As my colleague Ian Cooper noted yesterday in The Trader’s Pit Blog, California foreclosures have literally gone off the charts.
In fact, with the current pace over 517 new filings a day, serving foreclosure notices must be the only thing California deputies are doing these days.
But there was more bad housing news on the day. Existing home sales came in light again according to the National Association of Realtors.
It was the seventh straight drop as the spring selling season continued to come up lame. Sales fell 19% on a year over year basis.
Moreover, the median home price also plummeted once again as it dropped 7.7% from last year, a complete head scratcher for all of those who thought that real estate never declined.
Economist Robert Shiller, of course, was never counted in that group. And this is just the beginning he says.
From the Harford Courant by Eric Gershon entitled: Home Prices Seen Falling Further
“Robert J. Shiller began a talk Tuesday by joking about his reputation for bearing bad news. Then he offered some: Housing prices nationwide could plunge more than the 30 percent fall from 1925 to 1933, the Yale economist said, invoking the dark days of the Great Depression.
“I think there’s a good chance we’ll exceed that this time,” said Shiller, the widely cited expert in financial markets, real estate and speculation who helped devise the Standard & Poor’s Case-Shiller index of residential real estate values.
In the largest metropolitan areas across the nation, housing prices have dropped by about 15 percent during the current two-year slump – more in parts of Florida and California, less in some states, including Connecticut.
Shiller, famous for exactly pinning the dot-com meltdown in early 2000, also predicted the burst of the housing bubble. He favors bailouts of some families squeezed by falling values and the mortgage crisis.
“This is the biggest financial crisis since the Great Depression,” Shiller said in remarks at a breakfast talk at the New Haven Lawn Club, hosted by Citizens Bank.
“The reason why it can’t be ruled out as being totally ridiculous is we’re also in the midst of a significant liquidity meltdown,” said Joel Naroff of Naroff Economic Advisors in Pennsylvania. Banks, Naroff said, “don’t want to make loans, even basic loans.”
Shiller said he believes housing prices could fall more dramatically now than they did in the early Depression days because there was more speculative construction in recent years than there was in the 1920s, he said. In the 1997-2006 period, U.S. home prices rose 85 percent, he said, the biggest jump in history.
“It suddenly seemed possible that housing prices would go up 10 percent a year,” he said. “That’s crazy. … Can’t happen.”
Shiller is right by the way. It was crazy.
So lets review.
1.Prices are falling
2. Inventory is up
3. Sales are down
4. Mortgages are hard to get
5. Foreclosures are skyrocketing
The bottom in housing is nowhere in sight.