Stewart Gordon

How Far Will House Prices Fall? Implications From the Latest WSJ Survey

Excellent work even if much of it is beyond my statistics study. From context, I judge the most optimistic at the end is the result of readers who say 'here are reasons it can't happen.' Looking purely at homes as a manufactured commodity, one starting with at least 9 months of excess inventory, one whose "marketing forces" face serious liquidity issues in early stages and perhaps more serious interest rate increases throughout and who also face a "saturated market" in many terms, it would be hard to believe that average deterioration would not be at least 35%. Put it another way, the market doesn't need it, there's lots of it around,cheap doesn't matter if monthly payments are driven up by rates,buyers are experiencing economic slowing of some depth and the entire financial bottleneck will not release uniformly leaving eager buyers unable to sell their homes (down payment source now required) or eager sellers anxious to relocate can't find qualified buyers (see above). The greater the granularity of the analysis, the more these mini-bottlenecks exacerbated by cautious tight money look very real. Ergo, 35% might be good news.