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Housing Market Will Weigh on US Economy For Years

Written By Brian Hicks

Posted June 3, 2011

The S&P/Case-Shiller Home Price Indices are the leading measures for the residential housing market in the United States, tracking changes in the value of residential real estate both nationally as well as in 20 metropolitan regions.

The indices are calculated monthly and published with a two-month lag.

New index levels are released at 9am Eastern Standard Time on the last Tuesday of every month.

Data through February 2011, released last week by S&P — the leading measure of U.S. home prices — show prices for the 10- and 20-city composites are lower than a year ago, but still slightly above their April 2009 bottom.

According to the Case-Shiller report:

The National Index hit a new recession low with the first quarter’s data and posted an annual decline of 5.1% versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels.

As of March 2011, 19 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were down compared to March 2010. Twelve of the 20 MSAs and the 20-City Composite also posted new index lows in March.

With an index value of 138.16, the 20-City Composite fell below its earlier reported April 2009 low of 139.26.

David M. Blitzer, Chairman of the Index Committee at S&P Indices, was pretty blunt about the report, saying: “There is very little, if any, good news about housing. Prices continue to weaken, trends in sales and construction are disappointing.”

If you want the best barometer on the state of the economy, there it is!

This index is dropping like a rock through the floorboards.

The Fed has thrown the kitchen sink in an attempt to reflate the economy and get real estate prices moving.

Why? Because the banks are in desperate straits, and the Fed is more concerned about the banks than they are the people.

But it’s not working for them — and they know it. In other words, QE1 and QE2 have not worked as they had hoped.

And here’s the proof:

jun 2011 case shiller index

So expect even more Quantitative Easing (I love the deceptive term they came up with to describe the debasement of our money), because they don’t know what else to do but throw more money created out of thin air at the problem.

And they have no other viable options.

Twenty years from now, people will look back and wonder how we could have let our leaders put us on this path. The price that all of us will have to pay for this insanity is going to be severe.

All you can do is prepare as best you can for the economic debacle of all time.

Ownership of the physical metals, a safe haven place far away from the big cities, and long-term storage of food and essentials is what you can do to protect yourself from the terrible and unfortunate events that loom in our near future.

And as precious metals prices continue to push for higher and higher new highs, our quality junior mining shares are going to perform exceptionally well…

Based on physical buying pressures we’ve already seen this year, I feel we could still see gold and silver running to yet more new highs.

We are destined to see $50 silver again, while I think gold will probably blast through $1,700 an ounce by year-end.

We won’t have long to wait to see if I am right or wrong…

In either case, the storyline for the precious metals remains extremely bullish for the long term.

Good Investing,

Greg McCoach
Analyst, Wealth Daily
Investment Director, Mining Speculator and Insider Alert