Courtesy of Clusterstock, by Yves Smith
OK, this factoid is just San Diego, one of the epicenters of the housing implosion. But the flip side is conventional wisdom is that the worst hit locales are bottoming first….right?
Maybe not. Again, generalizing based on one data point is not advisable, but this one is so striking that I can’t help but think that even a much lesser version of this pattern elsewhere would mean housing has a ways to go on the downside. That would be consistent with historic norms, since per Carmen Reinhart and Kenneth Rogoff, in severe financial crises, real estate takes over five years from its peak (which in our case was 2Q 2006) to hit the trough.
And this is the year when Option ARMs hit the wall in a big way too…