Wednesday, February 15, 2012

Foreclosure rate ticks up again

After the $26 billion robosigning settlement, the foreclosure rate is ticking up, as expected. Why should it not result in home prices sliding down again? A realtor I know said "There is some chance it may result in softening of home prices". Really? I thought markets were more efficient to price that in.

So here it is. The changes in the rate of foreclosure is a somewhat leading indicator of the changes in home price index.



And here's the data and the correlation is -0.75, implying a highly negative correlation.



The further price correction starts in 3...2...1...