Joe,real estate is a very sticky market,and much more so in resale homes because of the emotional investment.I live in sonoma county and resale homes have dropped in price a lot less than new homes. new home median prices dropped 43% yoy,june to june.The number is skewed by some fair sized condo projects and some other factors (more mid and low end subdivisions than the year before)but the decline is substantial.resale homes are a lot harder to judge because of wide variations in quality,but the declines are real.

more.It is important to remember that the credit squeeze has just begun,and the market does not yet reflect any realization of what the next waves of resets will cause in the way of foreclosures and distress.....12% with 20% down and perfect credit anyone?

"Yet I must continue to state - all the defaults do not seem to bear significantly on [home] prices. I personally wish for lower prices, but reality is prices are not budging in my areas of interest."

Joe, I agree. Someone told me watching the impact on home prices is like watching ice melt at 33F. I hereby offer a prize to anyone who comes up with a set of measures that makes small home price movements seem big and exciting. Let's see, how about dinner with Tanta at Lama's? Or a dryfly fishing trip in Minnesota?

Seriously, I'd love some ideas for measures that magnify (and clarify) early home price movements in markets. So far, all I have is this:
Identify a near-lowest historical price for a type of property in an area. Then watch and count the for sale or sold properties under that price. Even small price movements should show up as big changes in the number and quality of the group. But even that's real slow.

CR: Something does not make sense. The first chart (Delinq.) must actually be ahead of the 2nd chart (forclosures are lagging delinq.)

So one of those charts is not right.

I think the issue is that alt-a (in the 2nd chart) falls under 'sub-prime' in the 1st ? or is it that all alt-a who are delinq. first re-fi to sub-prime before going in forclosure ? The time is not enough for this between the timing of the two charts.

"People need to know that plenty of middle and upper income borrowers used 7 year ARMs and 10 year IO and option ARMs to borrow $1 mil and more in purchases and refinances, that will adjust starting in a few years from now.'

I'm in Nothern California, I know one of those guys. He's in sales, relentlessly positive; he knew that the 1 mill interest-only would get him the house of his dreams and he'd be able to refi and use the equity to get a better loan down the line. Haven't talked to him in a year. Wonder if he still feels that way.

In my smallish city near Silicon Valley, there are over 40 multi-residential income properties for sale -- almost unheard of. They're all selling at a multiple of at least 25 times income; over twice break-even. "Price reduced... bring us an offer..." they thought prices would keep going up, they paid too much, and they just can't afford to keep losing that kind of money anymore. But those prices are going to have to drop quite a bit before anyone's going to step in.

Let me add; I think this looks more like the standard of the last 3 to 4 years - DD

Is that the 'standard'? Probably not. Are there going to be some of them? Sure.

I am more interested in what happens to 'normal' folks, not a couple of variable income self-employed who are clearly over extended and rolled the dice.

If the Joe & Mary's out there are the extent of the problem then we don't have a lot to worry about.

BTW I am self-employed and don't have a lot of time for folks like that... they are accidents waiting to happen. They should have known better.

In some places in the mountains, (I am focus on Madera county) homes that went for years in the range 120K-180K are now selling for 400K-500K.

How can that continue ?

R/E will have to revert to mean. A drop from 550K to 500K is not enough on a home that through the entire 1990s was selling under 200K.

I don't see mainstream media coverage dealing exclusively with personal debt which, after all, is the one of the underlying conditions for which mortgage default is only the first of many potential symptoms to become visible.

SubPrime is treated almost everywhere as a non-starter because it's viewed as if it were the solitary problem and not a minor manifestation of far more serious ones.

At a time when people should already be taking steps to protect themselves and their families, most are unaware they are in any danger.

In Bernanke's situation I imagine one may either do one's job or keep one's job. Evidently BB has decided to keep his.

jck, the problem I have with talking about percent of outstandings with Alt-A is that it is so new, as a class, that it is weighted overwhelmingly to recent vintages.

In other words, if you're going to talk about "all outstandings," you're including loans that were originated in 1977 (theoretically) all the way to loans originated in 2007. In practical terms, the book turned over so much with the recent refi boom that you have a small cohort originated prior to 2001, and then annual vintages thereafter. Alt-A was 1% of 2001, 3% of 2002, 3% of 2003, 8% of 2004, 15% of 2005, and 18% of 2006. So of your 6% of total outstandings, most of that will be recently originated outstandings. A historical trend line for Alt-A delinquencies is kind of problematic, then.

It has always been, which is why everybody's models are getting some furious adjustments these days. We made all these Alt-A loans because we could kid ourselves that the "historical" delinquencies were miniscule. That, of course, was because historically Alt-A was a very small and very carefully selected borrower class. Once Alt-A got out of the "private banking" crowd and went mainstream, the historical comparisons are highly misleading.

Back in the late 90s, "Alt-A" loans went almost exclusively to high-net worth borrowers who were self-employed but had banking relationships with the lender. In 2006, "Alt-A" loans were going to people off the street who earned W-2 income but didn't want to share those W-2s, and who only had to show maybe 2 months worth of cash reserves. My point is that no one knows what the "unstressed" or "natural" rate of Alt-A delinquencies is.

patientrenter- I developed a metric for where I live in Loudoun county Virginia near DC. I used a data set of SFH sold for less than $1M. Then the best metric I could find was $/sqft to adjust for the change in product mix. It is also important to subtract seller subsidy from the sale price to get the net price. Using this methodology prices have fallen 15-20% from peak. Above ground square feet is generally a better metric to use than total sqft.

"This is the first time in my decades in the biz that they have "peaked" in the first year of a vintage."

But, of course, you won't know if this year was the peak until after the second year and after the third year...