TaxEsqBlog -by Ronald J. Cappuccio, J.D., LL.M.(Tax)

Remember all the experts reminding us the aggregate housing market had never declined since the Great Depression? That myth was shattered by today’s Case-Shiller 20-City Index showed a huge 14.4% decline in the March 2008 compared with March, 2007 prices. This is average of the 20 cities. Las Vegas was down nearly 26%. This was the biggest decline in the index has seen since it was started in 1988. Other areas not in the index, such as shore and vacation properties show an even bigger decline.

Housing "Bust" Gets Worse The housing boom is long gone. In NJ, the housing boom ended in the Summer of 2005, and since 2006 the housing market has been crashing. New home builders are trying to unload excess inventory by cutting prices and offering incentives. The National Association of Home Builders reported builder confidence sank by two points to 22 which is the lowest reading since January 1991. The US Commerce Department reports new home construction rapidly declined 6.1% in July to a seasonally adjusted annual rate of 1.38 million which is down 20.9% over the past year. On top of the housing decline, the tightening credit standards is making it harder for homeowners with adjustable rates to refinance and avoid skyrocketing payments. This does not look good for the construction industry and the economy in general.