Two billion dollars for a real estate Web site?
That’s what Zillow is reportedly willing to pay for its house-hunting rival Trulia. But while house-stalking online is the equivalent of TV binge-watching, not everything is going well in white-picket-fence land.
That is because housing has become a major impediment for the US economy and a large reason economic growth has come to a standstill in 2014.
The latest numbers underscore the story. While there had been strong hopes for a broad-based housing upturn six years into the “recovery,” demand for new homes has fallen off the cliff this year.
In fact, sales of new single-family homes cratered 4.9 percent in the first six months of 2014. June was nearly twice as bad, with sales off more than 8 percent from May levels.
This comes as no surprise to Jeffrey Gundlach of Doubleline Capital, one of the smartest guys in the hedge fund arena. All year, Gundlach has been warning that Americans (especially younger ones) have been scared senseless by the housing bust and are steering clear of home ownership.
Gundlach also makes the case that without all the bells and whistles of the 2006-era adjustable-rate financing, home affordability is no better now than it was back in those halcyon days — despite rock-bottom mortgage rates.
One doesn’t have to look to the new construction on 57th Street to see that housing prices have soared in recent years, perversely tamping down demand in the 99 percent of the country, where Russian oligarchs aren’t parking their money.
The median price of a new home in the US is almost 18 percent higher than it was a year ago, according to a report in the Wall Street Journal.
How much of a drag the housing stall is having on the economy will come into sharper view this week, when the initial estimate of GDP for this spring is released. We already know the slowdown had an impact on the 2.9 percent contraction in growth in the first quarter.
In the meantime, Zillow, which is worth an eye-popping $6 billion, is betting the house that Americans will live out their American dream, vicariously, by home-viewing on-line.