Homes Sales.....It's About Price
Funny how people are waiting for the home sales numbers. Wall Street and the pundits want you to focus on the number of homes sold.
Who really cares about the number of homes sold....it is the price that matters. Could you imagine everyone cheering about a high volume day in the market and prices crashed 20%????
Real Estate prices in America are crashing. Never before has residential real estate decreased in value as much as it has in the past few years. And the pace of declines is accellerating.
Whether it be residential or commercial..... Real Estate is the most leveraged asset class...relatively and absolutely. In the past five years, trillions in toxic loans were being issued at 100% and more to supposed value. Now that value has eroded loans are defaulting at historically high rates.
It's not too difficult to understand. As the loans default, more distressed properties will hit the market driving prices down further. We are just in the early innings of this process.
As more and more families are financially ruined from the spiral, expect the economy to slow further.
It has already have a dramtic impact an Auto sales and airline travel this fall. Casinos are going bankrupt. Retailers are shuttnig down and commercial vacancies are skyrocketing. Tax revenues are evaporating. Few realize how important real estate and toxic lending were to the economy in the past few years.
Now, with homeowners having the lowest equity in their homes in history....the question now is how much further will prices fall????????????? How much slower will the economy settle?????