The percentage is small 2.44% in May 2008. But the impact can be huge.
"Prices are already off nearly 20% from their 2006 highs, according to the S&P/Case-Shiller Home Price Index.
And there's a strong inverse correlation between home prices and defaults, accouding to Lawrence Yun, chief economist for the National Association of Realtors.
'It's a feedback loop,' he said. 'Price declines lead to more defaults, which leads to more price declines.'"
Time will shake us out of this cycle. But at least in the near term, banks are going to be even more cautious in lending. The bottom line: money will be harder and more expensive to come by.
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