Analysts Call For Continued Housing Price Decline
September 16, 2008
If you are seeking to sell your home, you may want to take notice of what is going on in the financial markets. The pricing of your home will most assuredly be affected, that is if you have a real estate agent who has any clue as to what they are doing.
The collapse of Lehman Brothers Holdings Inc and takeover of Merrill Lynch & Co Inc will cause liquidity in the credit market to shrink, resulting in lower home prices, prominent U.S. banking analyst Meredith Whitney said.
The Oppenheimer & Co analyst also expects fewer mortgages to be available for prospective homeowners, as she sees no hope for the return of the mortgage securitization business.
“All this creates a recipe for meaningfully lower U.S. house prices,” Whitney said.
The magnitude of houseprice declines in the next few years could likely exceed expectations of both the markets and the companies, she wrote in a note issued late Monday.
“The fact that all banks under our coverage have unrealistic HPA (housing price appreciation) assumptions will in our opinion lead to a material and protracted writedown and capital pressure scenario for banks well into 2009,” Whitney said.
Since the onset of the credit crisis over 14 months ago, less than $100 billion worth of mortgages have been securitized and, accordingly, homeownership stands at 68 percent, Whitney said
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