The United States of Subprime

Data Show Bad LoansPermeate the Nation;Pain Could Last Years

By RICK BROOKS and CONSTANCE MITCHELL FORD
October 11, 2007; As America's mortgage markets began unraveling this year, economists seeking explanations pointed to "subprime" mortgages issued to low-income, minority and urban borrowers. But an analysis of more than 130 million home loans made over the past decade reveals that risky mortgages were made in nearly every corner of the nation, from small towns in the middle of nowhere to inner cities to affluent suburbs.

http://online.wsj.com/article/SB119205925519455321.html?mod=hpp_us_whats_news

California Bay Area New-home sales dive 1/3 in June

Even the Bay Area of California, supposedly erosion proof, is getting a clue.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/08/17/BUC3RK0EM.DTL
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New-home sales dive 1/3 in June
Economist says price drop will bring back demand
Kelly Zito, Chronicle Staff Writer
Friday, August 17, 2007

"Prices went way ahead of themselves relative to the incomes of the consumer, and price increases could only be maintained with exotic financing," Krueger said. "Once that went away, you had a significant erosion of demand."
Statewide, the picture is similar.

Ultimately, though, steeper price reductions may be the answer.

"How does demand come back? When prices come down," Krueger said. "For the consumer, that potentially could be good - it could alleviate some of the affordability problems we suffer from so much in the Bay Area."