Housing update

I would just like to share some recent statistics that have come out regarding the housing market. In the final three months of the year, sales home sales fell in 40 states. Median home prices dropped on over half of the metropolitan surveyed (149). Nationally sales fell 10.1 % from 4Q last year. The national median price of homes fell 2.7% to $219,300. That is the largest price decline in the 27-year history of the Realtor's Price Survey.

These declines are creating a feedback loop, which will rock this economy. I don't know if you've ever seen the movie "Pay Forward." Well there's this kid who has this idea that if he helps 3 people and they each help 3 people and they each help 3 people, well you get the idea. It's a simple exponential formula (y=3 to the x power). The world will become a better place. Well this feedback loop actually has the exact opposite effect. The construction workers lose their jobs, the realtors cant sell houses, and the mortgage broker can't sell any new mortgages. All these people will now be spending less money at the wal-marts, McDonanlds, and Best Buys. This feedback loop will start to hit consumer spending harder and harder, and for a GDP that 70% based on consumer spending, well, the impact will be heavy.