Disappearing now: $6 trillion in housing wealth

A Washington think tank is warning that housing prices are falling at an accelerating level, destroying wealth at a pace that will cost the average homeowner $85,000 in lost wealth this year alone.

The projections by the Center for Economic and Policy Research are based on the numbers in Tuesday's Case-Shiller home price index, which showed accelerating price declines in most big cities.

The annual rate of price decline over the last quarter was 24.9% in the 20-city index and 25.8% in the 10-city index," the center said in its Housing Market Monitor today. "At this rate of price decline, the excesses of the housing bubble will have largely disappeared by the end of the year. At the same time, the price decline implies an incredibly rapid loss of wealth. In real terms, the rate of price decline in the 20-city index would imply a loss of almost $6 trillion in real housing wealth over the course of the year, an average of $85,000 per homeowner."

I'm a so-so student of economic history, but I'd have to bet that, even adjusted for inflation, the only time that many Americans have lost that much wealth in a short period of time would have been during the Great Depression. I'm not even sure it happened during the Depression. (I understand: This hasn't happened yet; it's only a prediction.)

Repeating again: The CEPR says prices are falling so rapidly that the bubble will be gone by the end of 2008, but the loss of housing wealth will be massive.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo: Getty Images

Comments

[Jason]

They're not really losing wealth because they never had it in the first place. Their assets are being reset to the values they should have been. The ones that purchased homes for these inflated prices never had that wealth to begin in the first place.

[Florida Homeowner]

Much ado about nothing. If the average homeowner lost $85000 in this downturn, how much did the average homeowner gain from 2001 to 2006? In my case, based on current appraisals and similar sales, my home went up $400,000 and is now only up $200,000. Still pretty good return on a $300,000 investment, and since I haven't sold, it isn't over yet.

[Frank]

There is no doubt in my mind that Bush has played a significant role in ruining the US economy. At 72 I’ll be a long-time dead by the time our country is out of debt.

[JEFF]

Keep Falling Baby - I want to see a for sale sign on every block. Sorry homeowners - that phantom money you thought you had is all gone, better sell the flat screen if you want to keep your house! HA HA

[DG]

In the midst of a 'relief rally" you can almost hear people singing "happy days are here again" as if the worse is over.

We HIT the iceberg. Just because your not floating in the ocean yet doesn't mean the ship isn't sinking. REAL adjustments to how many American spend are slow to change.

Those that change quickly will be spared. Those who look for an alternative to the Housing ATM machine to fund their hyper-inflated lifestyle will be forced to move (hide) from the false reality of wealth.

GEE. False reality of wealth in LA? Nah. Get your 16-y.o.'s out of 4000 pound vehicles, out of brazilian bikinis, off the phone and into the classroom. Or your retirement will be anything but....

[John]

Very nice. The best thing that has happened to America in a long long time. Maybe all the real estate agents and house flippers can go back to delivering pizzas and we can all have normal home prices again.

[vultur]

I'm Greatly Depressed that I didn't act on the obvious short sale of subprime debt like Mr. Paulson. This fall was so obvious to anyone with common sense and I called it years ago but I lacked the courage to make that bet and cash in big time.

[Steve Plunk]

Remember this wealth magically appeared courtesy of the very same housing bubble that has now burst. Easy come, easy go.

[Cal]

What if you rent? I dont think the CPER is going to be invited to the NAR Christmas party.

[Hector]

Good. I'll be able to afford a house finally.

[Yarr]

That's what happens when housing prices spend a decade or more being over valued. Prices are just now correcting closer down to what the homes are actually worth. Too many people trying to get rich quick!

[JW]

The bubble may be over at the end of 2008 in many parts of the country but it's not going to be over in SoCal for several more years. There's a lot more pain to be had when the ARM resets start arriving in 2009-2010.

[Laker]

"....will cost the average homeowner $85,000 in lost wealth this year alone...."

What kind of WEALTH are you talking about?????? It is debt, not wealth. And even if you consider people that had their house suddenly gain huge equity...it was fake and mainly temporary. When this "wealth" is based on liar loans given to everybody that breath, that is not wealth but more like ponzy scheme temporary money making. I bet you $1000 that even my gold fish in my 10 gallon tank could get approved for that 80/20 $1,000,000 Option ARM loan back in 2005-2006.
Today that they are jsut starting to get back to normal lending practices....and my gold fish are suddenly not qualify for that option ARM loan...wow...what a surprise...How come??? My poor fish will need to leave the rest of their life in the 10 gallon tank, and not in a Mcmansion...

"....The CPER says prices are falling so rapidly that the bubble will be gone by the end of 2008....."

No SH**, please check my modest blog, I plotted the case shiller up to February and added my prediction that is just using current trend using some physics and gravity principles coupled with basic math. Look at the pink line...It is exactly what the CPER are saying...the bubble will deflate almost completely by start of 2009...
If you are curious, the yellow line is from shockg and lefty.

[Glenn / CA]

What you didn't say was how fast and how much the home prices went up. My home tripled in just 3 years before the bubble burst, and it has "only" lost 30% so far. If you look at the heartland of the country,they did not have their home prices rise like that, and they are not falling like that either.

The people who are affected were the ones who did not look to see what happened in the '90s and made very poor buying or refinancing decisions. Also, you only lose if you sell. Please tell the story instead of writing panic headlines.

[Dave-o]

Thank God I dumped my condo and got out of my ARM when I did.

Still gaining equity on my new home...houses are selling like crazy here, with almost no drop in prices.

[RZ]

How can wealth that didn't exist in the first place disappear? Am I wealthy because my combined credit card limit is near $100,000, even though I can't afford to spend even 10% of that amount? Of course not!

[Walt C]

The article only shows one side of the story. It fails to point out that for the last 6 years or so, housing prices rose so steeply as to create an un-affordable dream for so many people who would never have a chance to own a home, while creating the unrealistic illusion among so many people who bought into the idea that they suddenly had more money than they ever dreamed as though they had done something to create their riches. You make this out to be a depression like situation, while a strong argument can be made that housing wealth was never there to begin with. The last 6 years of growth has all been monopoly money to too many people with unrealistic expectations.

You cannot have it both ways. If you look at housing prices today compared to 7 years ago, it is still a huge gain. New buyers are still priced out of the market. People who owned the same home 7 years ago, are still ahead--on paper. The housing market can still fall but demand will still out pace supply, and when the credit markets reset, prices will be headed back up. So will the artificial wealth.

By the way, go back and look at the overall wealth loss of 2000-2001 during the dot com bubble burst. Another time of unrealistic expectations and over playing with the monopoly money.

[Happy4LA]

This is wealth that was not earned or based on anything but speculation in housing over the last 10 years. When median price housing has no correlation to the median priced home, something is wrong. Easy money was given to too many people whou should not have qualified for a loan. 10 years ago a $300,000 home was a nice home in California, now it isn't. That home is now approximately $700,000 in some areas even though incomes have not increased 200% over the last 10 years.

The mortgage companies have to be blamed here not just for causing this mess but for being negligent with the money they were loaning out. How stupid were they to give some of this loans? Not to mention the loans layered with fraudulent incomes to buy second and third homes on speculation.

[mlimberg]

""will cost the average homeowner $85,000 in lost wealth this year alone.""

You never had this gain unless you sold your home...

You do not have a "gain" unless you sell the asset.

Put that in the bank....

[Paul David]

No big deal if you're not in debt. The (paper) wealth increase of many of these people more than likely increased by that much over the last couple of years. The hurting ones are the ignorant or greedy that thought this would go on forever and 'cashed out' on this vaporous wealth!

[Jim]

Those projections are still overly optimistic. Based on historical lending patterns, a homeowner can only realistically afford a home at 3 X annual salary. With an average household income of approximately $40K, that means the average home price will have to drop to about $120K from its current level at just shy of $220K for equilibrium to be reached. That's almost 2 more years of declining prices.

