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September 26, 2007

Today's Housing Bubble Post - Biggest Price Drop in 16 Years

-- by Dave Johnson

Imissed this yesterday because I was traveling... S&P: US Home Price Decline Accelerates,

U.S. Homes Post Steepest Price Drop in 16 Years

The decline in U.S. home prices accelerated nationwide in July, posting the steepest drop in 16 years, according to the S&P/Case-Shiller home price index released Tuesday.

So the situation: a huge wave of "ARM resets" - steep rises in monthly payments for holders of adjustable mortgages - is only beginning. Then it takes several months before they get into enough trouble to be forced into foreclosure. At the same time, it is hard to get a mortgage now, the largest number of homes for sale in history, and everyone aware that prices are falling and it is just stupid to buy a house now. So prices are going to be dropping, maybe a lot, for some time. There is no way around it.

(Feel free to add other "doom and gloom" factors in the comments.)

Posted by Dave Johnson at September 26, 2007 5:22 AM

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Comments

Dave, if it's doom and gloom you want, that's all too easy. As the last part of the piece notes, home equity has financed a lot of other spending over the last several years, and that party's coming to an end also.

For a start, now that the three Home Depots and Lowes' that have opened near you have driven all the local hardware stores out of business, look for two of them to close, as the contractors who kept them happy are trying to find work. The remodeling boom has been financed almost entirely on home values, and in a crashing real estate market, it dies fast. :|

Posted by: John Mooney [TypeKey Profile Page] at September 26, 2007 6:58 AM

Is the U.S. dollar the new Schrute Buck? With the dollar falling, home equity shrinking and refinancing difficult if not impossible for many Americans, they'll be forced to draw on their pool of Schrute Bucks. What else is there?

Posted by: Madison Guy [TypeKey Profile Page] at September 26, 2007 3:30 PM

Is the U.S. dollar the new Schrute Buck? With the dollar falling, home equity shrinking and refinancing difficult if not impossible for many Americans, they'll be forced to draw on their pool of Schrute Bucks. What else is there?

Posted by: Madison Guy [TypeKey Profile Page] at September 26, 2007 3:31 PM

Is the U.S. dollar the new Schrute Buck? With the dollar falling, home equity shrinking and refinancing difficult if not impossible for many Americans, they'll be forced to draw on their pool of Schrute Bucks. What else is there?

Posted by: Madison Guy [TypeKey Profile Page] at September 26, 2007 3:32 PM

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