If lowering the mortgage rates to boost the housing market was the plan, then it is achieved. But the participation rate of first-time buyers is going the opposite way,” says Lombardi.
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New York, NY (PRWEB) October 01, 2012
According to Michael Lombardi, financial expert and lead contributor to Profit Confidential, the housing market recovery, just like the rest of the so-called economic recovery, is fake. Lombardi reports that investors are propelling the housing market, not would-be homeowners, and he believes this makes a big difference.
For there to be normal recovery in the housing market, Lombardi claims that the number of first-time homebuyers should be increasing. He notes that these homebuyers need to be buying a house to live in, rather than to simply renovate, rent, and flip—not speculation.
In the article “What My Real Estate Agent Showed Me Last Week,” Lombardi reports that first-time homebuyers accounted for 31% of the purchasers in August—compared to 34% in July and 32% in August of 2011.
“If lowering the mortgage rates to boost the housing market was the plan, then it is achieved. But the participation rate of first-time buyers is going the opposite way,” says Lombardi.
Lombardi believes that for there to be a healthy recovery in housing market, first-time buyers need to enter the housing market with borrowing. Instead, he notes that the opposite is happening—many all-cash transactions by investors buying homes to rent them.
Lombardi reasons that the demand in the housing market looks to be increasing, because investor and private equity firms are buying foreclosure homes with cash—then they simply rent the homes for a higher return than they are paying on their invested capital.
“From the looks of it, the ‘bounce’ in the housing market is not very convincing,” concludes Lombardi.
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.