[secondmortgages]

The housing bubble continues to deflate as evidenced by today's (1-19-06) housing start report. Nationwide housing starts declined 9%. Excluding the South, which is still recovering from Katrina, housing starts declined 21% nationwide. In the Midwest, housing starts declined 24% in December, from November's annual rate of 386,000 down to 295,000 in December. In the West, housing starts declined 22% in the month of December, from November's 553,000 annual rate down to a 433,000 annual rate. In the Northeast the decline was 14%. Below is a copy of the chart from Briefing.com showing the declines.


This can be found at: Briefing.com: Housing Starts

Prices have also been declining in many parts of the country, most notably in Southern California. Typical of these price declines is the situation in San Diego, where last months housing price decline was the largest in 18 years. Prices there declined 2.7% in the month of December alone, following monthly declines in each of the previous 3 months as well. The article describing this can be found at: San Diego Home Price Decline

Again, it appears the housing bubble has finally started to deflate. Now the questions are how much will it decline and how fast.

EconomicPopulistCommentary: HousingBubbleLinks

[littlePen]

I guess you think this is akin to the bursting of the Internete bubble, huh?

[egershna]

Sometimes statistics are used in very distorted ways.

For instance, it makes sense that there would be fewer housing starts - in the midwest - in December than in November. Think frost IN the ground and snow ON the ground. Happens every year.

On the other hand, a "correction" in the housing market is inevitable. People already have themselves extended too far out, and those with adjustable rate mortgages are screwed. You simply cannot pay for a $650,000 house on a $75,000 per year income.

[benderkoz]

FYI,

According to 'The Wall Street Journal', 43% of those buying houses the past few years have put down 2% or less!

With interest rates heading up, and housing prices going the opposite way, there is a real chance that many newer owners will owe more on their houses than they are worth.

And you know there is a peoblem when even that rag starts voicing concerns......................

[bestbyV]

FYI,

According to 'The Wall Street Journal', 43% of those buying houses the past few years have put down 2% or less!

With interest rates heading up, and housing prices going the opposite way, there is a real chance that many newer owners will owe more on their houses than they are worth.

And you know there is a peoblem when even that rag starts voicing concerns......................

All that's needed is a 5% dip in market values, and thousands of home-owners are in real trouble!

But this isn't necessarily an "economy" problem. It's a combination of a LOT of wrong things - including lenders WANTING to sell mortgages to people who have no business getting those kinds of loans.

It's all a paper numbers game, and the day WILL come when there's a correction that will take place. When that happens, there will be "wailing and gnashing of teeth"!

[QRhnNSg9]

If it isn't an 'economy' problem, then please explain why every recession/depression since the 'big' one of the 1930's-40's has been preceeded by a crash in the housing sector?

[Zesavenue]

Does anyone really think that $750K for a bungalow in CA isn't just a tad overpriced? Of course there will corrections. Anything reasonably priced in a normal part of the country is doing just fine, thank you. Just a little FYI. Not everything in America is Doom and Gloom, regardless of what your nitwit profs have told you. Get off campus and see the REAL world.

[Kragh]

Yep,

It's time to blow sunshine up everyone's ass and pretend that their standard of living isn't in decline- despite losing about 22% (on average) of their paychecks over the past 20 years.

[acceraStoof]

If it isn't an 'economy' problem, then please explain why every recession/depression since the 'big' one of the 1930's-40's has been preceeded by a crash in the housing sector?

It BECOMES an economic problem.

But the root problem is that people borrow too much money to buy a house they cannot afford - and do not have adequate downpayment money for.


Let's say you only have a 5% downpayment on a house you're buying for $500,000. So you owe $475,000 on a house that you think is going to increase in value. Everybody is happy IF that house increases to - say - $600,000 in value.

But let's say the value of your house decreases - due to any number of variables. Suddenly you owe $475,000 on a house that's only worth $400,000. Everybody is in a panic - ESPECIALLY the bank that loaned you the money in the first place!

It's all a paper "game". The success or failure of that "game" has many factors, including job market, interest rates, shifts in industry, etc. You simply cannot look at it as a black-and-white issue.

[Intockatt]

But Spand,

I do agree with you about that $750k bungalow in Laguna.

But it also applies to that $135,000 3-bedroom in Beloit, or even that $87,000 trailer in Alabama.

That's the true universiality of the problem.

[P1international]

Yep,

It's time to blow sunshine up everyone's ass and pretend that their standard of living isn't in decline- despite losing about 22% (on average) of their paychecks over the past 20 years.

I certainly have not lost 22% of my paychecks over the past 20 years. You've got to gulp down some wildly twisted facts and figures to believe that's the case for Americans.

Tell me, Joao... do you even own your own home?

[boiffrona]

TheJefferson,

The true problem is the same one we've had in every other Depression:

Too much money in too few hands.

Always a killer.

[romalama]

Yep,

It's time to blow sunshine up everyone's ass and pretend that their standard of living isn't in decline- despite losing about 22% (on average) of their paychecks over the past 20 years.

Maybe YOURS did, but then someone finally realized what you are worth. Normal people, that have some kind of skill besides opening their mouth and pushing paper, are doing just fine. Our incomes and property values are doing fine, also.

[noingenah]

You may not have, but per BLS figures 80% of US workers have.

Responding to #11.

[nuabuncarnigo]

TheJefferson,

The true problem is the same one we've had in every other Depression:

Too much money in too few hands.

Always a killer.

That is NOT the problem!

[Gmvkgkmn]

You may not have, but per BLS figures 80% of US workers have.

Responding to #11.

...again, do you own your own home?

[KuznehikVasaN]

...The true problem is the same one we've had in every other Depression:
...

As a professed teacher, I would assume you learned somewhere that there was only one REAL depression. That feeling you get when looking in the mirror is "personal" depression.

[IodinkBoilk]

I suggest you read Ravi Batra, as he was the first guy to point out this problem.

Agree, Spand, as long as you consider 80% of Americans as 'abnormal'.

How about those autoworkers?

Pencilnecks all?

[huerta]

Responding to #11.

There's a little button at the bottom right of each post labeled "Quote". Go back to the forum instructions and see if you can figure out how to use it.

[Intiltern]

Yes,

I own my own home.

Spand,

I assume that somewhere along the way you wwere schooled on the falsity of economic data vs your so-called 'real world.'

I suggest you read 'The Silent Depression' by Wallace Peterson to see what I mean.