Posted on 09/20/2007 8:49:57 AM PDT by Hydroshock
Edited 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 country’s 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 Senate’s 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 government’s 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!
LLS
“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.
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