Thread: House Prices Continue to Decline as Talk of Credit Crisis Sp

House Prices Continue to Decline as Talk of Credit Crisis Spins Out of Control

October 1, 2008

By Dean Baker

"The root cause of the crisis is the deflating housing bubble, credit problems are secondary."

The Case-Shiller 20-city index fell by another 0.9 percent in July. It has fallen at an 8.6 percent annual rate over the last three months and is down by 16.3 percent from its year ago level. Nominal prices have now declined 19.5 percent from their peak two years ago, which implies a real decline of approximately 27 percent. This means that the bubble is approximately 60 percent deflated. This corresponds to a loss of more than $5 trillion in real housing wealth.

The near hysterical discussion (count the times “Great Depressionâ€

A home is place to lay one's head after a hard days work. A place to raise a family. A place for family and friends to gather.

If the value of the home goes up more than annual inflation the tax man smiles, the vultures circle over head.

A home is not revolving bank or credit account. So much for Hollywood.

Wall Street may have many wolves running about, but a truely conservitive home has guns inside to keep the wolves at bay.

Just my $.02 worth, inflation accounted for.