Winter writes that a good sign of recession is when local councils, due to their restricted revenue raising ability, hit upon hard times and blow their budgets. I have seen similar things written on Ritholtz's Big Picture.

There may be an element of truth to it, but I don't necessarily agree with it in this context as most local councils raise revenue off property taxes. The last ten years probably have to be treated as an aberration in that area as towns and counties got fat off the inflated housing market.

I know my house in Virginia inflated 200K in the space of three years; with a commensurate increase in property taxes. The local county did not reign their budget in or give tax breaks during that period, they spent all they could get their hands on. Now with the housing market deflated back down to normal levels again they have nearly 60% of the revenue they did in 2006.

I suspect bad governance over the last five years may be a stronger contributor to broken town and county budgets than the 'recession'.

The Washington Post has an article which mentions that prime defaults in October last year outpaced subprime risk of defaults. It is a bit tenuous and full of 'human' style narrative of folks who borrowed too much and then got caught.

I found this particularly galling where one woman bought a house for 525K, she has run into troubles and the bank made a deal with her to put some of her payments into the future:

Byrd said the arrangement would not work long term. She wants her loan modified to reflect the current value of her house - about $250,000.

Where is personal responsibility and consequenses in all that? Barry Ritholtz has a foreclosure heat map from 2008.

California, Arizona, Nevada and other South-West states are hit hard by it. As the WaPo article notes, because of the high growth in those regions there was a large part of the economy dedicated to construction and the ancillary business related to the purchasing of new houses.

The price drop in Phoenix has been large. We have been looking at land locally and when sending out emails inquiring, it is not uncommon to have a 50K drop in the asking price with the first email reply from the realtor. Not much is selling, I don't think many people have much money at the moment. We are probably lucky that we are confident enough to be looking on the market. Our purpose is to get land now in the trough, and then build a dream house on it in a few years time. Something like this Waimarama House in New Zealand.

We are in no hurry, the market has much to dip here yet, and if a software developer and lawyer still cannot afford the houses that are around here, then there is a still a ways for housing prices to come down before they are affordable again.

Barry Ritholtz remarks that until housing prices normalize a recovery is not possible. He quotes someone saying consensus is that prices have bottomed out and will rise. Ritholtz jumps on how wrong 'consensus' has been lately. FWIW we are looking at land and thing prices are going to come down further, probably another 50%. So we are waiting before we jump in.

We are ready to buy, have the money to buy, and want to buy, but are waiting out what we think will be further drops.