The nation's housing slow down will be a long haul and a full recovery won't occur until some time in 2009, according to a new report by Housing Predictor, which forecasts more than 250 local housing market futures in all 50 U.S. states. The report comes on the heals of a Yale University economist warning to Congress that there may be future shocks to the nation's housing markets. Economist Robert Shiller, who authored a book warning of the real estate market collapse four years ago told Congress he feared that 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 present real estate slow down has evolved into a crisis with tightening credit standards for home buyers seeking mortgages. The slow down in the housing market is gaining momentum with slower sales in the majority of markets tracked by Housing Predictor, while foreclosures are at a record high. Former Federal Reserve Chairman Alan Greenspan said he would not be surprised if home prices fall in double-digit decreases over the next year. Deflation in U.S. home prices of that scale nationally would be unprecedented in U.S. history, and would have severe economic repercussions, costing many times the economic damage of the subprime mortgage melt down that started the present financial crisis. Investment bankers estimate the financial damage could be more than $300-billion. The damage to the entire U.S. economy would be the worst since the Great Depression. The Housing Predictor analysis indicates inventory levels of homes, condos and land for sale in the majority of states markets are increasing with more foreclosures hitting the market.
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