Wednesday, December 29, 2010

Housing price declines increase strategic default risk

"Home prices are expected to drop another 20% before hitting bottom, according to economists at A. Gary Shilling & Co., raising the risk that 40% of borrowers will walk away from their home in a strategic default.

The firm reported in its December Investment Insight that home prices are already 30% below their peak in the first quarter of 2006 and fell 2% between the second and third quarters of 2010.

Essentially, the economists wrote, things will get worse before they get better.

"Housing normally spurs economic growth early in recoveries as this interest rate-sensitive sector responds to earlier rate cuts by the Fed," the report said. "This time, it's been a dud due to the collapse in prices."

at http://www.housingwire.com/2010/12/29/housing-price-dips-to-increase-strategic-default-into-next-year?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+housingwire%2FuOVI+%28HousingWire%29

No comments:

Post a Comment