Skip to comments.US expert warns of fresh shocks (If Housing Price Continue To Fall)
Posted on 09/20/2007 8:49:57 AM PDT by HydroshockEdited on 09/20/2007 10:12:24 AM PDT by Admin Moderator. [history]
Fresh economic shocks on the scale of the current credit squeeze will occur if US house prices continue to fall, one of the countrys leading housing experts warned on Wednesday.
Robert Shiller, a Yale university economist, told a US congressional panel that he feared the collapse of home prices might turn out to be the most severe since the Great Depression.
The decline in house prices stands to create future dislocations, like the credit crisis we have just seen, he told the Senates joint economic committee.
The warning underlines an increasingly widespread view that the turmoil in financial markets and tightening lending conditions are early consequences of a slump in the US housing market that is gathering momentum.
Warning signs There were fresh signs of weakness ahead for the US housing sector as figures showed applications for building permits fell to a 12-year-low.
Housing starts also dropped to the lowest level since June 1995, declining 2.6 per cent to an annual rate of 1.331m units.
The decline in construction activity appeared to be spreading to the north-east, where starts were 38 per cent lower.
Patrick Newport, an economist at Global Insight, said: The eye of the storm is just ahead.
But investors were cheered by the prospect of future interest rate cuts, as consumer price figures suggested a moderate inflation trend.
The governments consumer price index fell last month by 0.1 per cent as prices at the pump dropped by nearly 5 per cent.
Core prices increased by 0.2 per cent. But the annual underlying inflation rate edged down to a 17-month low of 2.1 per cent from 2.2 per cent.
I am still hoping for the epic beer market.
Didn’t we just see this on another thread?
No I am hoping the coming recession does not become a depression.
I'm hoping for an epic shot and a beer market.
I agree hydro and I think we’re heading into some difficult times - really difficult times.
A collapse in housing prices would make it easier for me to buy a house. Of course, it would suck for those who already have bought one...
I think Hydroshock has posted every article that was written by or makes reference to Robert Shiller. They are all the same, going back to 1973 I would imagine.
My wife and I have been accelerating our paying off bills and putting money in the savings. I also am keeping a closer eye on our investments. Despite what some of the hecklers on this and other threads may think the current economic climate screams for caution.
Left-wing/socialist/skull-and-bones/dim shill credibility comes from where, when, who, how, why???
Mixing shots and beer could really lead to difficult times the next morning.
Why do we fight inflation everywhere else, but want inflation in the cost of housing?
Cash is king, debt is teh ugliest 4 letter word there is, and never be over leveraged in anything if you have to use credit. These 3 thoughts have served my family well in boom and bust for 3 generations
OHHHHH the humanity, this guy is more of a hack then greenshit
Aw c’mon man. The whole we’re Doooomed (tm) thing is really old with the whole housing market. The housing is less than 10% of the GDP, if it were to go to 0.00 there wouldn’t be a ‘depression’. And it’s not all that likely we’ll even have a recession. The markets are certainly not pricing that in.
As any other economic climate... In my humble opinion, there is never a time one should make hasty decisions on investments, and getting rid of debt is something everyone should strive for no matter what economic climate we’re in.
I wish that I could figure out a way to make money off of you naysayers! It is as if many of you want America’s economy to fail... excuse me... someone already posted that they are hoping it will!
“Patrick Newport, an economist at Global Insight, said: The eye of the storm is just ahead. “
An odd quote: The eye is dead calm. Immediately preceding it is the forward eye wall, the worst. Usually once a storm escapes the tropics, the lagging eye wall (after the eye) isn’t nearly as bad as the forward eye wall, and the lagging spirals are a complete dud.
Because those who are the “we” got their home already, and want to pull the ladder up after themselves.
(Doncha hate all those people who bought at $200,000, saw their property peak at $800,000, and are ruinously miserable because they can only sell for $790,000?)
>> I wish that I could figure out a way to make money off of you naysayers! <<
Ummm... there is: Buy their homes.
I’ve got a house and it won’t suck for me. The mortgage gets paid off in less than 10 years, and most importantly it’s a fixed-rate mortgage. OK, I’m being redundant. Fixed-rate is the only kind there is. Everything else is gambling or rent. We have firm roots where we are and don’t plan to move. The value may drop slightly but it’s unlikely to drop below the balance of our mortgage at this point.
The housing market is cyclical, just like the stock market. It may have a blip where it goes down, but eventually home values rebound and exceed the previous high point. And like the stock market, you should take the long term view and not the short term panic.
There are other far more serious flaws with our economic health. Budget deficits, underfunded socialistic security mandates, trade deficits, the failure of the education system to turn out productive citizens, loss of manufacturing base, dependence on foreign energy sources not friendly to the interests of the US, the uncontrolled influx of immigrants who will be a net economic drain, crippling environmental regulation and plaintiff products liability litigation are some just to go off the top of my head.
Didn’t the FT publish a story in August saying the market was going to collapse after the Labor Day holiday, then we would know the full extent of ‘housing crises’???
Did the ‘housing crises’ used to be called supply and demand??
These people are trying to talk down the US economy
People are responsible for their finances and if you give money to people who cannot pay it back, or, you buy too much house you cannot afford, well, that’s life.
“These people are trying to talk down the US economy.”
You get a gold star on your forehead for the best performance of the day. That is exactly what they are trying to do.
Our economy is extremely strong and will continue so for a long time. The big probblem we have is that homes in Cali and the Northeast are over priced. That is it. It will be corrected.
Because people like the idea of something from nothing. They pat themselves on the back for being clever, while inflation is doing the dirty work.
