Home Price Confusion

While you are all digesting the Iraq Study Group report [if you’re not you should be!], here’s a little local economic news to depress you even more. The New York Times has done a good job of tracking the news beneath the surface on real estate. Here’s a typical article: What Statistics on Home Sales Aren’t Saying

This confirms anecdotal data. Home prices are in a lot worse shape than the official statistics show. That’s due both to the way the official stats are compiled, and to what they don’t even seek to capture. The market is really much softer than the published figures seem to indicate.

That’s bad news all around since it implies a strong retrenchment of consumer spending in the next few months. Since consumer spending is two thirds of the total economy any kind of steep slowdown in that sector will almost certainly take the entire economy down with it.

That’s what the bond market is beginning to say too. Hold on for a rough 2007.