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The Housing Bust

October 24, 2007

It had been predicted for 4 years. I have said on numerous occasions, since 2002, that you simply cannot give people with bad credit mortgage loans and think all will be well. You can’t give someone a 4% first year mortgage loan that expands to 8% in five years and think they can afford the payments. You can’t give people 100% loans, or even 125% loans (which was done), or no interest loans and not see massive foreclosures down the road. And now the chickens are coming home to roost!

Who Wants Cheaper Auto Insurance?

Sales of existing homes plunged by a record amount in September as turmoil in mortgage markets added more problems to a housing industry in its worst slump in 16 years. The National Association of Realtors reported Wednesday that sales of existing homes fell 8 percent in September, the largest decline to show up in records dating to 1999. The seasonally adjusted annual sales rate of 5.04 million existing homes was also the slowest pace on record.

The weakness in sales translated into further pressure on prices. The median price — the point at which half the homes sold for more and half for less — fell to $211,700 in September, down by 4.2 percent from the sales price a year ago. It marked the 13th time out of the past 14 months that the year-over-year sales price has decreased.

And, it’s only begun! :-(

Written by Ernie · Filed Under Daily Commentary 

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