With US home prices down close to 20% from its peak, you'd think there'd be more buyers sucked in, wouldn't you? After all, in equity space we're looking at 20% as the marker point for a bear market, and smart long term buyers should be coming in, right?
Unfortunately, you'd be wrong, as the repercussions of the credit crisis on bank balance sheets and tolerance for risk have led, particularly since the start of this year, to a startlingly sharp increase in mortgage rates.
Hence, affordability, which as recently as a year (or less) ago, had started to look pretty decent, has gone back to pretty difficult levels... and all that in the face of job uncertainty, higher prices for staples and wealth destruction... not to mention the shutting off of the home-equity-for-groceries-SUVs-and-LCD-TVs spigot.(And, as Floyd Norris of the NYT points out, the number of Prime foreclosures has just surpassed Subprime ones.)
NOT a good sign for US consumption, and all those in Asia counting on a rebound (i.e. everybody.)
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Stumble It!::
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