That's just a straight-line extrapolation of lending policies. It doesn't take into account the explosion in gas prices, commodity prices, weak dollar, etc. Nor does it account for the current overhang of unsold homes on the market or those who will be tipped into foreclosure over the next 12 months by a declining economy.

I could go on, but in the interest of brevity I'll stop there. The conclusion: Don't look for a "bottoming-out" any time in the next 18-24 months. If we're lucky, we're talking about 2011 or 2012.

...and I'm being optimistic...

[elizabeth]

$6 trillion in "lost wealth"? No houses have disappeared, burnt down, been destroyed. The houses still exist -- homeowners still have a roof over their heads, and once the bubble has popped, new homeowners will find housing much more affordable. It's unfortunate that some people will lose in the process, but in the end it will be a GOOD thing!

[SDDan]

The 6 Trillion was never real to begin with. It was all make believe appreciation driven by easy credit.

[The Snob]

Let's start by agreeing that these numbers are big and would certainly have some important consequences. But, I'm not sure this number means much at face value.

My big question is, how much of this is destruction of real wealth versus paper losses? If you bought before 2000, then I'd bet that in most areas, your house is worth less than in 2006, but more than when you bought it. Certainly the people who bought from 2005-2007 are in danger of being underwater, as are those who took out HELOCs and blew the money. I've yet to see a good, detailed report on what those numbers look like.

[sonofdy]

After vast over-inflation of property values for years, why are you suprised? As yourself this, is a smal 2 bedroom house with almost no land really worth 500,000 dollars? Loss in real estate wealth? Not really. Just the market correcting. The only people being hurt here are those who were left with the hot potato. I saw this coming years ago when I saw people paying 400,000 for a shack, slapping a coat of paint on it and selling it for 500,000. I am sorry for those caught out at the end but this is no different from the dot gone bubble in the late 90's. Let the real estate market fall. In 12-24 months it will recover at a more realistic level.

[David Hale]

Interesting, However I would note that the truly mind-boggling prediction of "6 trillion" was an inflated value that lacked a historical foundation, hence it is a disappearance of "money" that was not warrented in the first place.

[Donny]

Is that real wealth or perceived wealth based on an extremely speculative housing market? I feel for the ones left holding the bag; but homes are like the stock market. You don't want to be the last buying it. This has to be cyclical or else we'd have clerks making $250,000 as minimum wage. Home prices will adjust and realistic people will have another chance, a better chance, to buy a home.

[JK]

"...will cost the average homeowner $85,000 in lost wealth this year alone."

Except it's not really wealth until you actually sell the home and pocket the money. I think that's been a big part of the problem. People think they are wealthy because some arbitrary appraiser told them that their home is worth some ridiculous figure. Your home is worth what people are willing to pay for it. If you have $1 million in equity in your home, do you really have a million dollars? NO, not until you are able to sell the home for a million over what you paid for it and then actually get the money.

[UhhhhWhat]

****There is no doubt in my mind that Bush has played a significant role in ruining the US economy. ****

Right. Because you say so. An overinflated RE market is finally adjusting and this is evidence that Bush "ruined" the US economy.

[ideal4investors]

I agree it is a great loss of wealth in a short period of time. But it would be interesting to see how much wealth the average homeowner has accumulated in the past 5 years even with the recent drop? Or the past 10 years? I would bet that even with the deflation in home values taking place right now, many people are still seeing a very good rate of return on their homes in the long term.

[Lisa]

I live in Houston, Texas where our home prices were not inflated. I live in a very nice neighborhood with a 2700 square foot home on a huge lot with big shady oaks in one of the best school districts in Texas. I paid $160,000 for my home with granite countertops, all stainless appliances, a sprinkler system, a manicured landscaped lawn, a hidden back alley garage, on a 14,000 square foot lot. My relatives that live in California and Upstate New York are awestruck at the size and quality of home you can purchase in Houston. I think the home prices here are more realistic and in line with reality. People in other areas that lived in a home like mine who were told it was worth $450,000 and then went out and borrowed $100,000 on that only to find their home is no longer worth what they thought got themselves in their own pickle. If I had been told my home was worth a million bucks, I would still be fine because I didn't overextend myself by pulling imaginary money i didn't really have out of my home.

[ideal4investors]

I agree it is a great loss of wealth in a short period of time. But it would be interesting to see how much wealth the average homeowner has accumulated in the past 5 years even with the recent drop? Or the past 10 years? I would bet that even with the deflation in home values taking place right now, many people are still seeing a very good rate of return on their homes in the long term.

[Ben]

And for those like me that bought a house during this period, and never 'spent' our vanishing equity, we now owe more than its worth.

[Duane LeGate]

We called this in September of 2006, all the way down to the MSA level.

Here is the audio of the intereview… http://www.centralvalleybusinesstimes.com/
links/bubble.mp3

Here is the link of the article… http://www.centralvalleybusinesstimes.com/
stories/001/?ID=3053

BTW.. also called HEDGE FUNDS BEING IN TROUBLE… due to this (in the audio)

For what its worth, home prices will stabilize by 6-9 months... we are at bottom as we speak.

[Robert]

Good, let them keep on a falling.

[John Lepone]

The Fed bail out of institutions that made bad credit decisions for excess profits is coming out of everyone's pockets. In 1965 my wife and I both has jobs and my mother still had to sign for our loan to purchase a new car. In the 1990s my son had a gold credit card while a senior in college with no job. The idea that bad loans are ok as long as the intrest is high enough, is bad business. Our current credit mess, driven by greed, is a house of cards ready to fall.

[Duane LeGate]

we called this back in 2006, all the way down to the MSA level.

Here is the audio of the intereview… http://www.centralvalleybusinesstimes.com/links/\
bubble.mp3

Here is the link of the article… http://www.centralvalleybusinesstimes.com/
stories/001/?ID=3053

BTW.. also called HEDGE FUNDS BEING IN TROUBLE (in the audio)

For what its worth, we are almost at bottom..

http://www.HBNInteractive.com

[Kevin]

To anyone who was stupid enough to get an ARM when rates were at historical lows - Do you watch the Simpsons? I picutre a BIG, "Ha Ha" from Nelson...

Why in the world would you get an ARM when rates are at historic lows??? They can only go one way, UP!

this is a much need market correction and the 'wealth' never existed in the first place.

[John]

Peter, how can the bubble be gone by the end of 2008 if the Option ARM and Alt-A ARM resets don't happen until 2010 through early 2012?

I know it's not question day, but your thoughts on this would be welcome.

Are we going to be deep into over-correction territory soon?

[tuma]

Total BS. The "wealth" to being lost was never there in the first place. It was phantom wealth. It was illusionary. It was 'wealth' backed by speculation and as with everything speculative then end is justified. Housing must come down more and even faster; align with fundamentals (rents,income,population) and return to historical norms. Then and only then can we relaunch this economy on a sustainable footing. That's why you have to help us STOP the bailout...>

www.angryrenter.com

[Evil Banker]

Hahaha... "disappearing" are journalistic ethics. Anybody with half a brain knows that wealth doesn't disappear. It simply changes hands.

In this case, the wealth was stolen by greedy appraisers, lenders and realtors pushing unconscionable financing products and schemes just so they could get their commissions.

The American Dream has become the American Scheme and the rest of the world is onto you... that's why we Evil Bankers are crushing the dollar - to make you poorer than ever.

