Edmunds predicting that August sales will be down 5% from a year ago

I heard the Edmunds analyis on the Dow Jones Money Report on the radio this morning. Gas prices are lower this year, and falling at the moment,

Was the person who spoke Jesse Toprak? If so, I had to hurry out of a conference room (I was getting my lunch from the leftovers of a lunch meeting) on Wednesday afternoon so he could take the call. =Þ

"Then you have the indirect impact: people who may be able to purchase a vehicle, but don't because they're not sure about their home value."
 
OK...I'm not a home owner, but I don't see how this is a factor. "I want that new 3 series, but my home value might be less than last year, I might have to...pay less property tax or something..." The only way I can see this as a factor is if you are planning to sell, or maybe this has an effect if you plan to buy your vehicle on a home equity loan? Like I said, there may be other factors I'm not aware of, but I feel like the whole housing market decline thing causing the sky to fall is more media sensationalism than anything.

bbechtel - Quite the contrary. The media frenzy didn't really pick up until Wall St took its series of plummets. I can tell you as a homeowner and an investor that I'm in far less of a position to purchase a vehicle.

Can you explain how it effects you as a homeowner, other investments aside? I just don't get it.

If you have a variable rate loan, your monthly payments would have suddenly skyrocketed. When I bought my house last year, I locked a 6% rate. Rates hover around 7 or even 8%. To put that in perspective, I pay $669/month right now. If I ended up at a higher rate, I would end up spending somewhere around $900.
 
On the other hand, if you have a locked rate (like me), you might see forclosures throughout your neighborhood, which causes house values to plummet. Also, if a bunch of loans start defaulting, your taxes could rise because the city still has to provide utilities and maintenance to your neighborhood. Suddenly garbage pickup becomes a lot more expensive.
 
I think the biggest factor is that people lose extensive value in their home. If you owe more on your house than it's even worth, the financially wise decision is to default (though creditwise, that's a nightmare of a decision). If I bought a $150,000 house last year and it's only worth $100,000 (rather drastic drop, but you get the point), then it's better if I default the loan, collect my belongings, and go find a nice apt to rent.