TIP SHEET

Earlier this week when the news came out that U.S. housing prices slumped in May at the steepest rate yet, some investors no doubt asked themselves - is this as bad as the U.S. housing crisis is going to get? In no way, shape or form, answers David Rosenberg, North American economist at Merrill Lynch & Co. Inc. He noted in his morning market memo yesterday that nearly 19 million empty apartment, condo and single-family units are overhanging the residential real estate market, and that backlog is fully 35 per cent above normal. He said that the supply glut is likely to act as a dead-weight drag on pricing for years. "We wouldn't be looking for a bottom in pricing until the end of 2009 at the earliest; and the 10-per-cent national apartment vacancy rate is bound to weigh on rental rates in the apartment sector as well," he added.

That obviously is not the kind of the news that investors want to hear, especially if they own U.S. financial stocks.

For the record, the Standard & Poor's/Case-Shiller 20-city index was down 15.8 per cent in May from a year earlier, the biggest slide recorded since the inception of the index in 2000.