[David]

Posted by: Frank | April 30, 2008 at 10:29 AM

Frank, open your eyes man. More people owning homes is a good thing from a tax perspective i.e. the city/state/federal government coffers overflow. The problem is that ALL of our elected officials showed no fiscal restraint, not just Bush and his administration. Watch your trash bill: Mayor V is raising your rate to cover what? Yep, the lost tax revenue from foreclosed owners and empty houses. But you sure never heard a squeak out of him OR Ahnold back when the fountain of tax revenue was running over, did you? If you'd like to point a finger, look to the Federal Reserve and their monetary policy, NOT the White House. Loose lending by less than scrupulous financial institutions to morons without a pot to pee in resulted in the current fiscal issues (note: we're not in a recession based on Q1 economic growth stats released today). Bush offered opportunities that helped the post-9/11/01 economy recover; greed drove the rest of the market to find loopholes, prey on the willing, and put the big lenders at risk of write-offs. But hey, what's $20B when you made $100B?

Listen, you're 72 so I know you've played slot machines. When you put $100 in and you only get $20 back, then you put that in and wind up with empty pockets, do you walk over to a pit boss and ask him if you can get your money back 'because you weren't aware of the risks of gambling' or 'weren't told that you might lose all your money AND the house's money'? Heck no. No one held your feet to the fire ~ just like no one forced you to go out and buy a house with unsustainable payment terms. But at 72, you're probably smarter than that, right?

The Feds should not reward stupid people for making stupid decisions with taxpayer dollars. Bush gets it but he's being forced to cut the idiots financial slack by the Dems. McCain gets it too. Hillary and Obie, not so much: taxpayers should not be responsible for bailing out homeowners who A) knew they were getting in over their head or B) have changing circumstances that prevent them from making their payments. If I take out a marker at the blackjack table and lose, you think the pit boss is letting me off the hook? You want to play, you got to pay, and if you can't, you suffer the consequences i.e. bankruptcy, foreclosure, bad credit, tax bills, etc.

What is my reward for making ALL of my payments, on time, for more than the minimum, on the mortgages in my name? Anyone? Can I get some taxpayer dollars for being a GOOD mortgage holder?? Puh-lease.

[Tom]

How about the reason for the bubble in the first place? The bankers did not just suddenly and collectively lose their minds. The Fed created this bubble when it tried to re-inflate the stock bubble that burst in 2000/2001. By opening the spigot on credit, banks were flooded with liquidity, and gave mortgages, conservatively at first, but with a continued credit flood all the way through 2005, houses were rising so fast it seemed there was no losing. That is when the risky lending kicked in, but the roots go back further.

Also, the Fed is doing the same thing now, trying to re-inflate housing. And like last time, the bubble is going elsewhere, this time to commodities. All we get is higher prices, without saving the banks or the housing bubble.

[Doug]

This wealth was real wealth just like the wealth in stocks or 401ks are real wealth. If your stocks go up, you are wealthier, even if it's just on paper. Everything is just paper or computer data. It's the collective acceptance of these items that constitute a sense of wealth. The dollar is just paper. I'm a real estate appraiser in Detroit. I've seen this coming for years. The problem was not low interest rates, it was the severe lowering of credit standards and loan to value ratios that the big banks did to get more loans to sell to Wall Street for big commissions. Even with low rates, if they had not made it possible for borrowers to get these loans, we wouldn't be in this situation. The name of the game was to approve anything, sell the paper for a big commission and if it went bad, it was someone elses problem. Wall Stree greed and the rating services that were suposed to place an honest value on the worth and risk of these loans are to blame, and of couse the Bush administraion that gutted financial ovesight.

[Lee]

What is amusing to me is that we had two opportunities to put intelligent, competent leadership in charge of the administration in Washington. We were all sold out by the poorly educated Nascar voters who voted for a guy that they "would like to have a beer with". Well, take a good look at the economy and the 40 billion per month we are spending on jobs programs and roads in Iraq, largest decline in RE in 75 years, $4.00 a gal for gas, rising food costs, record foreclosures, rapidly declining dollar and a budget deficit 10 times the size of the surplus that was left to this pres. and congratulate yourselves! You got just what you deserved. Maybe this time enough people will vote intelligently.

[DC]

Sorry, Banker, but that wealth IS real - as real as the FIAT its based upon. If it can be used to buy, sell, trade... its as real as anything else.

AND, whats going to happen with the trickle downs already ocurring with home equity drying up? Im looking forward to a real steal on college tuition.

The house is no longer a pool for cheap H.E. loans for home improvement (stupid - paying to fix someone elses house up? - not me!) and college loans.

Ill be glad to see the scam called " you have to have a 4 year degree and mountain of debt to get a job to go more into debt" come to an end.

Im not waiting to buy A house, Im looking to buy 2 or 3... Living like a dog is going to pay off.

[mike burns]

A few years ago, Congress and regulators were holding hearings and "encouraging" banks to loan to more poor people. They were crying that housing prices were too high for people to afford.

Now prices have dropped and they're whining that prices are too low. As a renter, I'm happy to see prices dropping a little, but they're still much higher than they were in 2000.

[Mike W]

Wealth didn't disappear. Home prices rose mostly due to fraud and crazy speculation not from fundamentals. Like stocks, it's merely paper gains until one secures his profit by selling. However, there was a redistribution of wealth that went on. Borrowers and lenders, participating at or near the top and left holding the bag, transferred a lot of their wealth over to sellers, brokers, agents, assessors, etc.

IMO CPER is wrong in claiming the bubble will be gone by the end of 2008. Typically, it takes 5 to 6 years to reach bottom after a housing bubble bursts. By the end of this year, homes will still be UNAFFORDABLE to the average person. Until we return back to the historic trend line, prices will continue to fall. We probably will see them drop to 1998/1999 levels. All fraud-fueled bubbles undershoot. This one will be no different. Don't count on seeing a bottom until 2010 at the earliest.

[Wolfgang]

Why hasn't anyone asked the obvious question? If housing prices are declining - and are projected to continue to decline - does that also mean a decline in real estate taxes? After all, the tax is based on assessed valuation. If the value goes down, then the tax has to go down, n'est pas? Does that mean that municipal government is going to have to leave within its means? Or more properly does that mean that municipal government will have to go back to the homeowners and ask, through referenda, for tax increases since they won't be able to hide behind the automatic increase through the assessed valuation process?

[MyLessThanPrimeBeef]

First, it's topless - 'Prices will just keep going up. I don't foresee a top, ever.'

Then, it's bottomless. They can't see a bottom now.

If you watch carefully, you will see this porno is getting darker...lots of pain, the S&M variety, because the director is one very sick guy.

But, it's not really well made. These amateur porno actors have no self control; they keep going off prematurely, from the very beginning of the shoot to even now, jumping into the 'relief rally' too soon, vulturing too early.

[JUSTME]

We blame Alan Greenspan for this mess! He of all people should have known (and no doubt did, but didn't care) what would happen if he/Feds kept raising interest rates, right when so many ARMS and balloon-payment mortgages were up for renewal at new, higher rates! Now all the old goat can do is proclaim that the U.S. is in a recession! Thanks a lot, dumbo! In the meantime, many of us now are (trying to keep up with) paying monthly mortgage debt that is higher than the new, deflated value of our homes... Idiots!

[ken]

Hello To all you gloating retards out there,only 1% of the houising market is subprime,flippers and such-the vast majority of home buyers over the last few years were normal honest people who put down the required % at the purchase,dont look now but all you gloaters have lost That $85,000 also-dont cry,this is a real world problem that will screw all of us so wake the hell up and stop acting like idiots-I am tired of what America has become-and you gloating morons are going to elect the next anti-christ(I mean president)lord help us

[Rico]

Thanks King George! Another Bush, another recession, lost sovereignity, lost American wealth, lost American wages, devalued dollar, lost jobs, wars which have no end, rampant inflation, lost value in retirement funds, skyrocketing gas & energy prices....... But, enjoy your $600.00 (if you're lucky enough to receive that much). Washington D.C. needs to be put out of business !

[Geof]

I guess the "average" homeowner shouldn't have been buying Junior McMansions they couldn't afford. Or using non-existent wealth to support their lifestyle.

