Dr. Housing Bubble 07/06/08

[Crewleader]

July 6th, 2008

Housing All-Stars: First Half 2008 in Review. Acceleration in Foreclosures, Historical Price Declines, Stimulation Checks, Expensive Texas Tea, and Job Losses.

Unless you follow the housing market closely, you may think that not much in the housing market has changed. Yes, in January we already knew that the housing market was having problems but these last 6 months have added fuel to the flame. In January, the year over year drop for Southern California was 13.3% and the median price was $425,000. That may seem horrific and was a record but measure that with data 6 months later that now has the year over year drop at 26.7% and a median price of $370,000. The velocity of the drop intensified exponentially during this time frame.

We can also measure this against national price changes with looking at the Case-Shiller data. In January when the data was released, the most recent data indicated the following:

20 City Composite
November 2006: 204.65

November 2007: 188.98

Drop of: 7.6%

Now fast forward to the most recent data:

April of 2007: 200.53

April of 2008: 169.85

Drop of: 15.2%

The Case-Shiller data trails the market by two months. That is, the data released in late June covers the market until April of 2008. The data released in late July will go up to May of 2008. This is something to remember because even data from other sources is 45 to 60 days behind because the nature of closing a sale on a home is not instantaneous. From signing a contract, getting financing, inspection, appraisal, and to closing escrow does take sometime. It’ll be interesting to see if we even get a tiny jump when the May and June data is reflected in the current data. If we are to look at preliminary data like mortgage applications and also contracts, the above trend is most likely to continue.

The first half also witnessed interesting sales gimmicks like buy one get one free marketing ploys to entice buyers to jump into the market. The government during this time also engineered the first bailout for a Wall Street investment firm of Bear Stearns. It turns out that things were worse than they wanted us to believe. During this time we also saw the fascinating dance phenomenon take fire not on Dancing with the Stars but on the streets of America. People were learning the ease and flexibility of moonwalking away from your mortgage and responsibilities. Sometimes in life, you do get second chances and people realized that those on Wall Street shouldn’t have complete domain over speculation. Mary and John Doe realized that they too had some power in the market.

The first half of 2008 was only the beginning of a year that is going to prove to be a major turning point in our nation’s history.

Foreclosures

http://www.doctorhousingbubble.com/housing-all-stars-first-half-2008-in-review-acceleration-in-foreclosures-historical-price-declines-stimulation-checks-expensive-texas-tea-and-job-losses/