Earn What You Spend

The news today shouldn’t come as a real surprise - mostly a corroboration of what we already knew: housing prices continue to fall: 

Sales of single-family houses in the U.S. dropped in November by the most in two decades and resale prices collapsed at a pace reminiscent of the Great Depression, dashing speculation the market was close to a bottom.

Purchases of both new and existing houses dropped 7.6 percent from the prior month, the biggest decline since January 1989, to an annual rate of 4.43 million, government and industry figures showed today. A 13 percent drop in the median resale price from a year earlier was the most since records began in 1968 and was likely the largest since the 1930s, the National Association of Realtors said.

There wasn’t an ounce of good news in this report - housing prices are simply in free fall.  The Fed keeps pushing the rates as close to zero as possible, and mortgage rates are falling accordingly, but this hasn’t translated into increased sales or stopping the falling prices. 

One of the more disturbing quotes I read today was from Lawrence Yun, the Realtors’ chief economist: “About 45% of transactions, nationally, were of distressed properties.”  So anything that is selling is only doing so because the house is in, or near, default. 

As as side note, for anyone interesting in pulling their finances together, Saving To Invest has a number of great articles.  I just found out today yet another friend was laid off … so there is certainly no time like the present to get everything in order.