Housing Doom Housing Bubble Blog

It’s Friday- Mr. Twist and I have left Phoenix (predicted high 75F/24C) for Columbus, Oh (predicted high 53F/12C) for the weekend.  John’s in charge of the virtual office, and I don’t want him loafing around.  I need Doomers to send him links, ideas, anecdotes and insights to keep him busy.  [John- Don’t forget to feed Igor, and turn off the lights tonight!]  I wonder where I left my gloves…
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I don’t know what Doom would do without L. Today he passed along this article [1] detailing how the two big GSEs have only two and one half months to get cracking on implementing the same guidlines on non-traditional loans as federally chartered banks now have to follow. The actual press release is here.[2]

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As several readers have reminded me, we are past due for a quick math lesson on home price appreciation.  One of the things that people tend to forget, is that when you hear of median prices "only" dropping X%, it pays to remember that X% down is worse than X% up.  Here’s an example:

You purchased a lovely home a year or two ago for $300,000 dollars.  A comparable one just sold down the street for $350,000- so you figure your house is also worth $350,000- that would mean  you’ve had 17% appreciation.  However, if prices then fall 17% in your neighborhood, do you know what your home is worth?  It’s worth $290,500- $9,500 less than where you started from.  That’s because $350K is a bigger "pie" than $300K, so the same percentage of a bigger pie, is going to be a bigger piece.
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