Since my blog is a ripoff of irvinehousingblog.com and since he does such a great job analyzing the housing market and financing – much better than I ever could – I just wanted to share this article originally posted by Irvine Renter on March 1, 2007.

Financially Conservative Home Financing

This article is another valuable look at why Adjustable Rate Mortgages have caused our housing market to bubble, and what kinds of things people should be thinking about when they buy houses, to make sure they can afford their homes.

From today’s Ventura County Star:

Countrywide Financial Corp. said Tuesday that its second-quarter profit shrank by nearly a third as softening home prices led to rising delinquencies and mortgage defaults among the most creditworthy borrowers.

“Looking to the second half of 2007, we expect difficult housing and mortgage market conditions to persist,” he said.

Mozilo said he doesn’t expect that the market will turn around until 2009 at the earliest.

The only thing missing are quotes from a realtor telling us not to worry that this is just a minor market adjustment and now is a good time to buy because the housing market will be strong again very soon.

The Office Of Federal Housing Enterprise Oversight (OFHEO) has a website that lists all kinds of information regarding housing and the changes in housing prices. You can go to the site and run reports for various areas around the country.

I ran a report for the Oxnard-Thousand Oaks-Ventura area. I graphed the results. This graph represents the one-year percentage change in housing prices for the previous quarter. For instance, in Q1 2007 the housing prices in this group decreased by 2.08% over the same quarter in 2006. This represents the first decrease since 1996. I have attached a chart for a quick visual of the trends over the past 30 years. Right now we are in the middle of the worst decline since the late 80s and early 90s.

The recent decline does not mean that houses have decreased in value by such a significant amount.  What the graph shows is that the rate of change in housing prices have changed.  In 2003 housing increased by 32% over the previous year, whereas in 2007 housing DECREASED by 2% over the previous year.

Click the chart for a larger view.

And here are the raw numbers that I used to plot the graph.

Here’s another great article from IrvineRenter explaining why housing prices are currently at an inflated level and destined to come down – possibly quite a bit.

How Inflated Are Housing Prices

I’d like to kick off this blog by sharing a great article I read on another blog. It does a great job of explaining why houses should not be treated as commodities.

Houses Should Not Be A Commodity