Dr. Housing Bubble:
Multiple sets of indicators are clearly showing that the housing market is entering a second winter. Home prices are inching closer to cycle lows and indicators of housing distress are rampant throughout the country. Home prices during the troubling five years of 1928 through 1933 saw a decline of 25.9 percent nationwide and this was during the Great Depression. The latest Case-Shiller data shows that home prices in the 20 City and 10 City composite measures are down by 32 percent from their 2006 peak. This is now nominally the worst housing correction since the Great Depression. The continuing correction in housing is economically challenging middle class households in ways vastly different from those during the Great Depression. What is troubling about the new cycle lows is that the liquidity injected into the banking system by the Federal Reserve simply delayed the inevitable while diverting precious resources to a broken financial system. The painful lesson of the new reality is that household income, the gas in the engine, is simply too low to support prices even at today’s new lower levels....
...Since the start of 2005 to the end of 2010, three million seven-hundred thousand American families have been kicked out onto the street. At an average of 2.3 people per household that’s 8.5 million Americans who have been directly, physically, affected by the popping of the US Housing Bubble, so far.
I estimate that by the time the “dust” settles on they myriad of personal tragedies that resulted from the misguided policies of the Clinton and more importantly the Bush era, to “promote” (i.e. subsidize) home ownership, six million American families will have been “de-housed” , that’s 14 million personal tragedies....
