During the days of the Great Recession, rapidly falling home prices caused all sorts of havoc for our major financial institutions. Unfortunately, home prices are starting to plummet once again in many areas of the country. And just like during the last housing crash, we are also seeing a surge in foreclosure filings. That doesn’t mean that this current crisis is going to look exactly like what we experienced the last time around. But nobody can deny that there are a lot of alarming similarities between what we are going through now and what we went through during the days of the Great Recession.
According to Zillow, 53 percent of all homes in the United States have lost value within the past year…
More than half of homes in the U.S. lost value over the past year, marking the highest share of properties to depreciate in more than a decade.
Research from Zillow revealed that approximately 53% of all U.S. homes have lost value since last year, up 14% from a year ago. It’s notable given that a share this big has not been seen since the tail end of the Great Recession – around 2012 – when home prices and household wealth started a meaningful recovery.
This is good news, but it is also bad news.
The good news is that prospective homeowners are finally getting some relief. Home prices have soared in recent years, and this has priced many potential buyers out of the market. A correction was greatly needed, and we are finally getting one.
The bad news is that prices are falling so quickly that some homeowners are now underwater on their mortgages. We all saw what happened in 2008 when that started happening on a widespread basis.
So we need home prices to come down, but we don’t want them to come down too rapidly.
Unfortunately, some of the markets that were extremely hot a few years ago are now being hit extremely hard…
Many of the biggest drops are in once-red-hot pandemic boomtowns. In Denver, 91 percent of homes have fallen from their peak value. It’s 89 percent in Austin, and 88 percent in Sacramento.
Florida has been hit hard too: more than 80 percent of homes in Jacksonville, Orlando and Tampa are now worth less than they were a year ago. Dallas and San Antonio are also seeing declines of more than 85 percent.
If we see additional acceleration, this slide in home prices could become an avalanche.
Already, we have witnessed the biggest drop in home values that we have experienced since the end of the last housing crash…
Most homes have lost value from their peak, falling 9.7% on average. It is much larger than the 3.6% reported in spring 2022, but about level with pre-COVID-19 pandemic rates, according to the report. It is still well below the 27% average drawdown in early 2012.
I feel really badly for those that purchased homes during the past couple of years.
Many of them are already underwater on their mortgages, and new foreclosure filings are rapidly rising all over the nation.
One of the states where foreclosure filings are increasing particularly quickly is Illinois…
But analysts were stunned to see Illinois emerge as one of the worst-hit states last month.
In October, one in every 2,570 Illinois homes had a foreclosure filing — a total of 2,118 properties. That includes 1,252 foreclosure starts (when the paperwork is first began) and 187 completed repossessions (when the foreclosure process is completed).
Illinois saw fewer than 1,900 filings in September, and just 1,597 last October.
‘We’ve definitely noticed an uptick,’ said Jason Merel, a realtor covering Chicago and the northern suburbs.
This reminds me so much of 2008.
If we don’t get this crisis under control very soon, it could get very ugly.
Meanwhile, large retail chains continue to report very disappointing results…
At the start of the week, Goldman’s top consumer specialist Scott Feiler pointed out this would be a “very important week” for earnings across the consumer sector. Home Depot set the tone on Tuesday by cutting its full-year outlook as big-ticket spending and home-renovation demand continue to fade. Now, the next major earnings report just hit the tape, and it’s delivering another clear signal of softening trends.
Target slashed the top end of its 2025 profit outlook amid softening demand, heavy markdowns, and uneven traffic, which continue to plague its turnaround strategy.
I think that Target is in a lot of trouble.
We are being told that Target’s woes are being caused by a four-headed monster of “shabby stores, sinking staff morale, jittery investors, and a leadership shake-up waiting in the wings”…
Inflation-weary shoppers are steering clear of Target’s messy, understaffed stores.
On Wednesday morning, the Minneapolis chain with 1,980 stores said third-quarter profit took yet another hit, deepening a slide that has now stretched across three straight years.
Target’s slump comes from a four-headed monster: shabby stores, sinking staff morale, jittery investors, and a leadership shake-up waiting in the wings.
Without a doubt, all of those factors are contributing to Target’s demise, but to me the biggest reason why Target is struggling is because most of their merchandise is grossly overpriced at a time when consumers have very little discretionary income.
We just don’t have a lot of money to throw around these days.
Once upon a time, it was not a big deal to spend a couple of bucks on a Big Mac.
But now the average price of a Big Mac has risen to six dollars…
In 2000, a Big Mac cost about $2.24. By mid-2025 the average price had climbed to $6. Adjusted for general inflation, that $2.24 sandwich from 2000 would work out to about $4.22 in today’s dollars. In other words, a McDonald’s signature burger costs roughly 40 per cent more than it did 25 years ago.
Other menu options have soared too. A FinanceBuzz analysis found that a quarter pounder with cheese meal more than doubled over the decade, from $5.39 in 2014 to $11.99 in 2024. A ten-piece McNuggets meal climbed from $7.19 in 2019 to $9.19 in 2024.
Our standard of living is going down.
Anyone that cannot see this is blind.
In a desperate attempt to stay afloat financially, many Americans are taking on second jobs…
It takes Tazo Stuart-Riascos 28,000 steps per day to make ends meet in one of America’s most unaffordable places.
He begins clocking that prodigious number of paces before sunrise, as he hustles from his apartment in Oakland to his retail job in San Francisco, then back to the East Bay for his night shift at Trader Joe’s, where he’s on his feet until 10 p.m. All that scrambling and Stuart-Riascos still just barely gets by.
He’s part of a growing number of people — many working one or more jobs — who find themselves struggling to stay afloat as the cost of living skyrockets and wages fail to keep pace, making it even harder to survive in the already-expensive Bay Area.
Of course now that the labor market is really tightening up, finding work has become a lot more difficult.
Just like we witnessed during the Great Recession, mass layoffs are happening all over the nation.
Many Americans are extremely concerned about what economic conditions are going to look like during the months ahead.
As always, let us hope for the best, but let us also prepare for the worst.
Michael’s new book entitled “10 Prophetic Events That Are Coming Next” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.
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