I laugh at the plight of the Noveau Rich and their pretentious white elephant houses...one of which I'll probably buy at the Sheriff's bluelight special repo sale on the courthouse steps at a massive discount. Then my money-in-the-bank, immaculate credit redneck butt will be the one living large. I'll use the inevitable appreciation to buy some pretentious spiffy suits, a BMW, gold chain, and a trophy wife and the cycle will begin anew...

[Dan]

For those math challenged posters who say that the wealth in housing was imaginary. It was not! At one time, there were willing buyers and willing sellers, once those two met, a fair price was determined. And that fair price went on the balance sheet as an asset. Now there are fewer willing buyers, so prices go down and that asset on the balance sheet goes down with it. It's called supply and demand. When the asset side of the balance sheet goes down, you have lost wealth.

[Kelly]

If my appraised value goes down, so do my property taxes. I bought my home as a place to live, not as an investment.

[PAUL ASHTON]

No tree grows to the sky. Bush nor Greenspan held a gun to anybody's head, but GREED did. If nobody borrowed, prices would have risen modestly. Here in Oregon, our prices still appreciate 4% because the banks were smarter than the morons elsewhere. Oh, and the banks were pushed to loan to sub-primes so that "everybody could own a part of the american dream.

[Robert Cowger]

I watched two land owners in this small town buy from each other and raise the price each time the 10 acres of land was sold to each other. Each time, they registered the sale with the local Tax Assessor Collector. Therefore, the value of the land went up.
It started at a sales price of $2,000 and ended at $20,000. That is what they want for the land now for this land which they cannot sell. They lost nothing if the price falls to $2,000 again because they never had the money. Their loss will be the cost of registering the sale with the local TAC.

I know others who have done the same thing with houses in town.

BS.

[Jacque Bauer]

Yes, it is certainly true that no one has lost intrinsic "value" in this re-adjustment, anymore than the Dutch lost in tulip bulb prices hundreds of years ago - only paper value. There is no one to "blame" except for the speculators who bid up the prices, which eventually were unsustainable. The prices of today are completely appropriate - but for today only.

[Eddie of Long Beach]

What Jason said in Comment 1 can't be overemphasized:

"They're not really losing wealth because they never had it in the first place. Their assets are being reset to the values they should have been. The ones that purchased homes for these inflated prices never had that wealth to begin in the first place."

[JIMV]

Remember the real issue. Most folk with homes losing value are not selling, the problem is local governments pretending those losses have not occurred and taxing as though the new $250K home is still a paper $400K home. That money is being sucked out of our pockets.

[Cal]

The good news for America is the average homeowner didn't lose 85k, the losses are concentrated in the bubble states. The bad news is the average California homeowner lost much more than that.

Between MEW and purchases during the bubble.. this lost wealth is very real.

[Rich]

"They're not really losing wealth because they never had it in the first place. Their assets are being reset to the values they should have been. The ones that purchased homes for these inflated prices never had that wealth to begin in the first place."

Well, that covers most of the metaphysical traps people fall into when they talk about prices. You don't get to wave a wand and call something "unreal" just because you didn't like the trend; your upcoming paycheck isn't "real", nor is your annual income, until it's in the bank, right? But nobody would argue that you don't have an income!

Any price that somebody paid for a house, where some bank shelled out real irrevocable dollars to somebody else, was "real". People are paying taxes calculated from those prices, and people were borrowing based on prices appraised from those prices. Those prices were "real" until the market revised them. Those of us who live outside of California insist your prices have mostly been "unreal" in relation to the same housing value elsewhere, but you all insist your inflated market is justified by your sunshine. We say you will inevitably lose it all in an earthquake, so it must be "unreal"--who's right, or do we acknowledge that value changes over time? Who knew what was or will be "real"? People aren't very good with probability theory, so we can't even go there. Suffice it to say that everyone had the opportunity to leverage their unrealized gains by borrowing against their equity, but many didn't, so now that opportunity is lost; but it was "real"...

[Chloe]

Real estate is local. The gentleman in Houston, his property cannot be compared to, let's say for comparison sake, anything in Las Vegas or even in a suburb of Chicago. And no real estate market anywhere can compare to what happened to the California housing market. We in Vegas got stuck with those lame brained California speculators and house flippers that came over the state line in 2005/2006 and now 98% of those homes that they thought they would get rich quick with are in foreclosure. And because of those foreclosures - they have ruined many a nice neighborhood here and driven the housing prices down to a scary level. We bought our home new in 2000 for $121,000. We've had it on the market now for over a year and we feel we are asking a fair price for it. Back in 2006, same model house was going for $247,000, which we knew at the time was GROSSLY overpriced!! (Those who bought then at that price are now in forclosure!) Now, because of the numerous foreclosures in the community, we are being screwed. Some of the houses have been sold for just a little over what we all paid back in 2000. We refuse to bring the price down to what it was in 2001, 02 or 03!! If that's the case - then why would anyone want to buy any real estate if the value of it will never appreciate? As much as I dislike Bush, he isn't at fault for this. It's the lenders, the bulders, the greedy, unscrupulous people out there who were greedy enough to give a $400,000 mortgage to Joe Blow without any credit references or even proof of a job!!! How I wish we can prosecute THOSE idiots!! I hope they all had to give up their Mecedes and Escalades and now are driving used Ford Focuses and renting 2 bedroom apartments since they, too, lost their homes because of greed.

[JLD]

Thank God I am not alone out in the ocean of overvaluation. I was pleased to read so many responses that realize this housing mess was setup to be inevitable. Housing could not go up at 8-10% annually forever, Greenspan was so full of it to push variable rate mortgages over fix (as well as advocating using your equity in a house as a piggy bank, thanks
Alan). And yes America, some people are not meant to own, if you dont pay for it, its not yours, so I dont want to bail out these people or hear them cry that they are losing their homes, they never owned the house to begin with.
I bought a house and I pay monthly on a mortgage, if my home falls in value, so be it, I will deal with it only if I have to sell it, otherwise I dont care.

[Garba]

I was working in California from 2001-2006 as a consultant living from Georgia. I was in NoCal and the prices were sky rocketing on a monthly basis. Since I did not have property there and I was not emotionally/financially attached, I could come to a reasonable conclusion that there are not enough people in the state making the kind of money required to purchase a $400,000+ house. And if there were the pool must be shrinking and the pyramid will collapse and it did.

[PAUL ASHTON]

PAUL ASHTON, yep - they are now all part of the American Dream! Enjoy!

[Jim Bob]

Real Estate was in a bubble. The bubble popped. Now real estate values are returning to their actual values. People who blame Bush because they were greedy and speculated on the continued expansion of the real estate bubble need to grow up and take responsibility for their own poor financial decisions.

[Shelly]

Listen to the speeches-the government pitched homeownership. When buyers bought homes, slick salespeople closed and manipulated the deals, getting tough "only when they have to." Buyers were told they could refinance in 2 years because that's what "everybody" does. The scheme is as crooked as anything out there.

[Ja yS.]

What wealth? If you can't afford the house, you walk and let the bank pick it up.
Who loses, the taxpayers do in the end.
That right my fellow Americans bid up the price of almost anything until no one can afford and then wonder why.
Duh!

[MJ]

As a mild mannered renter (intentionally) and more or less passive observer to this "bust", I find the dynamics fascinating -- I have maintained that since the early 70's when credit cards really hit the street in earnest, that we have increasingly lived in a false economy built on a very unstable and unsustainable foundation of consumer debt and spending. Perhaps if the house of cards collapses now (really collapses), my daughter's generation will be able to pick up the pieces and build a better foundation --- for us boomers though -- we better get used to working through our retirement years!

