Tuesday, May 13, 2008

Bloomberg Doesn’t Make Sense

He reports a median sales price drop for housing of 7.7% in the first quarter (tracks well with Brick Oven’s assumption of 2.7% per month). Then he goes on to report:

Homeowners who live near a house repossessed by a lender will see their property values drop an average of $5,000, according to the Center for Responsible Lending. Nationally, foreclosures will result in $202 billion of lost real estate value, the Durham, North Carolina-based group said.

The $202 number is crap. The Case-Schiller Index has home prices down around 25%, which equates to a real estate value loss of $5 trillion, not $202 billion. In the first quarter alone, the 7.7% drop equals $1.5 trillion in evaporated wealth.

Bloomberg has been sounding like a cheerleader for a while now. The banks are in trouble and I suspect that he knows it.


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