Quote:
Originally Posted by clickhappy
It doesnt make sense to me. Unemployment is down, so people are working. Rates are lower than 6% and that is low.
I understand that things would slow down from too much appreciation of the past few years, but I dont get why its this bad. Nothing is selling, no one is buying and prices are dropping like crazy.
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Credit crunch clickhappy - triggered by predatory lending by financial institutions to people who had little hope of paying a mortgage. The home market accouts for almost a quarter of the economy - so everything from construction to retail etc will be hit.
Banks have now tightened up lending critera after having lost billions (and many billions to go yet). The next problem is going to be from people who did pay their mortgages, but want refinancing out of adjustable rate mortgages - it's going to be generally harder for them to refinance.
Sure.. unemployment looks OK, but there is just not enough liquidity around and less retail spending - a vicious cycle.
Meanwhile, the home constuction industry is in for a longish time of bad news. There is almost a years worth of 'home stock' on the market now and little chance of it being sold soon - and this is increasing weekly as further foreclosures are processed.
There have been around 750billion worth of foreclosures so far and roughly another trillion expected.
Bottom line - it's the worst real estate scenario since the depression and ripples everywhere and creates a lack of confidence - hence the dollar and oil problems etc.