Bloomberg: Run for your lives – the end is nigh!

Wow, you normally don’t see the mainstream media get too frenzied about the depths of the impending mortgage and housing meltdown but Kathleen Howley really let fly in a recent Bloomberg article titled "Rate Rise Pushes Housing, Economy to `Blood Bath’". It covers a wide range of opinion from noted housing bears who have been proselytizing on the impending doom for a long time now.
Here are some choice excerpts (emphasis mine).

The worst is yet to come for the U.S.
housing market.

“It’s a blood bath,” said Mark Kiesel, executive vice
president of Newport Beach, California-based Pacific Investment
Management Co., the manager of $668 billion in bond funds. “We’re
talking about a two- to three-year downturn that will take a whole
host of characters with it, from job creation to consumer
confidence. Eventually it will take the stock market and corporate
profit.”

“It’s not just a housing recession anymore, it looks more and
more like an economic recession,” said Nouriel Roubini, a Clinton
administration Treasury Department director and economic adviser
who now runs Roubini Global Economics in New York.

“I continue to believe that we haven’t seen the bottom in the
subprime market,” Viniar said on a June 14 conference call with
reporters. “There will be more pain felt by people as that works
through the system.”

`There isn’t a recovery about to happen,” said Ara
Hovnanian, chief executive officer of Hovnanian Enterprises Inc.,
the Red Bank, New Jersey-based homebuilder.

“When all these people see their mortgage payment and it’s up
40 or 50 percent, they’re going to say, `We can’t stay in this
house,”’ Pimco’s Kiesel said. “And there are millions of people
in this situation.”

The housing sector will push the U.S. economy into recession
unless the Federal Reserve cuts its benchmark rate at the first
surge in unemployment, said Kiesel, who expects the Fed to reduce
rates.

The share of mortgages entering foreclosure rose to 0.58
percent in the first quarter, the highest on record, from 0.54
percent in the final three months of 2006, the Mortgage Bankers
Association said in a report last week. Subprime loans going into
default rose to a five-year high of 2.43 percent, up from 2
percent, and late payments from borrowers with poor credit
histories rose to almost 13.8 percent, the highest since 2002.

“We have a lot of people, even prime borrowers, who are at
the edge because they either bought with no equity, they have an
ARM that’s seen a rate spike, or they used their house like an ATM
and turned their equity into cash,” Roubini said. “Many of those
people are under water today, and if they have to sell, it’s going
to drag down values in their neighborhood.”

This isn’t another housing bubble blog either – this is Bloomberg News – one of the most respected news services in the country. For those Pollyanna doubters poo-pooing the bearish sentiment I hate to say it, but the signs seem to point to the bears being right. In one of my first posts I penned for this blog I said that now was "a terrible time" to buy a home if you weren’t planning on buying long; i.e. buying and staying put in the home for a long, long time. I still feel that is the correct approach to this market.