Way back long before you were born there was something referred to today as The Depression. Everyone (almost everyone) got suddenly poor. Business came to a halt and there were few jobs to be had. That recession (that’s what they will call it today) was caused by the crash in the stock market.

Today (or very soon) it is going to be blamed on the collapse of the housing market. The talking heads and cheerleaders will tell this is a slowdown and it will pick in a short period of time. The lowering of interest rates will make financing easy and mortgage rates very low which will bring the buyers out of their holes. They won’t be able to resist the wonderful deals.

It seems our economists have missed some very obvious statistics available from the U.S. government. The Census Bureau has most of them.

An interesting article by Jas Jain on the Internet site SAFE HAVEN exposes numbers that are more than scary. His conclusion is there are twice as many units available as there are families to occupy them.

At the end of 2001 there were 119,116,000 housing units (houses and condos) and at the end of the second quarter of 2006 it had increased to 125,800,000 or an increase of 6,684,000. Don’t let these numbers bother you as they are very simple.

The number of occupied house in 2001 was 106,261,000. The difference is vacancies.

At the end of the Q2 2006 109,450,000 were occupied. That’s an increase of only 3,189,000.

OK, now deduct the new number occupied from the net change in homes built and it comes to 3,495,000 with vacancies running close to 2.6 million. Units occupied are family units which might be one person or 10 people. Divide 3.5 million by 5 years and you will immediately see that we have been building 700,000 more units than family units have been created.

Currently 69% of American own their home or at least share it with the mortgage company. That figures almost everyone above the poverty line who can qualify has bought and mortgage qualifications are becoming more stringent. Now the investors who have been flipping houses have quit buying and are waiting for the housing market to “come back”. It looks like a long wait.

Home construction continues even though there are no buyers with the supply becoming more and more. The bust of the housing bubble can easily cause the next Depression because 30% of the GDP is home construction. The stock market will collapse and jobs will become scarce. Seventy percent of our economy is based upon consumer spending. When the kids lose their job they will be moving back home with the old folks whose house is paid for leaving their place as another vacancy. Mr. Jain is looking at 20,000,000 vacancies.

What will that $300,000 house of today be worth a few years from now?

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know. Copyright 2006 All rights reserved.

Copyright 2006 Albert W. Thomas All rights reserved. Author of "IF IT DOESN'T GO UP, DON'T BUY IT!"