[Joe D]

Yesterday I read that 1 out of every 194 homes is facing foreclosure. That means approximately 1/2 of 1% of the homes are at risk. I feel sorry for those facing foreclosure, but this does not appear to be the "crisis" some are making it out to be. I would love to know what the foreclosure rate has been the last few years.

[Bill]

The loss is very real for me. My wife divorced me last fall. California law is community property split 50/50. My wife received ½ of the equity of our home that we owned (which I made all of the payments on). The amount was based on the value of the house at the time of separation. I stayed in my house rather than sell so my children’s lives would not be disrupted and they could stay in the school district. Therefore I just absorbed a ~$65K loss that was on “paper” and is now in her pocket. I had to take the money out of my 401K to pay her, so that is real money that is now gone forever. To make matters worse the money was supposed to go into a college fund for our children, but she was able to pull the money and used it for augmentation, furniture, parties and to support her boyfriend whom she was having an affair with. - Bill

[Stepen B. Small, Esq. Kansas City, Mo]

The "wealth" was the $6 trillion in mortgages in the hands of investors such as banks, thus the collapse of the banking financial system.

When the assets of a bank fall below its requires reserves it is insolvent and the FDIC/FSLIC/RTC demonstrated whan happens next, the bankers are thrown out and new ones buy the assets but not liabilities of the insured institution and the taxpayers fund the loss by paying off the depositors whose money financed the acquistition of the bogus loans. Then the government has a fire sale.

Last go around one could buy credit card receivables for 3/4 of one cent on the dollar from the RTC, and that was because they accounts were of questionable value and the RTC had no idea what it was doing. The RTC also held foreclosure auctions of assets of failed insured institutions. The auctioneers loved that.

So, when you all say there was no wealth you are wrong, it wasn't the leveraged homeowner's wealth in the form of the overvalued house, it was the wealth of the investor who loaned the money on thin collateral. Someone came up with a check at closing, and the money went somewhere, but the collateral won't repay it.

Taxpayers will be required once again to bail out the banking system.

And the wealth hasn't evaporated, the crooked borrowers who received the money (cash out 2nds for example) took their profit at the expense of their lender. With respect to buyers, the wealth was transfered from the lender to the seller, and who knows what happened with that money. the buyers will lose their equity, assuming they had any, thier credit, and the collateral.

As the smart money knows, as the government must replace your deposits with new money, the dollar loses in value, thus across the board commodity inflation and dollar devaluation. So we all lose. What should happen is those responsible for pillaging the wealth of the nation should be fully prosecuted, the funds traced and recovered and the lawyers paid princely sums to save the economy.

The worst is yet to come. The dollar will be replaced. Buy commodities that you can use or take to a stable economy elsewhere.

There is a remedy, the government should pursue the loan proceeds in whosever hands they may have come as a matter of fraud.

Interesting, the price of oil. How can it double and quadruple so quickly? There are not twice as many miles being driven in the past year. Manipulation, price fixing, etc. ?

[doctorfixit]

Newspaper scribblers should be required to pass a course in basic economics and a course in basic accounting before they start writing this kind of nonsense. When an asset is recorded in the books, it is recorded at the purchase price. You don't get to adjust the asset price later on - not even when you sell the asset. You deduct the asset purchase price from the asset account and you add the sale price to the CASH account until you re-invest it or you spend the money on something. Assets are not profits. They are what you use to generate profits, and you don't generate profits from a personal residence, unless you rent out a room. The drop in home prices reflects not a reduction in wealth, but a correction in the price to reflect the value under market conditions, and not the artificially inflated speculative price. (At least this is what I remember from Accounting 101 that I took 40 yrs ago.)

[JohnnyB]

I think it’s always important to understand the sources of information… those seeking to frame the debate, as it were (especially when originating from a think tank). While the CEPR provides some good viewpoints and has folks like Dean Baker out their saying the right things at times, they do also have an insidious, underlying globalization-expansion core agenda that is important to realize.

In a nutshell, this core agenda basically involves globalizing ALL employment, not just labor intensive, low educated workers. In other words, removing all barriers for U.S. companies (and multinationals) to hire high paid, educated professionals and financial services in the same manner that our country has already globalized low cost labor in manufacturing related industries.

This would dilute the employment prospects, exponentially increase competition and lower standards of living and wages for U.S. college educated professionals, just as it has for the lower end of the employment spectrum.

On top of that, the CEPR wants to do away with intellectual property and patent rights. So our creative community (artists, musicians, indi film makers, programmers, inventors) would not be protected and would not earn any income under their unfettered globalization game plan.

It’s really quite troubling what’s underneath their general “contrarian” public voice.

Here are selected excerpts…

Globalization: It Doesn’t Just Happen
BY DEAN BAKER (CEPR)
November 2007

“From the standpoint of rich countries like the United States, the developing world can be seen as a gigantic menu. The menu includes items like cheap textile workers and autoworkers. Through the path of immigration it also contains cheap farm labor, cheap construction workers, and cheap nannies.

This menu… reduces the wages and living standards of the workers in the United States who must directly or indirectly compete with low-wage labor in the developing world.

The menu also includes items like cheap doctors and lawyers, cheap accountants and economists. It even includes cheap investment bankers. The United States has not been ordering from this portion of the menu.

A large inflow of foreign educated workers would reduce the wages of the most highly paid workers in the United States, but more importantly it would reduce the prices of the goods and services they provide.

So, rather than trying to obstruct the next so-called free trade agreement, progressives in the United States should work to ensure that it liberalizes trade as much as possible in the most highly paid professional services.

Our policy should be to have trade do for Wall Street what it has already done for Detroit.

The United States and other rich countries should not seek to impose intellectual property rules, such as copyrights and patents, on developing countries.

The question is then whether we want to pursue futile efforts to protect less educated workers from global competition or whether to make the most highly educated workers enjoy the full effects of global competition that less educated workers have long been forced to experience.”

[Robert Rosenthal]

I sold two pieces of property eighteen (18) months ago to flippers who jacked up the price they paid me by 30%. They still have their for sale signs up and I have their $$$. the moral here: Don't be greedy.

[Gus]

This is a non-issue. The only people who should actually count home equity in their net worth calculations are people who plan to sell their homes and become renters. Otherwise, home equity is an essentially meaningless figure. A home's equity is only worth what you can actually SELL the house for at any given time, minus your indebtedness on said home, nothing more, nothing less. Where we went off the rails is in using our home equity as if it were an ATM, with ever-expanding withdrawal limits. I hope that one of the byproducts of the difficulty that lies ahead is that people will learn to be more responsible with debt and live within their means.

[ctiberius]

I'm glad I don't live in any of those areas where atmospheric and inherently unsustainable rises in housing prices are normalizing.

[Kimbo]

I bought my house in So cal in 1985 for 140k. My house went to 800k in 2006. It will be worth that again in 3 years. I could care less about the burst bubble. We all forget about cyclical economic downturns that happen every 5 or so years. It will be boom times again, now let's quit blogging and get back to work.

[Bob]

All the little Generation X morons who are rife on the Internet have their stupid, know-it-all say, which amounts to nothing more than their collective ignorance. If you purchased a home several years ago and watched it increase in value as you made significant improvements, all the while paying greatly increased property taxes and the other big cost of living increases that have accompanied the so-called "bubble," then you know darn good and well that the loss of value over the last three years is a real loss, indeed. Yes, the realtors encouraged homeowners to up the price of their homes for sale when they were in demand so as to increase their commissions, but now that prices continue to decline, the same realtors are encouraging homeowners to sell for less and less so that the realtor's continued income is assurred. A smart homeowner didn't expect their home to sell for the greatest amount the realtors told him or her it was worth, nor are they lowering the price to the same level the realtors are now saying its worth. That said, all these renters who have so much to say about it based on their vast experience of a few years out of the nest with mommy and daddy would do much better to shut up and listen for a change. You don't need that brand new car, Generation X. We didn't own one at your age. Why do you brats always have to have the newest and the best in everything? What our economy needs is for all of you to lower your sights a bit, get real, and buy that older used car from the older person whose got more cars to take care of than they can afford thus helping yourself AND them. Start seeing things that way and we'll all get out of this in one piece. Yelling how great it is that people are losing all sorts of money they were going to need for retirement is just so much whining from the brat class. Don't think it won't come around to affect you. Rising gas prices, food prices, health care costs, and all the rest of it, are going to nail your butts in short order. Then finally we may see your spoiled rotten generation having to take notice of the real world from which you've always been sheltered by your two-income, never around, lazy parents.

