The author of a study claiming the U.S. housing collapse is now worse than during the Great Depression warned Wednesday that the market likely will continue to fall for the rest of the year before going stagnant.
Paul Dales, senior U.S. economist for Capital Economics, predicted home prices would fall another 3 percent over the rest of 2011 before potentially hitting bottom.
"Even when that happens, I don't think we're going to see any significant or sustained rises," he told FoxNews.com Wednesday, predicting "a couple years of pretty much no recovery whatsoever."
The bleak prediction comes after he released a report estimating that since the collapse began from the pricing peak of 2006, prices have fallen 33 percent -- more than the 31 percent dive recorded between the 1920s and 1930s.
The data underscores the trouble the U.S. economy is having emerging from what is described as the worst recession since the Great Depression. "The sharp fall in house prices in the first quarter provided further confirmation that this housing crash has been larger and faster than the one during the Great Depression," the analysis said.
Dales said the collapse has eclipsed that of the Great Depression because the boom that preceded it was much bigger. Unlike during the 1920s, access to the housing market was far more open leading up to 2006.
"This boom was characterized by homeownership becoming the norm for pretty much anyone," Dales said, noting that the boom has effectively been thrown in reverse.
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2 comments:
He actually has a rosier estimation than most real estate analysts. Most believe over the next 2-3 years, there is another 10-20% downside to the overall market. I'm more inclined to believe those estimations. The shadow inventory, along with the drawn out foreclosure process(as noted in a previous sbynews article), and the fact we're stagnated at +9% unemployment, this housing story is far from over. A large inventory leads to lower prices, less demand(ie jobs) leads to lower prices. I was in the renovations biz and am now going to school to get into another industry. While I love the work, I can't sit on my hands for as long as it'll take to clear up this mess.
As Obama throws another party at the White House...
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