Real estate house prices in the US continue their downward plunge. And since prices are falling, more homeowners find their equity gone and are therefore trying to sell their houses, too, resulting in still more declines.
The Case-Shiller home prices index shows another year-over-year drop of over 6%.
Every one of the 20 survey areas shows a decline since the previous month.
Of course, what is strinking about the housing price decline is that it is the result of several factors:
1. Radically changed financing climate removed the source of loans for people with less than good credit and without much of a down payment.
2. Falling prices beget more falling prices. More homeowners without equity choose to either sell or give up their houses in foreclosure or deed in lieu of foreclosure.
3. Historically low levels of equity. Equity has fallen from 70% to less than 50% on average. Although 1/3 of houses are owned free and clear, the remaining 2/3 have less equity than ever before on average.
4. Historically high consumer debt levels. Consumer debt continues to climb to unprecedented levels. Household income has not kept pace.
2008 promises to be even tougher as more adjustable mortgages reset and more homeowners decide to get out of their mortgages and cannot do so by refinancing.
Full story at Houses Prices Plunge.
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