Tuesday, December 23, 2008

When Housing Became a "Serious Liability"

I was going to write something up, but Felix Salmon sums it all up best:

November is never a great month for home sales, but don't let that fool you: today's reports are truly gruesome, falling significantly short of very bearish expectations. New home sales, at an annualized rate of 407,000, are at their lowest level since 1991; existing home sales, which were running at a rate of over 7 million a year in 2005, are now down to less than 4.5 million.

The median home price in the US is now just $181,000 -- down from $215,000 as recently as June -- and total housing inventory for sale rose in months-supply terms (thanks to the drop in sales) and is now hitting all-time record levels of about one year's supply.


And here's the kicker:
All this is happening, remember, in an economy where roughly two-thirds of American households are owner-occupied. Owning one's own home, something which for most of this decade was a definite asset, is now a serious liability. Millions of workers can't move to somewhere with a better job market, and to make matters worse their net worth is now negative -- which means that no one will lend them any money, even if they are current on their mortgage payments.
Source: NAR

2 comments:

  1. Jake,

    I just finished an ebook and included a chart of yours on Merrill's capital raises, I need your permission to use it in the ebook with attribution back to your blogsite of course.

    The ebook's website is www.financialfuturesanalysis.com

    Please let me know one way or the other, thanks

    John Bougearel

    ReplyDelete
  2. John-

    Absolutely. Feel free to use anything from this blog as long as you link back.

    I look forward to taking a look at the ebook.

    Best,
    Jake

    ReplyDelete