Existing-house prices drop at a record rate nationwide

From the AP via the Houston Chronicle:

The median price of a single-family home fell to $219,800 last month, a drop of 2.5 percent from the price in September 2005. That was the biggest year-over-year price decline in records going back nearly four decades.

Housing, which had set sales records for both new and existing homes for five consecutive years, has been rapidly loosing altitude this year, as consumers were battered by rising mortgage rates, soaring energy prices and a slowing economy.

However, economists with the Realtors said they believed the housing decline could be hitting bottom.

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Yeah, well, it's no surprise that economists working for realtors think they're hitting bottom--their livelihood depends on good forecasts.

I prefer economists who are a bit removed from the middle of things. This price drop is definitely the sound of a bubble bursting. All of this has been predicted for at least a couple of years now, if not more. Princeton economist Paul Krugman has been talking about it for quite a while, insisting that what’s been keeping the US economy afloat since 9/11 has been the over inflated housing market, spurred on by artificially low interest rates coupled with psychotic no-interest and adjustable rate mortgages. And that means lots of people will soon have to make ridiculously high payments on ridiculously overvalued property, many of whom won’t be able to do it, and since the GOP rammed finance industry written bankruptcy “reform” through Congress…well…one wonders if the press is even going to cover all the financial bloodshed.

You know, if Krugman is right about how the economy has been driven these last few years by housing, then there may very well be another recession in the works. Frankly, I just don’t understand right-wing economics anymore.

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