[Jim-Bob Jones]

I can has Pawnzey skeem?

[Anthony Jardin]

I bought an $800,000 house two years ago with no down, interest only. My neighbor just sold for $520k!
I'm sooo screwed. I put every last penny that I had into this house. Heeeeelp!

[Tera]

Irresponsible journalism from LA times, why stop at the number of $6 trillion, why not sensationalize it to $20 trillion figure. Did the writer ever wonder all of those gains are fake, just like those of Internet bubble. Are we supposed to bemoan those "inflated" loss?

[Brad]

Builders are not building because a house cannot be sold for what it costs to build it. Hmmmmm how long can that continue? Look at a 20 year period and you will see that we are now below the 5% annual long term growth rate line. Are we heading into the next great depression or is this the buying opportunity of your life....$6 trillion to come back in the next how many years????

[eddie willers]

ALL THE FLY-BY-NIGHT MORTGAGE CROOKS, MOST OF WHOM WERE SELLING YOU DOT-COM STOCK IN THE 90'S, HAVE GONE INTO COMMODITIES. THAT'S RIGHT, NOW THEY ARE BIDDING UP YOUR OIL AND FOOD.
HOW ABOUT A HUGE PENALTY FOR LENDERS WHO SELL OFF A MORTGAGE THEY HAVE MADE, SO THAT WHEN THEY LEND, THEY MUST SERVICE THAT DEBT FOR THE LIFE OF THE DEBT? THAT WAY, THEY WILL NOT GRANT LIAR LOANS IN THE FIRST PLACE!
LIKEWISE, MAKE ALL COMMODITIES SPECULATORS ACTUALLY TAKE DELIVERY OF THE COMMODITY THEY ARE BUYING, NOT TO FLIP THE CONTRACT TO ANOTHER SPECULATOR!
A LITTLE COMMON SENSE CAN HEAD OFF A LOT OF GREED AND CROOKERY.

[Dan]

Again, for the math challenged. 3 identical houses on the same street. In 2000 Larry bought one house for $200,000. In 2004 Curly bought one house for $400,000 and in 2008 Moe bought a house for $200,000. Which one(s) of the three owners has lost wealth?

[jeffrey williams]

The writing on the wall that most /some people blindly stared at was true ... All good things come to a screeching halt...easy come easy go...The market is adjusting as it always will. The time to buy a house could be near. intrest rates are low.

I dont feel sorry for the peole that lost thier new found wealth as it was truely not earned. Wealth is something that is accuried not bestowed. Figure it out AMERIICA ! This BUBLLE was good for some, it will be good for others. We need to get back to old VALUES and stop trying to compete with the JONESES ~ America and Americans need to get real and earn thier keep.

[Paul]

The CHEAPER houses become, the WEALTHIER you are because your dollar buys more. Is one better off by paying 70% of one's income for shelter than just 50%, or 33%, or 20%. The LESS you pay for a given good, the more you have for other goods.

This journalist is making the same mistake that many made. DEBT is NOT WEALTH. When you shed debt, you become wealthier.

[E]

So funny.

Every post there is always someone stating how few subprime loans there were and now calling bottom.

Usually it's a REAL ESTATE CLERK.

It seems as if many are still in denial that it's not just a subprime problem. The Alt-A wipeout will be way more exciting than the boring subprime crash. The reason that we don't hear about this from this loud group of bottom callers is that they are most likely sitting on one of those toxic loans themselves making minimum payments on their option ARM and they are the next group of people to hit the "denial juice".

Damn...this is fun to watch.

[Alikospah Wayakn]

I bought my home in '71 and paid it off by '91. How much have I lost? I don't see that I lost anything, the monthly payments were manageable and were never "adjustable".
I never bought that "adjustable" nonsense anyway, it was a clear warning that once the name was on the dotted line, the payments would go up. Do people deliberately make dumb decisions and hope the fed. will bail them out?
Sorry, no sympathy from here.

[MyLessThanPrimeBeef]

MJ, I do believe the barbarians have been dilatory.

The sooner they get their act together and fulfill their destined task to end the empire's misery, the closer your daughter and her generation will be to their Renaissance.

[Cal]

Joe D: "Yesterday I read that 1 out of every 194 homes is facing foreclosure. That means approximately 1/2 of 1% of the homes are at risk. "

Joe,

You quite simply don't understand what the numbers are saying and never bothered to look at them. I'd explain it to you just like I've explained it to a hundred people like you before. But none of you listen.

[Paul]

Hearing economic situations compared to the great depression as if the great depression was the only important crises in history is disappointing. The times are completely different in just about any criteria you study. Comparing to the great depression indicates lack of thought and is at best a grab at making ones point more significant.

PS
There are plenty of Californians spending their cut of that "$6 trillion lost" on an island somewhere. Or was it really lost.

[ALGORE]

This is sort of like the lost SURPLUS from the Clinton years. Take a bubble, give a ten year forcast based on the peak of the bubble. Blame Bush for loss of fake surplus. Here it was fake home values.

The show was called FLIP YOUR HOUSE, and not wait and gain for a reason.

[Craig Eliot]

As someone (I forget now who) has very rightly said: "You'll know this whole thing is over when the average person can afford the average house." In which case, we have a long, long way to go ....

[The Donald]

A Godsend, indeed! Trillions in gain for new home buyers! More, more, more.

[DWilber]

I really dont see what all of your are seeing? Here in Hamilton County Indiana the price of a home has not dropped at all and the 4 to 5 hundred thoudand dollar houses are being built everyday.

As far as the guy above stating that that home owners are going to lose around 85,000. Well what is a house cost 115,000. Your saying it will be worth less than 40,000?

I could only see that in an actual depression.

[me]

I bought a house for 236,000 in 2002. Sold it for 350,000 in 2007. Bought my new house for 650,000 in 2007. I probably could not sell it for more than 600,000 now.... so what. I had a good ride... now back to reality. My current home is the one I plan to retire in... say in 20 years from now.... I have a 30 year fixed rate at 6.25... no worries.

[Michael C. Scott]

I bought a $120,000 townhouse in 1996, with a conventional, fixed-rate mortgage. This I paid off 12 years early, in 2004. When I had a mortgage, the paymet was only $692 a month. I am absolutely deighted that the greed and stupidity of people who bought homes far larger than they could really afford has caught up with them.

The poster who made the comment that the same folks who created the stock an housing bubbles ae bidding up the price of cmmodities was absolutely correct. There is too much money in circulation, and it has to go somewhere. Unfortunately, our Glorious Imperial Governmen does not include the price of energy or food in its official inflation rate. Gas here is up 40% in the last year. Eggs are up 100%. Did you get a 40% or 100% raise in the last year?

The good news is that this economic turmoil is hastening the day when Civil War Two arrives.

[ccollins]

I had a feeling something was off during the last 4 years. I couldn't quite put my finger on it. Property values had risen so high that even my spouse and I (top 5% income salary earners) could not see how we could afford the huge mortgages. We didn't realize the banks and mortgage companies were giving out sub prime loans to anyone with a pulse, until the s**t hit the fan. It turned out the bad lending practices had driven up the prices---not the demand by people, who could afford the properties.

I'm definitely going to trust my instincts for now on, because they were right.

