“I’m melting,” said the Wicked Witch after being doused with water in the land of Oz.
Well folks, looks like the economy is melting having been doused with a hefty dose of reality.
A new report today by the Joint Economic Committee of Congress, says the New York Times, is predicting some two MILLION foreclosures just by the end of next year—this “on homes purchased with subprime mortgages.”
The report is apparently far more dire than the prediction by the Bush administration of only half a million or so foreclosures. Surprised? Come now.
So, what does this mean in terms of money lost?
The report says 71 BILLION dollars will go down the drain due to lost real estate wealth caused by foreclosures on subprime loans alone.
And, it gets worse. Listen to this: Says the report, as quoted by the Times, “An additional $32 billion would be lost because foreclosed homes tend to drive down the prices of other houses in the neighborhood.”
Sort of like guilt by association–only, in this case, it is financial loss by association.
The real news is that hardly a day goes by when what we thought we all knew about the full extent of the problem gets tossed aside by new figures or a new private or government report.
Now, in Oz, you’ll recall, the whole damn mess began because that house happened to fall on a witch. If The Wiz was being penned today, the witch would have died of a coronary after her subprime mortgage tanked.
Related posts:
- Housing Slump Brings U.S. Economy Down;Manufacturing Stalls
- Focus on Foreclosures, 3-29-07
- How the Housing Crisis is Affecting Lenders and the Economy as a Whole
- Sub-Prime Lenders Get Crushed. Is Economy Set to Implode?
- Real Estate Dispatch – Christmas Eve Edition – 12/24/06
Article Author: Charles FeldmanCharles has written 179 articles for us.
Visit Charles's Website: http://www.thefeldmanblog.com
Charles is currently reporting for KNX Radio in Los Angeles, is the co-author of the book No Time To Think, and can be found commenting about the news on his blog, The Feldman Blog, as well as on The Huffington Post.
Joshua Dorkin
{ 5 comments… read them below or add one }
So much doom and gloom. Don’t worry, everything will work itself out eventually. Life goes on.
Unfortunately, even though there are problems, all the negative headlines scare people away even from the good deals.
There has to be a tourniquet sometime before a complete meltdown. Yes, the people living beyond their means, the ones who bought a new house, a Hummer and $10,000 worth of clothing on credit are certainly going to suffer. But when the prices get low enough, investors will snatch up the properties and make a good profit. Hopefully the lesson will be learned.
The real estate market is so uncertain right now, it makes u think if and when the industry will recover. Good post, keep up the good work.
I saw a recent article which surprisingly said that commercial construction is doing well for now.