Post by unlawflcombatnt on Jul 17, 2007 15:37:54 GMT -6
Nouriel Roubini provides his latest assessment of the Housing Crash in his most recent article, leading with the comment that U.S. Homebuilder Confidence has hit a 16-year low.
"As reported by Bloomberg today U.S. Homebuilder Confidence Drops to 16-Year Low as Housing Slump Persists. This is all consistent with all the other indicators coming from the housing market showing that the housing recession is getting worse: falling home sales, falling starts and permits, rising cancellation rates, increased supply of unsold new and existing homes, falling home prices, rising defaults on mortgages.
Even the usually optimistic NAR has had to repeatedly revise downwards its forecasts for 2007 sales and is now expecting - as many others do - a year over year fall in home prices, the first time that such a fall has occurred since the Great Depression. At this point the issue is not whether home prices will fall this year. The only issue is how much they will fall.
There are at least four factors that will increase the excess supply of new and existing homes this year and next and lead to even lower home prices.
First, the credit crunch in the subprime market will reduce the demand of new home by potential subprime borrowers. Goldman estimated this effect to be as large as 200k less new homes sold this year.
Second, about $1.5 trillion of ARM will be reset this year and next: a rising fraction of these borrowers will be unable to afford the much higher rates on their mortgages and will be forced to sell their homes.
Third, it takes about six months or so for a subprime mortgage delinquency to lead to foreclosure, and the bank taking over the home and then putting it on sale in the market; once that occurs, the supply of homes in the market will increase. Some forebearance will occur but many homes will end up in foreclosure and then sold by the creditors adding to the housing supply glut.
Fourth, folks who bought homes in the last two years for speculative reasons with little equity (the condo flippers) will sell their homes as rapidly as possible as now falling home prices are wiping out the little equity they did have in these homes.
In summary, all four factors will increase the excess supply of unsold new and existing homes and will push further downward home prices. The housing carnage will get much worse before it gets any better...."
The full article can be found at
Nouriel Roubini's site
"As reported by Bloomberg today U.S. Homebuilder Confidence Drops to 16-Year Low as Housing Slump Persists. This is all consistent with all the other indicators coming from the housing market showing that the housing recession is getting worse: falling home sales, falling starts and permits, rising cancellation rates, increased supply of unsold new and existing homes, falling home prices, rising defaults on mortgages.
Even the usually optimistic NAR has had to repeatedly revise downwards its forecasts for 2007 sales and is now expecting - as many others do - a year over year fall in home prices, the first time that such a fall has occurred since the Great Depression. At this point the issue is not whether home prices will fall this year. The only issue is how much they will fall.
There are at least four factors that will increase the excess supply of new and existing homes this year and next and lead to even lower home prices.
First, the credit crunch in the subprime market will reduce the demand of new home by potential subprime borrowers. Goldman estimated this effect to be as large as 200k less new homes sold this year.
Second, about $1.5 trillion of ARM will be reset this year and next: a rising fraction of these borrowers will be unable to afford the much higher rates on their mortgages and will be forced to sell their homes.
Third, it takes about six months or so for a subprime mortgage delinquency to lead to foreclosure, and the bank taking over the home and then putting it on sale in the market; once that occurs, the supply of homes in the market will increase. Some forebearance will occur but many homes will end up in foreclosure and then sold by the creditors adding to the housing supply glut.
Fourth, folks who bought homes in the last two years for speculative reasons with little equity (the condo flippers) will sell their homes as rapidly as possible as now falling home prices are wiping out the little equity they did have in these homes.
In summary, all four factors will increase the excess supply of unsold new and existing homes and will push further downward home prices. The housing carnage will get much worse before it gets any better...."
The full article can be found at
Nouriel Roubini's site