A housing recession!
By John Burke | Related entries in News
From The New York Times, December 2, 2008 - Click on image to enlarge
The above graphs depict various key factors contributing to the nature, length and depth of seven recessions over the past 40 years, including the current downturn. The recession that began officially last December has not been marked (so far anyway) by a relatively sharp drop in either GDP or personal consumption.
For that matter, the declining employment figures on which the National Bureau of Economic Research relied heavily to “date” the recession still look pretty good, compared to those of several earlier downturns.
Of course, we may be in the early stages of a deeper and longer recessionary period like that of 1980-82.
But the most striking thing about these data is the way falling housing prices practically leap off the page and smack you in the face. In every prior recession, the median price of a single-family home continued to go up or at least hold firm in almost every recessionary month. In sharp contrast, we see a steady, depressing drumbeat of sharply lower housing prices month by month over the past year.
To be sure, there was a huge housing bubble, inflated by years (maybe decades?) of easy credit and bad habits — and every bubble must eventually burst. But if there is a serious argument against working to put a floor under housing prices as a way to prevent the downturn from becoming a disaster, I’ve yet to hear it.
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UPDATE — 12/5/08 — I guess they heard me! The Fed now wants to help homeowners fend off foreclosures and the Treasury is working on a plan to subsidize new long-term mortgages at rates as low as 4.5% to stimulate home buying.
This entry was posted on Wednesday, December 3rd, 2008 and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
December 3rd, 2008 at 7:42 pm
Yes this recession is different. First you see people shouting in glee that yes we are in a recession. Then consider the political infighting that we see daily. This infighting causes all parties to give money to whomever in hopes of getting votes during the next election cycle.
Our leaders are not putting our nation’s best interest first. They are selfish imbeciles that need to grow up a play with each other’s toys.
Yes it is true that we see a recession about every three years, and when we do they usually last about 8.5 months. This time politics will bring to the table spending and their denial of the situation won’t get us out of this mess.
http://nomedals.blogspot.com
December 3rd, 2008 at 9:12 pm
Nice headline…dumbass. Maybe that’s because home prices weren’t so inflated as they were before this recession. When a 1,000 sq ft home with 1bath costs 600k in San Diego and actually sells at that price, which they did 3 years ago and it is considered a “steal”, yeah, it’s not going to hold it’s value, nor anything resembling that. That’s like saying the Yahoo stock you bought for $150 during the dot com boom “didn’t hold it’s value” after the boom went bust……….this was the biggest housing bubble EVER….there is no precedent for type of housing increase we saw.
December 4th, 2008 at 11:47 pm
UPDATE — 12/5/08 — I guess they heard me! The New York Times reports today that The Fed now wants to help homeowners fend off foreclosures and the Treasury is working on a plan to subsidize new long-term mortgages at rates as low as 4.5% to stimulate home buying.