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Housing sales are down in 40 states scream the headlines. My reaction is Thank God Almighty.

Look folks, we know that the marketplace got flooded with a combination of forces. Low interest rates, easy (non existent?) mortgage requirements, and speculators who came over from a depressed stock market. If that is a surprise to anyone, raise your hands. When sales activity is breaking records like it did in 2005 by such a large margin there is no place to turn.

Some call it a bubble and I think they were right. But it was not the bubble that others hope for. Many naysayers thought that the bubble was one you would see coming out of the mouth of a 10 year old just before mom had to start picking gum out of her hair. I saw it as the really cool bubble that all your friends said “awesome” to, and then you knew it was time to start chewing the gum to get it back so you could try again.

My impression, we had a period of exuberance. Some markets that were speculator driven such as Florida and Arizona have seen the volume drop severely. Other markets that were over bought due to panic buying, San Diego, Washington, and Boston, are facing some appreciation loss.

To me, watching the landscape, I am happy. There is a great deal of appreciation out there. Mortgage companies and the government are figuring out that stated income loans to those receiving welfare is not a smart move. The subprime lenders are paying for their greed but rational lending is reasserting itself.

Builders have backed off and slowed production to realistic levels. Interest rates are finding their equilibrium. The money that was pouring into real estate by speculators is heading back to the stock market and it is having a strong year, protecting the country against a real estate driven recession.

And for the most part, housing has held onto its gains. If you had said all these things on some sites you would be laughed out of town and still may be. And they will use the tools that politicians have used for years to illustrate individual cases (or narrow regional pockets) where some have gotten hurt. But folks, this is capitalism. It is rough and tumble. People make and lose money every day in the capital markets.

If you bought a home that you know you could not afford but were hoping that appreciation would protect you and you were caught. I am sorry, but you placed a bet and lost. However, for the majority of buyers out there, they have seen a great 5 year window of appreciation that is not backsliding significantly. That is wonderful as the market catches up.

WASHINGTON - The slump in housing deepened in the final three months of last year with sales falling in 40 states and median home prices declining in nearly half of the metropolitan areas surveyed, a real estate trade group reported Thursday.

The National Association of Realtors report showed that the biggest declines were in former boom areas.

The biggest percentage decline occurred in Nevada, a drop of 36.1 percent in the sales pace in the final three months of 2006 compared to the same period in 2005.

In other former boom areas, Florida saw sales drop by 30.8 percent, in Arizona sales were down 26.9 percent and they fell 21.3 percent in California.  via BostonHerald.com.

Related posts:

1. Home Sales Fall in 38 States
2. New Home Sales Fall 11.3% from October
3. D.R. Horton, America’s Largest Builder, says Sales Up 33% in 4th Quarter
4. Northern Texas Sees Pre-owned Sales Drop - Median Prices Rise
5. Truck Sales Fall Off With Housing Slowdown