The biggest creation of money that the U.S. central bank has ever undertaken, trillions of dollars, will eventually lead to rapid inflation.
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New York, NY (PRWEB) January 03, 2012
According to Michael Lombardi, lead contributor to popular financial newsletter Profit Confidential, U.S. home prices will fall in the three percent to five percent range in 2012. Where he differs from most economists on housing is that he does not believe that U.S. home prices will move up this decade.
Lombardi reports that 2011 will be the fifth consecutive year that home prices in the U.S. have declined. According to the S&P/Case-Shiller Index, U.S. home prices are down 31% from their mid-2006 peak.
Lombardi believes there are several structural issues hindering the U.S. housing market, including the huge inventory of foreclosed homes. For 2011, foreclosures by lenders of U.S. homes have consistently been in the 200,000 units per month range. One in four homes in the U.S. is worth less than the mortgage.
“Homebuyers can get a 30-year fixed mortgage in the U.S. today at the lowest interest rate on a 30-year fixed in 41 years,” Lombardi says. “The problem is that the majority of would-be buyers can’t get qualified, because lending conditions have tightened.”
Lombardi also believes that the attitude toward home-ownership has changed. “The rental market is booming in many states. Consumers don’t want to get burned again.”
“The biggest creation of money that the U.S. central bank has ever undertaken, trillions of dollars, will eventually lead to rapid inflation,” Lombardi writes. “That inflation will lead to higher interest rates.”
“Home prices do not rise when interest rates rise. Home prices have an inverse relationship to housing,” says Lombardi. “I sincerely believe that we are near the beginning of a new 30-year uptrend in interest rates. The U.S. housing market will not recover for many years.”
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market...before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
To see the full article and to learn more about Profit Confidential, visit http://www.profitconfidential.com.
Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.
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