Home prices in 20 U.S. metropolitan areas fell the most on record in July, indicating the threat to consumer spending was rising even before credit markets seized up in August. [Bloomberg]

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  1. okvol says:

    So there is a glut of houses on the market. I wonder if the fact that salaries are not keeping up with inflation has anything to do with this trend? And, how more and more folks are having to take lower paying jobs because their previous job moved overseas could affect home buying? Let’s not forget that the majority of items for sale in the US are foreign made, and the devaluation of the dollar is driving prices up. And, gasoline keeps creeping up in price…

    There are so many factors that lead to this event. And, they are all ugly.

  2. RogerDucky says:

    But, if the trend of “salaries not keeping up with inflation” continues, in the long term, it will cause deflation, which would make prices affordable to everyone again — provided, of course, that people still have places to work at…

  3. Virginia Consumer says:

    It has a lot to do with the aggressive tactics of the mortgage brokers. I found myself in a bad situation making less than I needed to pay my mortgage. I was lucky and found a way out, however, many do not. My mortgage wasn’t even that bad, however, the broker had used the wrong salary, one much higher, on the paperwork giving the bank and myself a false sense of what I could afford.

    A more common situation is that the mortgage broker sells the customer on a low up front mortgage that bites the buyer later. These are the sub-prime deals that are in the news. Banks were offering rates as low as 1% for the first year or two. Those with mortgage already know that most of your payment is interest and when the interest is really low the cost of the house is too. Anyway that 1% goes up in subsequent years to as much as 10% in some cases. This buries they buyer whose $700 /mo mortgage now costs $1500. Inflation did not eat up those dollars. Traditional mortgages have a fixed rate and don’t go up for the life of the loan. After even a few years the cost of the mortgage is a lot smaller component of a families budget.

    I know in the area I used to live in, one with very low housing prices already that foreclosures of the nature above were very common. So I really don’t think that jobs moving overseas and inflation are really the culprits here. They may still be affecting people in other ways, but that is not likely the real cause here.

    By the way if you find your job moving overseas get some training in the computer sciences. That industry is IMPORTING 100K jobs/year because there are not enough people here that can do it.

  4. pshah says:

    @Iowa Consumer: Nurses are in big demand as well. Also the jobs in CS are sourced from outside US mainly because of salary difference and the US companies wanting to make more profit.

  5. superflippy says:

    See, it’s stories like this that I think made selling our house so difficult. In stories about falling house sales, the local paper always had a little box showing that our city was mostly immune from the meltdown. But people don’t read the fine print, just the headlines.

    So even if you don’t live on the coast or in a large city, it’s still a buyer’s market. Perception is everything. (And we finally sold our house this week, after 4 months on the market, for 10K less than asking price.)

  6. swalve says:

    This is meaningless- how do we know the homes that happened to sell this month weren’t properly valued? The tightening of credit surely has caused people to choose lower priced homes since more of their housing budget now must go toward interest.

    This doesn’t (necessarily) mean that home values are down, it might just mean that the “product mix” is on the cheaper side.