The Household Financial Fallacy 0
Fundamental to this whole mess is thinking of one’s primary residence, not as a place to live, but as an investment. That’s gambling with the grocery money.
The S&P/Case-Shiller home-price index decreased 18.7 percent from March 2008, matching the drop in the year ended in February. The measure declined 19 percent in January, the most since data began in 2001.
Record foreclosures are depressing the value of other properties, contributing to a slump in household wealth that is hurting consumer spending and the economy. Still, falling prices and mortgage rates have made homes more affordable, helping to stem the slide in sales, which will eventually help prices stabilize.
Douglas A. McIntyre, writing at 24/7, considers the claim that the S&P data is so old (two months) as to be meaningless:
The market is looking for ways to claim that housing is finding a bottom and that it is possible that a recovery in home prices in in the wings. While there may be some pick-up in sales in the most depressed markets including Nevada and Florida, there is no sign that prices are rising. Clever buyers are moving in to buy homes in foreclosure, but the prices of these houses are so low that their sales may actually bring down the average price of the homes being sold in those markets.
