The Stock Market Goes Up, But the Pessimists Remain; Are Housing Prices on Their Way to Recovery, or Do They Have Further to Drop?

Meredith Whitney

Here are Nouriel Roubini’s latest views on the economy from CNBC.

Warning of “death by a thousand cuts,” Roubini predicted today that equally as many financial institutions could ultimately fail before the financial crisis has completely run its course. 

He also, according to CNBC, believes “housing prices are likely to fall another 12 percent in the next year — 40 percent overall since the market began its steep decline — and about half of all homeowners will owe more on their mortgages than their houses are worth.”  

Of course, they don’t call Roubini “Dr. Doom” for nothing, and one might be forgiven for at least hoping he was wrong on this one — though leading up to the financial crisis last year his predictions were all too accurate.  

But last week, banking analyst Meredith Whitney, who, like Roubini attracted a lot of attention last year for her prescient forecasts, sounded even more foreboding than the latter on housing, stating that prices could fall another 25%.  She is especially concerned about unemployment and its drag on consumer spending.  As she put it, “No bank underwrote a loan with 10 percent unemployment on the horizon.  I think there is no doubt that home prices will go down dramatically from here, it’s just a question of when.”   

For someone like me who just bought a home, this is not exactly comforting news!

If you’re thinking about buying or selling a home and/or want to learn more about the current difficult real estate market, you might want to try some of these recent titles from Greensboro Public Library:  Collateral Damaged:  The Marketing of Consumer Debt to America by Charles R. Geisst; The Housing Boom and Bust by Thomas Sowell; Busted:  Life Inside the Great Mortgage Meltdown by Edmund L. Andrews; Financial Shock:  A 360° Look at the Subprime Mortgage Implosion, and How to Avoid the Next Financial Crisis by Mark Zandi; Fool’s Gold:  How the Bold Dream of a Small Tribe at J.P. Morgan was Corrupted by Wall Street Greed and Unleashed a Catastrophe by Gillian Tett; Chain of Blame:  How Wall Street Caused the Mortgage and Credit Crisis by Paul Muolo, Mathew Padilla; An Insider’s Guide to Refinancing Your Mortgage:  Money-saving Secrets You Need to Know by David Reed; Home Rich:  Increasing the Value of the Biggest Investment of Your Life by Gerri Willis; And Then the Roof Caved In:  How Wall Street’s Greed and Stupidity Brought Capitalism to its Knees by David Faber; The Monopoly Guide to Real Estate:  Rules and Strategies for Profitable Investing by Carolyn Janik; Trump University Real Estate 101:  Building Wealth with Real Estate Investments by Gary W. Eldred and a foreword by Donald Trump; All Real Estate is Local:  Why Understanding the Housing Trends in Your Area is Essential to Building Wealthby David Lereah; Home Makeovers That Sell:  Quick and Easy Ways to Get the Highest Possible Price by Sid Davis; The Complete Idiot’s Guide to Staging Your Home to Sell by Julie Dana, Marcia Layton Turner; Buyers are Liars & Sellers are Too!:  The Truth About Buying or Selling Your Home by Richard Courtney; Buying a Home by the Better Business Bureau; and Home Buying for Dummies by Eric Tyson and Ray Brown.

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