Wednesday, February 27, 2008
Case Shiller impacts
I consider my real estate emotions article my signature article. Its the previous article to this one. However... you have to look at this Graph. It is the rate at which home prices are declining in a select number of large markets.
Notice something? The west coast markets are all burning down at 3.0% to 3.5% lost equity per month. For some reason Miami is burning down slower; I wonder if its due to fewer resales due to all the fresh construction being sold cheap. Washington DC is joining the crowd too.
What's that mean? Simple. The national credit crunch is causing all 'bubble markets' to converge on the same loss rate. Since all areas covered by Case-Shiller are declining, we can state with certainty that the entire US residential real estate market is now in decline.
The loss rate is fractionally higher than what I predicted. I was predicting that the bubble markets would converge on a loss rate of 2.5% to 3.0%. So the question is, why is it worse?