[tarbubble]

i've lost roughly $200k in imaginary money - two years ago i should have sold for $450k and just rented for a few years. now units in my complex (south OC) are down to about $250k. oh well, opportunity missed. i'd love to have that money, but the fact is that it never really existed. can't get too worked up about that.

[Bubba]

easy come

easy go

think I'll go get me a pop sickle

[bitter MDR Renter]

Cal wrote : "You quite simply don't understand what the numbers are saying and never bothered to look at them. I'd explain it to you just like I've explained it to a hundred people like you before. But none of you listen. "
--

I can't find your explanation on the msg boards from when you did. Can I trouble you to repost the cliff notes version please? Even "know-it-all Gen-X'ers" like me need a refresher.

Also, a question for those in the know: I bought a home in a decent suburb of Boston, MA in 2002 for 380k and sold in December 2006 for 440k just as things started going south. Put 5% down and had a piggyback HELOC with GMAC to fund the last $60k of original purchase price. We refi'd the 30 yr fixed in 2004 but the GMAC broker told me that HELOCs are/were not eligible for re-fi so we watched for the next 2 yrs as the teaser rates expired and it went up up up. It's water under the bridge now since we sold the house and relocated back to CA, but I'm still curious if that is accurate or standard practive / knowledge. He always seemed a bit shady. Thanks in advance.

[Bob]

****There is no doubt in my mind that Bush has played a significant role in ruining the US economy. ****

Whomever wrote this needs to revisit his civics textbook. Congress controls the budget and what political party is now in control of Congress?

[vil]

I bought a triplex in Culver City, CA for $280K in 1994. I sold it in 2005 for $1M and moved to Texas. Bought a lovely home in Austin for $360K. So.... lost wealth? Not hardly, in my case. I realized that there was a crazed market, sold at the height and moved to a beautiful area with money in the bank. It is allowing me to go back to school and finally get my degree. It feels like I won the lottery.

So what if my new house depreciates for a while? I have been through ups and downs in the housing market throughout my life. It only takes a little bit of common sense to know not to buy at the height of a market - that was a big reason in moving to Texas. Housing prices are extremely low compared to the rest of the country. Job growth is high and unemployment is low. The property tax is killer but there is no state personal income tax.

[Mark]

This price collapse is just getting started. It will take away ALL the gains plus more, just like it did in the past bubbles.

[forparity]

It's only a return to where prices should be. Just as the $8-$10 Trillion which was lost in the 2000 bubble market crash.

One big question should be, Will this result in a Trillion of lost tax reveune, and even larger deficits, as the 2000 crash caused?

[MistaGates]

"You never had this gain unless you sold your home...

You do not have a "gain" unless you sell the asset."

Gain does not = wealth. If you think that is not true, I suggest you tell Bill Gates that he is not really a billionaire.

[forparity]

Johnny B - very important point on Dean Baker - the source. While Baker is a very interesting source and his voice deserves to be heard, and the LA Times quotes him often enough (these days) it is critically important for all readers to understand - that when Baker was speaking out loud and clear on his view of the Clinton economy and refered to the them as the worst financial leadership since Herbert Hoover - there was not a chance in the world that the LA Times would share that with it's readers. This is mostly about partisan politics.

For a good read - in leftist journal - try this one of Dean's - from 2003, a must read for all. http://www.inthesetimes.com/site/
main/article/bursting_bubbles/

[Cal]

bitter MDR Renter,

http://mbaa.org/NewsandMedia/PressCenter/60619.htm

"The delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 5.82 percent of all loans outstanding in the fourth quarter of 2007"

"The delinquency rate does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process was 2.04 percent of all loans outstanding at the end of the fourth quarter"

That is 7.86% of all loans outstanding are either having trouble paying or in the foreclosure process. And that Q4 of 2007. Q1 of 2008 is showing up as a lot worse.

The 1 in 194 number from Realtytrac doesn't take into account the cumulative number it just takes a snapshot in time of Nod/Nts/REO and divides by households. But there are many loans in the defaulted state that aren't shown in those numbers, either the lender hasn't started foreclosure yet (average person get a NOD was 5 months late) or the NOD was filed before the period in question (again the Realtytrac number is NOT rolling its just a straight count for a period of time). It is taking over 9 months to foreclose on people just watching the notices for any period of time isn't telling you what is going on.

The lenders report what is going on and the MBAA summarizes it into its delinquency report every quarter. That is exact data from the loan pools.

[puckhead]

"Whomever wrote this needs to revisit his civics textbook. Congress controls the budget and what political party is now in control of Congress?"

Bob,

And which party had the Presidency and Congress when the govt spent like my wife in an Outlet Mall? Don't you find it amazing that Dubya did not veto ONE spending bill when the Repub's controlled Congress but now he's vetoing bills left and right with a Dem Congress? Coincidence ya think?

[blametaker]

Does anyone remember the spring of 2000 (when B.J. Clinton was still in office) and Wall Street investors lost a trillion dollars in one particularly bloody week in the US stock market? Why did some folks pardon Bill for this collapse and try to sting "W" for this one? The sitting president may be the captain of the ship, but the ship is sailing through very rough seas -- be it housing bubbles or stock markets -- and no single man is really in control.

[blametaker]

Does anyone remember the spring of 2000 (when B.J. Clinton was still in office) and Wall Street investors lost a trillion dollars in one particularly bloody week in the US stock market? Why did some folks pardon Bill for this collapse and try to sting "W" for this one? The sitting president may be the captain of the ship, but the ship is sailing through very rough seas -- be it housing bubbles or stock markets -- and no single man is really in control.

[Bite Me Baby Boomers]

For all the "Boomers" now whining about us "Gen-X-ers"

Funny how times change.

Just remember.

We are going to be the ones to choose your future retirement home. If you are real PITA's then we will just have the courts declare you incompetent and will file to become your conservators. Then we will look for the nastiest place to house you and then we will forget about you. Just like you all did to your parents.

Moral of the story.

Mind your manners. We already had to deal with your tough love bullshi*. GenX is fed up with your crap and for some of you, payback will be a bitch.

[LeftLA]

Most of you are idiots. You fail to realize that there are there are three types of wealth:

1. asset wealth (the total of your assets)
2. equity wealth (your equity - d'oh!)
3. cash wealth (how much cash you can get your hands on in one day)

They all count. And they're all getting crushed.

[B Mac]

Hey all you Dems out there on this post, are there any other problems you want to lay on this Administration? Come on, the getting is good. He is a lame duck and easy game. No excuse is too pathetic right now. Obama is listening and nodding his head in agreement with you!

Get off it!!! This real estate bubble was not started by Bush and it will not end because of Bush. It was started by you Dems who think it is a God-given right for every person to have his own house, whether he is willing to pay anything for it, take care of it, pay any taxes for it, or not.

Have just a little PRIDE and be willing to take just a LITTLE responsibility for yourselves. The bleeding heart liberals are what is really wrong with this country. You all want to replace personal responsibility with a Baby-Sitter State.

[gmathol]

When I talked to my American friends they were so proud of their rising house values, so I didn't question it and shared their joy. I always thought that the increasing house prices are a form of inflation, also some of my friends came out with more money the invested, but that was yesterday.

After I learned that somebody mortgaged themselves to debt I felt only sorry for them, but I'm a naive European and I lived the way my mother told me "son if you can't afford this - don't buy". May be I'm to conservative in financial matters, but I'm still on top of my life and my wife an American thinks the same way and we both doing fine or well without the "outrageous" kicks.

Sorry, this is not malicious glee.

[Tokyo Temp - ex LA Renter]

Now for those of us getting paid in yen....

True the cash I have in the US is getting abused. But I worry and at the same time quietly giggle with glee when the Yen continues to get strong. Though that sinks things here as well.

