The sky might not be falling, but home prices certainly are and in more parts of the nation than ever before.
From October of 2006, home prices fell a whopping 6.1 percent. Most troubling, the declines happened in 20 of the largest metropolitan areas, and in many of those, the declines were much steeper.
In Miami, Florida, where on a recent trip I could not help but notice how many new condo buildings were under construction or about to open, home prices have fallen 12.4 percent from last year. There a numerous reports that people who had put down payments on some of those new condos are asking for their money back. This could be really bad news for the developers who might not be able to pay off the loans that were needed to get their projects off the drawing boards.
In Los Angeles, prices are down 8.8 percent from last year. Things have gotten so bad, in fact, that many real estate agents are turning to other occupations to make a living; applications for new licenses are, not surprisingly, down.
And, even in New York, home prices are down 4.1 percent from last year. That figure would no doubt have been much higher had it not been for the anomaly of a booming condo market in Manhattan where Europeans ,flush with new found wealth courtesy of the decline in value of the U.S. dollar against the Euro, are driving up prices.
But, prices in the rest of the city are down.
These figures, by the way, come via Standard & Poor’s/Case-Shiller indexes as reported by the New York Times.
Lest there be any doubt that these housing woes are the direct result of the subprime mortgage debacle, consider this: just for the month of October, home prices slid 1.4 percent, and that marks the fastest decline in some seven years!
Want more truly scary stuff? The current decline in housing prices is, according to the Times report which quotes Yale economist Robert J. Shiller, creator of the home prices indexes, “greater than at any time since 1941, when the housing market was faltering at the start of the American entry in World War II.”
The ripple effects of the subprime mortgage mess have already tightened credit markets;contributed to the demise of the all-business class airline, Maxjet;forced the early retirement of a number of bank CEOs; dampened the Christmas spirit at many major retailers; and caused stock markets to rise and fall and rise again at alarming rates.
And now, the bad news: By some expert predictions, home prices may drop as much as 30 percent by the time this mess is resolved, if it is resolved?