Let's have a quick look at the median-based price indicators for last month. They were, in a word, horrifying. Between January and February, the size-adjusted median price declined 5.7 percent for single family homes and 7.7 percent for condos.
I emphasize the first clause of the above sentence. The aforementioned shellacking took place in a single month. From the September 2005 peak of the series, the size-adjusted median price is down 25.1 percent for single family homes and 28.1 percent for condos. The downtrend has accelerated of late, however, and a hefty portion of that decline has taken place in the past several months.The "plain vanilla" median, beloved by analysts everywhere despite being just about the least accurate of the price indicators, was hit even harder. It was down 7.4 percent for single family homes and 8.1 percent for condos. Again, in a month. From the aggregate peak in November 2005 the vanilla median is down 24.1 percent for detached homes and 26.4 percent for condos NEW YORK - Nervous homeowners and economic analysts have been wondering how much worse the housing market could get. On Thursday they got an answer: Plenty.
Foreclosures are at a record high. Home equity is at a record low. The housing market is spiraling down with no end in sight — and taking people's sense of economic security with it.
For the first time since the started tracking the data in 1945, the amount of debt tied up in American homes now exceeds the equity homeowners have built.
The Fed reported Thursday that homeowner equity actually slipped below 50 percent in the second quarter of last year, and fell to just below 48 percent in the fourth quarter.
And that was just one example in a day of dismal housing reports.The said foreclosures hit an all-time high in the final quarter of last year. And pending U.S. home sales — those in the gap between when a buyer signs a contract and when the deal closes — came in below analyst expectations for January and remained at the second-lowest reading on record.
Experts believe foreclosures will rise as more homeowners struggle with monthly payments as the interest rates on their mortgages adjust higher. Problems in the credit markets and eroding home values are making it harder for people to refinance their way out of unmanageable loans.
"If you're struggling with payments and you have negative equity in your home, your struggling isn't getting you very far," Elmendorf said. "It's very likely you want to stop and walk away."
Fevered talk in the capital of possible government fixes for the mortgage crisis belies an inconvenient truth of the credit market: banks simply are not eager to lend money.
Congress and the government may have a limited capacity to ease the crisis because it has gotten too advanced, experts say.
The latest signpost: Even a relatively modest legislative proposal to tighten the government's reins on mortgage finance companies Fannie Mae and Freddie Mac won't be coming together soon in the Senate Banking Committee, its chairman Sen. Christopher Dodd said Thursday.
Even with the Federal Reserve cutting a key interest rate five times in recent months, banks have been retrenching on lending. Many have suffered billions of dollars in losses from subprime mortgage securities that have sucked their capital dry. On a retail level, 55 percent of U.S. banks recently reported tightening their lending standards for mortgages to creditworthy borrowers, not those with tarnished credit histories considered high risk.
"This is just not going to be solved today,' said John Silvia, chief economist at Wachovia Corp. in Charlotte, N.C., and a former chief economist of the Senate Banking Committee. "A lot of banks just don't have the money right now" to lend.
And not for the biggest "No Shit" in the long sad history of this decade so far.