New housing permits fell in November to a new low since the data began to be collected since 1946. According to the Census Bureau, 616,000 building permits for privately owned housing units were issued in November—15.6 percent below the October level, and 48.1 percent below the level of a year ago. The sharp fall in new permits is a sign that the market is still adjusting. Builders have no...

Hope for the success of the government's bailouts of the financial markets and for the American economy are riding heavily on a turnaround in the housing market. But  there are no signs of that happening, according to the latest data from the Standard & Poor's/ Case-Shiller Home Price Indices.    The indices track changes in the value of the residential real estate in 20 metropolitan a...

Homeowners who are struggling with their mortgage payments hope that the government bailout currently being debated in Congress will bring them some relief. However, relying on the government as the only hope of avoiding foreclosure is unpleasant, to say the least. It's far better simply to avoid such a difficult situation. And  the current crisis does provide lessons that can help homeb...

Alan Greenspan, the former chairman of the Fed, said in a recent Wall Street Journal interview that an end to the decline in house prices is “a necessary condition for an end to the current global financial crisis.” The question remains: How did we get into this mess?  When house prices increase at the rate of 15, 20, or 30 percent per year, as was the case in some regions during the bo...

When announcing the government's decision to seize control of mortgage giants Fannie Mae and Freddie Mac September 7, Secretary of the Treasury Hank Paulson said that the measure provides policymakers with time to decide the “future role and structure” of the government-sponsored enterprises. One hopes this means that there will be a policy debate about how well the two GSEs accomplis...

The impact of falling prices in the housing market and the stock market is starting to show up in the national data on households’ net worth.  According to new data from the Federal Reserve, the total net worth of all U.S. households (their assets minus their liabilities) was $56 trillion at the end of the first quarter. This is $2.2 trillion less than six months ago (when net worth reached a ...

This month could be considered the one-year anniversary of the onset of the subprime meltdown. A few pivotal events occurred in April of 2007, before the conflagration that flared up in August. Now, one year on, write-downs on assets exceed $235 billion. This is the sum of the write-downs for the 20 financial institutions that have taken the largest hits on their balance sheets, as listed in the ...

Until recently the sub-prime mortgage meltdown had left the auditors unsullied. By contrast, in 2001 Arthur Anderson, one of the then Big Five public accounting firms, was charged with aiding and abetting Enron’s fraudulently creative bookkeeping. Both firms went under in 2002. Now a 581-page report by court-appointed investigator Michael J. Missal spotlights KPMG, one of the remaining Big Fou...

The number of new single-family homes sold in the United States last year, 775,000, was 40 percent below the peak reached in 2005. The extent of this remarkable bust has varied widely by region, just as the preceding boom did. As shown in the chart below, the boom was greatest in the South and the West. (These two regions together account for 75 percent of all new-home sales). In terms of the nu...

One rarely mentioned measure of the extent of the housing boom, and the shift from boom to bust, is the sharp change in the level of home prices in relation to their rental value.   The rental value of a house is the income you could expect to get from renting it out. In the case of a home you own and live in, the rental value tells you roughly what you would have to pay to rent your home; in ...

The real value (in 2007 dollars) of real estate owned by American households has increased from $2.18 trillion to $20.15 trillion since 1952, as shown in Chart One.  The portion of this that represents homeowners' equity in their homes has increased from roughly $1.75 trillion to over $9.65 trillion.  These increases reflect the growing population, the increase in the homeownership rate, and ...