Friday January 25, 2008

Median home price dropped for first time in 40 years

Sales of existing homes fell in December [2007], closing out a horrible year for housing in which sales of single-family homes plunged by the largest amount in 25 years. The median home price dropped for the entire year, the first time that has occurred in four decades. For the year, sales of single-family homes were down by 13%, the biggest drop since a 17.7% plunge in 1982. The median price for a single-family home dropped 1.8% to $217,000. That was the first annual price decline on records going back to 1968.

The new figures underscored the severity of the slump in housing, which has been battered for the past two years after enjoying a boom in which sales set records for five consecutive years. The housing bust has sent shock waves through the entire economy as defaults have risen, resulting in multibillion-dollar loses for big financial firms whose investments in subprime mortgages have gone sour.

- There's your inflation and deflation going on at the same time. Deflation in big-ticket items like houses and cars, and inflation in pretty much everything else that you need to use, eat or drink.

Given the deteriorating conditions, there is one way that this fall in housing prices could be arrested, or perhaps even reversed : hyper-inflation. How's that?

See also :

1. The housing bubble has burst
2. US 'spending binge' to end as housing market slows
3. Housing sales drop in 40 states

(2008-01-25 22:41:07 SGT) [Biz] Permalink

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