Expert: Housing Market 'Blood-Bath' Ahead

If you thought the end of the housing slump was in sight, think again: the worst is yet to come, say market experts.

It's no longer borrowers with risky credit histories that are taking the punches. The jump in the 30-year fixed-rate mortgage by more than half a percentage point to 6.74 percent in the past five weeks — the biggest rate spike since 2004 — is even putting a crimp on borrowers with the best credit.

What's more, the national median home price is set for its first annual decline since the Great Depression, and the supply of unsold homes is at a record 4.2 million, according to the National Association of Realtors.

I have many friends who think this can't possibly happen in NY. I have consistently told them that your house is only worth what someone is willing to pay for it. If people are suffering economically, and they are, then prices will fall everywhere.

Another market expert opined that the situation is not just a housing recession anymore, it looks more and more like an economic recession.

I have been predicting an economic recession since I started this site. A recession is the Republican's worst nightmare and it seems it may just come true.

GDP Slowest Since 2002

Are we heading for recession.

The economy grew at its slowest pace since 2002 in the first three months of the year, according to a government report Thursday that was weaker than Wall Street expectations.

The Commerce Department's gross domestic product report, the broadest measure of the nation's economic activity, showed an annual growth rate of 0.6 percent in the first quarter. That's down from its initial estimate of 1.3 percent growth.


The nation's economy grew at its slowest pace since the end of 2002 in the first quarter.
Economists surveyed by Briefing.com had forecast the growth rate would slow to 0.8 percent.

The National Bureau of Economic Research defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months." According to this definition and the slowing growth rate are we already slipping into recession?

Home Prices Still Dropping

The housing market continued its slump in all areas of the country.

Many economists feel the housing market has not seen the bottom. Will the problems in the housing sector push the economy into recession?

Sales Of Existing Homes Plunge

I have been telling friends for quite some time that the current housing market was way too overpriced and that eventually the bottom will fall out. It seems the bottom keeps getting lower.

The National Association of Realtors said today that sales of existing homes, which account for about 80 percent of all home sales, fell 8.4 percent in March. That was the steepest decline since 1989.

At the same time, prices also dropped. The median price of an existing single-family home decreased 0.9 percent last month, to $215,300, compared with a year earlier.

With the sub prime mortgage disaster still unfolding and home prices at historically unaffordable prices, this was bound to happen. Just how long this slump will last and what effect it will have on the broader economy is still unknown. I believe the housing market is just the first in what will be many dominoes falling that will lead the U.S. into a recession by late this year or early next year. This is the nightmare scenario that Republicans have been dreading. Middle Class wages have been stagnant for years while home prices have climbed beyond their reach. This is the perfect storm created by years of foolish policies that benefit those at the upper levels of the economic scale.

Read the rest of this article here.

Mortgage Deliquencies Hit Record High in First Quarter

This article is bad news for Middle Class America since it was rising home values that made most people keep spending what they really didn't have.

Mortgage delinquency rates hit an all-time high in the first quarter of 2007, according to data compiled by Equifax and analyzed by Moody’s Economy.com.

At 6.19%, Detroit (above) is the metro area with the highest mortgage delinquency rate.

The percentage of mortgages in default rose to 2.87%, surpassing the worst levels following the 2001 recession.

“The news is unremittingly bad,” CNBC's Steve Liesman said Tuesday. “Delinquency rates were up in 44 of the 50 states.”

Since it was the psychological thought that the equity within the home was enough to continue spending will Americans now pull back and cause the economy into a recession? Most Americans believe it will.
I am sure a recession right before the 2008 elections is just what the Republicans fear the most but it might be just enough to finally show the average American that the Republican party does not and has not ever cared about your issues.