As for all of the name calling and finger pointing at who's fault this is. I blame everyone (dems, reps, lenders, home buyers, etc), but most importantly I blame the Federal Reserve and the bunch of pirates that sit on it's board.

Those are the b@trds we should be going after and that should see the inside of a jail cell.

This won't go away until the Fed is owned lock stock and barrel by the people of the United States.

yea Ron Paul is a bit out there, but he has this one right on the mark!

[Scooter Thomas]

The Community Reinvestment Act of 1977 is what helped get us to this point.
http://en.wikipedia.org/wiki/Community_Reinvestment_Act

Some people just shouldn't be in the housing market. That's not racist, it's fact.

Also, remember an asset is only worth what someone is willing to pay for it; whether it's tulips, houses, Tickle Me Elmos, houses, classic cars, etc..........

[jellonailer]

Bush didn't do anything - there are thousands of idiots, thieves, and con men that collectively created this mess. I spent '05 and '06 in Boward county, happily renting a $400k condo on the sand for $1500 per month, and called a moron by a ton of so called "real estate" investors that just happened to live there.I then moved to Sun Valley, Idaho and rented a $1.4MM house for $1800 per month. Now I may not be a real estate genius but controlling the use of a property for 1.5% is the same as living for free without risk. I hate to admit it but I'm gleeful at times when I read about this market and look forward to another 30% drop. Remember, as they say in Vegas - "You only have a gambling 'problem' if you're losing!".

Catch phrase of 2010 will be....
"All my assets are tied up in debt"

[Jim]

Bush didn't do anything? That's exactly right. Bush didn't do anything, he isn't doing anything, and he won't be doing anything. As the economy goes into a tailspin, the Chief Executive is asleep at the wheel. When he isn't "staying the course" at great expense to all of us, he's riding his mountain bike until he falls off. The guy's second term is the biggest disappointment in decades. He really should be impeached. Republicans like him actually believe that no regulation of the economy and everything else is always the way to go. It isn't. As gas prices and food prices skyrocket, as housing prices plummet, as good jobs are reserved for those of the right sex and race or the children of the already connected and privileged, what this country needs is strong leadership from truly fair-minded individuals who have really lived in the real world. The Big Business fat butts aren't going to sit still for that, the middle class can't relate to anyone who isn't the same sort of conventionally minded, suburban cog as they are, and the millionaires in government won't tolerate anyone in their midst who isn't as corrupt and as lazy as themselves. What we have, then, is a recipe for disaster. My advice? Emigrate. The American Empire is in the throes of decline. Where to go? Good question.

[ComeAtYouLikeASpiderMonkey]

The majority of you dipsh#@s have only proved me right once again. You don't think the loss of wealth has any adverse affect other than the housing market idiots?? Mental midgets!! (or is it "small people").

This has, and is, carrying over into every single corner of our economy now and is only gathering steam. The criminal cronies of the Fed, Treasury, and Hedge Fund mafia have started little tiny things like skyrocketing food prices and in-turn hording-rioting-civil wars, unemployment, oil prices through the roof, inflation through the roof, homelessness, broken families, etc.

Yeah, I bet all of you dumb asses want more homes for sale. Why not? It doesn't affect anybody and anything else in the world right??

Genius. Pure Genius.

[SteveF]

These boom and bust cycles are the result of our Fed and its stupid "easy money" policy. Phony money and phony credit, created out of thin air is the engine and cause of the so-called "business cycle." The Austrian School of Economics explains this, while all other economic theories fail to do so. Governments collecting ever increasing property taxes benefit by these phony increases in property values. Owners who don't sell at the top get screwed with higher taxes and insurance. Also, the big banks and investment companies and the mortgage brokers made vast fortunes, and now they line up for the public to bail them out. They belong in jail.

[slave]

I purchased a home around 5 years ago. All the equity and all those years I worked was for nothing. Sure, laugh at me for wanting to own a little piece of America and a small home in a blue collar neighborhood. I did all that was expected to succeed, went to college, grad school and served in the military.

Now I go to work to pay a mortgage on a home that isn't worth it. I feel like blowing my head off.

[ANDRE]

ARE MOST OF YOU SLOW OR WHAT...

THE 85K LOS THEY ARE SPEAKING ABOUT APPLIES TO MOST NEW HOME OWNERS OR WHO BOUGHT IN LAST 3 TO 4 YEARS...
BUY HOME AT HIGH RATE SAY 500K AND MORTGAGED ETC AND NOW IT HAS LOST 20% AND THEY STILL HAVE TO PAY THE FUL PRICE..
ALSO IMAGINE PEOIPLE WHO USED THERE HOMES AS ATM MACHINES...NOT ONLY HAVE THEY LOST VALUE OF EVER GETTING BACK WITHIN NEXT 20 YEARS THEY OWE THAT MONEY AS WELL..

FOR THOSE WHO HAVE HAD HOMES ,IT WAS ALL ILLUSION AND MATTERS NOT AS THEY STILL HAVE HOMES AND FOR MOST THIS IS THE REAL ISSUE SO NO BIG DEAL BUT SO MANY USA PERPS HAVE ALL RISKED HIGH WITH VERY LITTLE MONEY AVAILABLE TOTHEM AS WELL WITH JOB MARKET GOING TO SHIT AND GAS UP AND DOLLAR WORTH SHIT ...
GOOD LUCK USA . YOU MUST REALY THANK GOERGE BUSH SR AND JR FOR REALLY FUCKING YOU ALL VERY BAD..
MAYBE THAT 2.6 TRILLION THAT IS MISSING AND STOLEN FROM PENTAGON CAN HELP PAY FOR THIS MESS... NOW WHERE DID THAT 2.6 TRILLION GO PEOPLE THAT YOU STILL OWE AND PAY INTEREST ON

[MyLessThanPrimeBeef]

Sometimes, idiots are really smart and geniuses are really dumb.

Here is one idiot's idea of wealth:

In Papua New Guinea, status is earned by giving things away rather than acquiring them. This (video) program (called Kawelka Ongka's big Moka) explores the Moka, a ceremony in which people. sometimes whole tribes, give gifts to members of other tribes. The larger the gift, the greater the victory over the recipient. Follows one individual, Ongka, as he prepares for the giving of his moka.

Now, are they primitive or are we primitive? Who is more civilized?

BTW, you won't get that kind of Moka at Starbucks.

[jacked]

Iceland and Ireland and Norway and Dubai and the list goes on and on. They got smarter kids, and are worth more per capita. But at least here in good old America, we have super arcade games like Grand Theft Auto, and prescription medications to numb our minds. Books. Who needs stinking books when 75% of Detroit's kids don't even finish high school. We're done as the only self proclaimed superpower. We're done as a third world country. We have entered the realm of the FOURTH WORLD.

[marxistsocialist]

Capitalism is horror without end !!

[Hank Jestor]

I love to hear the people who say that it is phantom wealth. Look around you. Do you see all those new cars driving around. All the toys that people have in their garage. Do you think those people bought them with huge pay increases over the past 6 years.
I saw a number for California median income for the past 6 years.
2002 - 68,000 - 2006 - 138,000
2007 - 68,000
Your neighbors have used that phantom profit to prop-up their lifestyles for the past 6 years. They used Heloc's and refinance to add to their income. Now that revenue is cone and if you live in Cali you are screwed.
Trust me, if you didn't cash out your house in the past 6 years, all your neighbors did.

To the little Gen X brat who thinks he's going to get his revenge on the Baby Boomers. First of all, you insipid little moron, your generation wouldn't have lasted ten minutes with our parents, the WWII generation. You think YOU were treated to some tough love? Hah, you spoiled brat with your cell phone, your computer, your new car, your designer clothes, and all the rest of the gimmicks and gadgets that characterize your SICK, unbelievably materialistic and neurotic generation. Why, you turkeys can't even drive a car or walk down the street without yammering on the telephone to prove how popular y