Housing II

These Fox money shows are something else. Do your own math:

180,000 foreclosures in July. The average foreclosure was probably $60,000 in the hole. 180,000 times $60,000 equals somewhere around an $11 billion monthly loss. The housing market wasn’t a story during these foreclosures in July. Housing prices are still dropping while more supply is injected in to the market through foreclosures and demand is drying up through tighter lending. A rational person, $100,000 in the hole on his home, is more likely to walk away today than he was in July.

The Fox trumpeted Bank of America’s $2 billion purchase of Countrywide stock doesn’t mean a thing. The fact that Central Banks just printed $500 billion in money should worry you. That’s what we’ve spent in Iraq. It represents two months worth of our entitlement problems.

Housing prices will be stable in the long run because local governments have raised development costs to the point where more supply cannot be built for less than current market rates. The banks are the ones in trouble.