Here's a short video report from CNBC yesterday about falling home prices:
The firm that is the source of the price data is reporting a 6% drop over the last few months and projects another 10% drop over the winter months. This de-flationary development will make it more difficult for banks to sell any foreclosed homes they may have in inventory, as it would make any loss they were previously estimating that much worse.
Is this the start of some serious deflation?
Related observation: CNBC reporter Olick makes a statement at the end of the video to the effect that "on Monday GMAC and Bank of America said that they will start some of the sales again and that will just add to the inventory..." This statement does not make sense. Foreclosures will add to inventories, sales will subtract form inventories. I've noticed that some of the mainstream reporting around this "foreclosure" issue is not differentiating between foreclosures and foreclosure sales. These banks I believe have stated that they will proceed with foreclosures as they need to press their legal rights, but I do not think that they are intending to proceed with foreclosure sales in light of the actual capital losses that they will have to realize upon the sale of a home at a price that is less than the loan amount.