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The credit crunch is far from over

david_mcmanusdavid_mcmanus
edited August 2008 in The Economy
For all the folks calling the bottom:

http://money.cnn.com/2008/08/04/news/ne ... ahoo_quote
Whereas most banks are estimating 20% to 25% peak-to-trough declines in housing prices, the Case-Shiller housing futures traded on the Chicago Mercantile Exchange portend a much steeper 33% decline, she points out.

In fact, Whitney thinks the actual declines will be worse - closer to 40% - because of the loss of the securitization market and the paucity of mortgage credit available. And that means more defaults: "The consumer's ability to refinance his way out of trouble has diminished greatly."

<sarcasm>
Not in Seattle. No way.
</sarcasm>

Comments

  • AlanAlan
    Not in Seattle. No way.

    Who can argue with that kind of logic?

    No, really. You can't argue with it because there is nothing there to argue against. You can contradict it but then Mr. McManus can just contradict you right back and then you are just right back where you started.

    Ya got anything substantial to back those words up, Davie or are you just a waving signs like those hawkers I see on the corner?
  • david_mcmanusdavid_mcmanus
    Sorry, Alan, I forgot my sarcasm tags around that. I'm in total agreement with the article.
  • jonjon
    Whereas most banks are estimating 20% to 25% peak-to-trough declines in housing prices, the Case-Shiller housing futures traded on the Chicago Mercantile Exchange portend a much steeper 33% decline, she points out.

    Prices of houses and the CSI are two somewhat different things. CSI is only selected areas, excludes new development and major renovations. It is also weighted towards houses that are resold fairly quickly. From the one graph I have seen, the quality of forecasts that market makes are not impressive. It is pretty thinly traded.
  • david_mcmanusdavid_mcmanus
    jon wrote:
    Whereas most banks are estimating 20% to 25% peak-to-trough declines in housing prices, the Case-Shiller housing futures traded on the Chicago Mercantile Exchange portend a much steeper 33% decline, she points out.

    Prices of houses and the CSI are two somewhat different things. CSI is only selected areas, excludes new development and major renovations. It is also weighted towards houses that are resold fairly quickly. From the one graph I have seen, the quality of forecasts that market makes are not impressive. It is pretty thinly traded.

    I tend to believe it will be a little worse than what CNBC or my friendly local real estate professional is telling me.
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