Housing Prices Plunge in Sept/Oct.

This is ugly:

"Clear Capital issued a market alert Friday after identifying what the company called a “dramatic change” in U.S. home prices.

The valuation firm’s index is showing a 5.9 percent two-month drop in home prices through September and October, representing a magnitude and speed of decline not seen since March 2009, the height of the housing downturn.

“Clear Capital’s latest data through October 22 shows even more pronounced price declines than our most recent Home Data Index market report released two weeks ago,” said Dr. Alex Villacorta, senior statistician for Clear Capital. “At the national level, home prices are clearly experiencing a dramatic drop from the tax credit-induced/

With a falloff of nearly 6 percent in just two months, home prices are now at the same level as in mid-April 2010, two weeks prior to the expiration of the federal government’s homebuyer tax credit, according to Clear Capital.

The company says both its home price index and the S&P/Case-Shiller indices have displayed consistent market peak, trough, secondary trough, and tax credit run-ups."

My Take:

Should we be surprised?  No...Concerned?  Yes.

When you take stimulus away gravity eventually hits.  Add a crisis like foreclosuregate on top of it and it's that much worse. 

Like any crack addict that hasn't had a hit of the crackpipe in awhile, you can expect the ensuing drop back to reality to be both fast and violent.

Clear Capital are usually the first ones out with the most recent housing data which means you can expect Case/Shiller to look the same in the following months.

The idea that housing prices are dropping this fast when interest rates are this low is really disturbing.  It tells me that people have all but given up on the housing market.  If this trend continues we are in deep trouble.

Moral Hazard is the biggest fear that I see as prishes start to crash:

As prices continue to fall, more and more loans end up being "underwater".  The ones that are already underwater then become completely hopeless.  The risk here of course is that borrowers start "walking away" in masses as they realize they were suckered into a Ponzi scam that leaves them worthless and jobless.

America is waking up folks.  If they were still clueless they wouldn't be slashing the prices on their homes like this.  They would also be buying new ones which they aren't. 

I said from the beginning that when the housing Ponzi crashes it's going to end with a mad rush to the exits all at once.

Gravity has shown us time and time again that what goes up must come down.

Edit:

Tonights piece on 60 Minutes is more proof that people are getting angry and desperate as our own version of The Great Depression conitnues to intensify: