There’s a rather breathless article in the New York Times this afternoon sending off alarms about housing prices tanking:
Home sales dropped and prices plunged again in October, an indication that the pain currently pulsing through the housing market is not likely to abate soon.
Sales of previously owned homes fell 3.1 percent for the month, to an annual rate of 4.98 million, according to the National Association of Realtors, a private trade group. Of the homes that did find buyers in October, nearly half were the result of a sale after a foreclosure.
That trend helped send home values down at the fastest annual rate since the Realtors association began keeping records in 1968. The nationwide median price of a home was $183,300 last month, down 11.3 percent from October 2007.
What the article doesn’t tell you is that, based on exactly the same source, the total year over year volume of sales nationwide for single family home is unchanged from last year.
There isn’t enough detail in the reports to hone in on exactly where the problem spots might be but it becomes increasingly clear that although there are real problems out there the problems aren’t schmeared over the country evenly. Some places have more problems than others and the places where the prices are going down precipitously sure seem to me to be the places they’ve skyrocketed meteorically. Is the real problem prices falling or price volatility?
If it’s the latter, there are two ways to deal with it: reduce the speed at which prices go down or reduce the speed at which prices go up.
The sales volume is the same, but the housing inventory has increased. I am waiting for someone to propose destroying the excess housing stock to floor up prices.
I’ve read exactly that suggestion in a half dozen places.
My point is that I don’t see the sales volume failing to rise as a sign of the apocalypse.