Last summer, Brick Oven predicted that the overall drop in home values would be 30%. Let’s see how it’s going using the Case-Schiller Index:
City/Peak Date/Drop Percentage
Los Angeles/September 2006/27%
New York/June 2006/9%
The most remarkable thing about the data is that the drop is markedly accelerating. The composite month-over-month drop last fall was 0.5% per month. In February, the composite drop was 2.7% and accelerating.
At that rate the current composite drop is 25%. I’m adjusting my estimate of the overall drop to 37%.
Goldman Sachs had estimated mortgage losses to be $300 billion. Actual losses to date have been 25% of $20 trillion, or $5 trillion, split between home equity and mortgage holders. My estimate of overall loss now exceeds $7 trillion, not counting the falling value of the dollar, which is a whole different subject.
Wall Street is misrepresenting the data in order to prevent panic. Panic would cost them money. Here’s the data:
30 APR Update:
Does the LA Times read Brick Oven? Probably not, they’re still a little low.
Just out- Disappearing Now: $6 Trillion in Housing Wealth