Sunday October 05, 2008

Property market collapse : California housing prices drop record 41% amid defaults

bloomberg.com :

California home prices tumbled a record 41% in Aug 2008 from a year earlier as more than 101,000 foreclosure sales pushed down values in the most populous US state. The median price of an existing, single-family detached home fell to $350,140, and will likely fall further, the California Association of Realtors said today [25 Sep 2008] in a report. The median house price peaked at $595,000 in May 2007. California prices have declined for 11 straight months beginning in Oct 2007, Richard Kleinhenz, deputy chief economist of the Realtors group, said. Homes priced under $500,000 made up 72% of August sales compared with 40% a year earlier, due to the increase in distressed sales, which include homes in foreclosure and so-called short sales where the purchase price is less than what's owed on the house.

- A drop in real estate prices of of 41% isn't just a fall, it's more like a collapse. It's not a complete collapse yet though - there's more room to fall. The related consequences are still rippling through the economy, with an ongoing financial system meltdown, $700 billion bailout package, and numerous bank and financial institution failures.

The $700 billion bailout is not the first and it will not be the last, it is only currently the latest of many. What can the US government do, bail out all the homeowners? It's a multi-trillion dollar problem, and these hundred-billion-dollar bailouts are missing the mark by at least one or two orders of magnitude. I hear that the auto industry is next in line, and then the airline industry, and after that as I have remarked on the forums, the colleges, their students, and then the guy who sells them the textbooks. Funnily enough, the guy who sells the textbooks replied to my post and assured us that they will be the last ones in line for a bailout.

See also :

1. The housing bubble has burst
2. US 'spending binge' to end as housing market slows
3. All signs point to an economic slowdown
4. Housing Slowdown May Claim 800000 Jobs
5. Housing sales drop in 40 states

(2008-10-05 11:12:31 SGT) [Biz] Permalink Comments [3]

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