Who really needs a Dollar to hold it's value when there is free money avsilisble?
Agreed. We’re also trying to pay off our mortgage and hopefully, will have it finished by the end of 2009. Good luck to you with your plans.
|Rank||Area||State||Peak||Bottom||Peak to bottom
home price decline
|11||Deltona-Daytona Beach-Ormond Beach||FL||06Q1||08Q3||-17.9|
|13||Hartford-West Hartford-East Hartford||CT||07Q1||08Q4||-17.6|
|14||Cape Coral-Fort Myers||FL||06Q1||08Q4||-17.3|
|31||West Palm Beach-Boca Raton-Boynton Beach||FL||06Q1||08Q3||-12.2|
|36||Fort Lauderdale-Pompano Beach-Deerfield Beach||FL||06Q1||08Q4||-11.5|
|39||San Diego-Carlsbad-San Marcos||CA||06Q1||08Q4||-10.9|
|40||Los Angeles-Long Beach-Glendale||CA||07Q3||09Q1||-10.6|
|43||Rockingham County-Strafford County||NH||06Q1||08Q3||-10.2|
|46||Providence-New Bedford-Fall River||RI-MA||06Q1||08Q3||-9.4|
|66||New York-White Plains-Wayne||NY-NJ||07Q3||08Q4||-5.3|
|71||San Jose-Sunnyvale-Santa Clara||CA||07Q3||08Q4||-4.4|
|72||Virginia Beach-Norfolk-Newport News||VA-NC||07Q3||08Q3||-4.1|
|79||Salt Lake City||UT||07Q3||08Q3||-3.4|
|82||Lake County-Kenosha County||IL-WI||06Q3||08Q2||-3.1|
|91||San Francisco-San Mateo-Redwood City||CA||07Q3||08Q2||-2.7|
Hey, I’m in the top 30 market, that’s great! Bring on the housing pricing drops since I don’t have one yet.
The world should be so simple. The Red Sox appear to be in collapse in spite of the $100 million injection of pitching. This is a model of the world economy. The main effect of the injection of the 50 basis points appears to be the $EU at 1.41.
Why, I don’t see Dallas - Collin County TX on this list at all.
Does this mean I’m not doomed?
Might also sink the economy to where you won’t have a job with which to buy said house.
Might also sink the economy to where you won’t have a job with which to buy said house.
Being I am dollar cost averaging at this time, I prefer a down market, brings down my average cost.
If you go here:
and click on:
“S&P/Case-Shiller® Home Price Indices Methodology”
you will find on page 6:
“...These sales pairs are further examined to eliminate outliers that might distort the calculations. Outliers include...suspected data errors where the order of magnitude in values appears unrealistic.”
==> In other words, if the actual numbers “appear unrealistic” to the statisticians, they are ignored. Hmmm... I wonder if THESE statisticians are less biased than the “global warming” statisticians....
You will also find on page 7:
“...The Weighting of Sales Pairs
The indices are designed to reflect the average change in all home prices in a particular geographic market. However, individual home prices are used in these calculations and can fluctuate for a number of reasons. In many of these cases, the change in value of the individual home does not reflect a change in the housing market of that area; it only
reflects a change in that individual home. The index methodology addresses these concerns by weighting sales pairs...”
==> In other words, if the price “increase” for a particular house is above what the statisticians expect, then that increase will be given less “weight” in the overall calculation of change.
My conclusion: The S&P/Case-Schiller “index” of price changes in real estate is about as valid as an “index” prepared by Lewis Carroll’s “Queen of Hearts”.
Or my garbageman...
I am hoping we can avoid 70s style economic hardship with massive inflation. But much more than that, if we do return to return to 70s style economic hardship, I am HOPING and PRAYING we do not see a return to Disco music because then I would have to kill myself!
Don’t even get me started on leisure suits.
Hahah this guys an optimist.
There is no doubt prices will continue to fall, and the credit bubble will continue to deflate with massive consequences around the world.
The only question left is how fast and how long the deflation is going to take.. if its slow enough, we’ll just have a flat economy/recession for a good longwhile.. if its rapid, we’ll have a global depression.
Ah, so THAT is why the FED just slashed the prime rate by 50 basis points! The economic outlook is so strong, they just wanted to make it even stronger.
Yep, I sadly agree.
I’m having 70s flashbacks. NOT GOOD. Somebody get me a Vallium, slap me, electroshock therapy. Anything!
I’ve tried to purge the 70s from my mind and now the Fed slashing rates, talks of recession, stagflation and the crashing of the dollar are all sending me back into 70s flashbacks. Next thing you know, I’ll be collecting Pintos and Gremlins.
OK, I’m better now. NO MORE TALK OF LEISURE SUITS, Donna Summer, or maxi dresses or...
Actually, with everyone working it should be cranking over at a slightly higher growth rate as has been noted by a number of people.
This rate decline is not a sign that we are going to tank. It is merely trying to tune the economy upward. If the housing sector begins to do well again, you will definitely see an increase in the growth rate.
is there a place or a thread for people to talk about “safe” investing and preparation in case, just in case, we do have a recession/depression/weather front or whatever?
“NO MORE TALK OF LEISURE SUITS”
Mini-skirts, however, remain in play.
I'll bet a lot of freepers don't remember that ( either they were too young or are now too senile...)
“I wish that I could figure out a way to make money off of you naysayers!”
Sell them gold. Get them prepared for “The Coming Recession”.
Learn how to short.
Or buy QID, SDD..or any number of other short vehicles.