(February 13, 2008) – Want to see some really ugly numbers? RealtyTrac released its foreclosure sales data by metropolitan area this morning. The findings, discussed in a story Forbes ran this morning called “Foreclosures Hurt Housing Market Further” are detailed below.
I put together the following chart using Associated Press data on the proportion of U.S. home sales in 2007 and 2006 that resulted from foreclosures, accessed here, so you can see what’s going on.
As I have been arguing, the black hole that the U.S. real estate market has fallen into is an asset market issue, not a GDP story. All the $600 checks in the world are not going to fix it–it has to be cured with asset market medicine. The GDP data that we use to define a recession don’t capture the pain of falling property values. It shows up on families’ balance sheets as illiquid assets and falling net worth. The bond market will come back to life only when fixed-income investors feel comfortable understanding and valuing future cash flow again. When that happens, as it always does, the property markets will stabilize too.
Meanwhile, if you are selling a house I hope you live in Vermont; if you are buying one I hope you are shopping in Nevada, like me.