Home Prices Suffer Sharpest Drop in Over Two Decades
An article published by Yahoo! Finance looks at the third quarter drop in home prices and the effects that this could have on the economy. According to the article:
- U.S. home prices fell 4.5 percent in the third quarter from a year earlier, the sharpest drop since Standard & Poor’s began its nationwide housing index in 1987 and another sign that the housing slump is far from over.
- One of the index’s creators also predicted that there’s a significant chance of a recession as the economy contends with falling housing prices, spiking foreclosures and turmoil in the financial markets.
- “We’re in the aftermath of the biggest housing boom in history, so how do we use historical data to judge the outcome?” he said. “We’re out of the range of the normal variation in the data and I take that as very significant.”
- After 13 years of rising home values — with the greatest increases occurring in the first part of this decade — the housing market has started to unravel, spreading from Main Street to Wall Street.
- The Federal Reserve has stepped in, cutting interest rates two consecutive times to 4.5 percent to encourage economic expansion. The Fed said last week it expects the housing slump and credit crisis to slow economic growth and push unemployment up slightly next year.
Seeing as the recently-ended housing boom was the biggest in the history of our nation, it should be no surprise that people predict that we are in the largest housing slump in history. This housing slump could put us into a recession as many fail to payoff mortgage loans, but so far, analysts are not really predicting an economic collapse. The scary thing is that we can only speculate, and we’ll have to wait and see what actually happens.
November 29, 2007 | Filed Under Payoff Mortgage
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