Grand Rapids, MI -- (SBWIRE) -- 04/25/2011 -- Dennis Tubbergen is a financial advisor, advisor to financial advisors, author and radio talk show host. Tubbergen frequently writes about the housing market in the U.S. in his online blog and in his Moving Markets? newsletter and provided an update recently that had no good news.

“An article in The Financial Times on March 24, 2011 reported that the U.S. housing market has hit yet another low,” proclaimed Tubbergen.

So how bad was the news?

According to the article, sales of new homes in the U.S. plummeted to a seasonally-adjusted rate of 250,000 sales in February – the lowest level on record, according to the Census Bureau. Four out of 10 homes in the U.S. which are sold today are being sold by someone who owes more than their home is worth or by someone who cannot pay their mortgage.

The article goes on to state there are some 4 million foreclosed homes on the market, creating an excess supply of homes for sale and depressing prices. Banks are also requiring larger down payments - if a would-be homeowner can get past today’s requirement for higher credit scores.

Maybe the most appalling fact from the article? Prices of homes have dropped more in the past five years than they did during the Great Depression in the 1930s.

“These bad numbers are making many in the real estate profession uneasy,” explains Tubbergen. “Mark Zandi, chief economist at Moody’s analytics was quoted as saying he expected the numbers to be bad, but this is becoming nerve-wracking.”

Tubbergen says Zandi went on to say, “You begin to think ‘Maybe this will be worse than you thought’ and it becomes a self-reinforcing cycle.”

“I’d like to make two points,” comments Tubbergen. “First, I believe that housing has more downside before prices bottom. I also believe it’s reasonable to expect housing prices to drop much further in this economic downturn than the prices that fell during the Great Depression.”

Tubbergen also argues that the catalyst for the Great Depression was a Federal Reserve-driven bubble in stocks, whereas this downturn began with the bursting of a Federal Reserve-driven bubble in the housing market. That being the case, Tubbergen thinks massively-inflated housing prices should fall further during this downturn than they did during the Great Depression.

“Second, it’s my view that government intervention in anything rarely fixes anything,” states Tubbergen. “I’d argue that intervention often makes the eventual problem worse. When the government intervenes financially, it does so with money that’s not tied to anything tangible. Due to this fact, the money used in the intervention is simply more debt – money used today that will need to be recovered through taxes or more printing of money down the road.”

Tubbergen believes that fact, in and of itself, should be enough to keep the government from intervening.

“Add to that the fact that government incentives to buy homes simply make home sales presently at the expense of home sales down the road,” concludes Tubbergen. “I’d argue that the low housing numbers that we’re seeing now is at least partially because of government intervention in this market.”

Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in the USA Wealth Management Building in downtown Grand Rapids, Michigan. Tubbergen is CEO of USA Wealth Management, LLC and has an online blog that can be viewed at http://www.dennistubbergen.com. His weekly talk show The Everything Financial Radio Show is simulcast on two Michigan metro stations and also airs to over 600,000 financial advisors, with recent podcasts available at http://www.everythingfinancialradio.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee.

Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.