all over the country to flip or to fix up and rent.
CNBC says to look at three key numbers as the year moves forward:
[Also] If the mortgage deduction cap were reduced, Crowe said, "almost all of that pain" would come from the high-end housing market. "You would hurt the markets in California and along East Coast…"
What do a $3.80 [national average] gasoline price, a 2.15% 10-year Treasury yield, and a 20 reading on the CBOE Volatility Index have in common? They're all levels that could ring the bell on this rally.
