Housing Crisis: So Many Reasons Why It's Here
A lot of data out today, starting with the monthly S&P/Case Shiller Home Price Index. The headline there is that for the first time in this housing downturn (and possibly ever), every one of the twenty metro markets the report covers is in the negative on a month-to-month basis. We took a look at the top ten and it’s astounding to see how price appreciation went from 20% year-over-year in November of 2004 to depreciation of 5.5% in September of this year.
I know a lot of you write into the blog complaining that we generalize too much in these numbers and that the media frenzy is causing prices to fall in markets where there is simply no reason for such an effect. Well, that’s all changing.
Sources are telling me that there are local and national factors pushing the numbers. It’s interest rates, the financial markets, and the access to mortgages and mortgage finance that hit every market in the country, whether the market ever boomed in the first place. Consumer confidence is a huge issue as well, and go ahead and blame the media for that if you like, but policymakers, industry experts and industry associations are the ones giving us all the bad news we report.
Today in Detroit, the U.S. Conference of Mayors is holding a meetingto talk about a new report showing the impact of foreclosures on local cities. The numbers are staggering: billions of dollars in losses from weak residential investment, lower spending and income in the construction industries and curtailed consumer spending due to decreased home equity.
New York State alone is projected to lose $10 billion in 2008 economic output as a result of the mortgage crisis. The report gives all kinds of scary numbers, giving the impression that the foreclosure crisis, whether it’s in your backyard or not, will affect everything in your city from potholes to pencils in school, thanks to all the money lost.
The trouble is, the mayors don’t offer too many suggestions to fix it, other than the usual working with community groups, more communications with lenders, ad campaigns and the ever-popular “reform the FHA.”
Questions? Comments? RealtyCheck@cnbc.com