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"Home Prices Are Falling Like Almost Never Before"
Those are the words of Angelo Mozilo, the Chairman and Chief Executive of Countrywide Financial, the nation's largest mortgage lender, according to the NYT. As they say at the Federal Reserve Board and all the other places where the growth of the housing bubble was ignored over the last five years, "who could have known?"
--Dean Baker
COMMENTS (3)
I have a question...If someone were to start looking in a particular area or reigion of the housing market to see how it is doing,what factors/numbers/data would one look at. What in particular is an economist looking for and at when seeing "how a housing market is doing"?
Posted by: Jim Nichols | July 25, 2007 5:41 AM
Dean. Sorry, I just don't see substantive FALLING prices yet in SoCal! What I see are reductions from all-time high asking prices, minimal increases in credit requirements of lower income buyers & growing numbers of defaults that banks seem very willing to hold rather than reduce prices to unload.
I guess it's no surprise real estate pushers' rhetoric is at feverish levels hyping message that current prices have retraced the "bubble" & now we're seeing REAL value. Bottom line, out here I'm confused why anyone would buy at these levels; I'm STILL waiting for price correction to START!
How about commenting on societal costs of repealing of Glass-Steagall? Do you think there's any chance a different Administration will put in place MUCH NEEDED single body regulatory control over our recently deregulated financial sector?
Posted by: bailey | July 25, 2007 11:38 AM
Bailey (if you don't mind my jumping in for a moment):
"I just don't see substantive FALLING prices yet in SoCal! What I see are reductions from all-time high asking prices, minimal increases in credit requirements of lower income buyers & growing numbers of defaults that banks seem very willing to hold rather than reduce prices to unload."
Reductions from all-time high asking prices occur for a reason, even if they're small. The changes in lending standards still have a ways to go, but to date, we have seen some serious changes that effect everyone, not just low income buyers. 100% financing has all but disappeared. Most lenders have done away with no documentation loans, 2/28 and 3/27 ARMs (these were popular with speculators and were the source of many of today's problems), and with the CDO crisis that is currently building on Wall Street, lenders will certainly be facing even tighter restrictions in the future if they want to continue to sell off their loans to investors. Aside from the near record or forclosures and inventory in many areas, combined with severely low sales, changing lending standards alone will have a direct effect on affordability, and on prices.
Overall, I think that the big price reductions are still coming, it'll just be a while more before this all plays out.
Posted by: patient renter | July 25, 2007 1:55 PM