Here are a couple in particular worth citing.
Greg Fielding writes ...
I'm in the business and, of the bunch, Laurie Goodman's analysis makes the most sense. And, she gets bonus points for having generally been right about all of this (unlike Zandi).In response, Patrick Pulatie replied ....
The bigger point is that the number today doesn't make any difference. If Uncle Sam can keep home prices propped up, then the total numbers could be smaller. But, if prices continue to slide, the total numbers could be far worse than even Lauri Goodman expects.
In the details of the Amherst report, she states that her 10.4M foreclosures assumes a 5% decline in prices. However, a 10% decline could trigger a "death spiral" where the number of foreclosures would be much greater.
Point is, social mood will drive this over the next 5 years, and it's impossible to say just exactly how dark social mood will become.
The spiral is inevitable, with all things considered. Case Schilling predicts 17% further drop, and I think that is optimistic. In fact, I see much more of a drop, from 30-50% in many areas. Factor in further decrease in wages, the 3.5m excess units of housing, lack of new family formation, increasing deaths in the pre baby boom generation, and baby boom generation, lack of qualified buyers, and many other issues, and the spiral is real.To which Greg Fielding responded
The government simply needs to get out of the housing business, privatize Fannie and Freddie with no guarantees, or let it fail, and quit trying to prop up prices. Let the market take care of business.
Agreed. The quicker Uncle Sam gets out of the way, the quicker we hit bottom and the quicker consumers can actually begin to recover.Mish on Social Mood
Anyone correctly citing "social mood" in their analysis is going to get a closer look from me, especially if it's not done for that purpose.
Thus I invite you to read Why 1 in 5 homes with a mortgage could default in the coming years by Greg Fielding at the Bay Area Real Estate Trends blog.
How dark will social mood become?
I don't know, nor does anyone else. Much depends on protectionism, tariffs, and other misguided policy decisions by Congress and the Fed.
If Congress adopts misguided protectionist legislation on the Yuan (which in my opinion would raise prices and cost up to 2 million jobs), then social mood can get much darker than it already is. Please see Ben Bernanke Fans Fires of Protectionist Legislation to Senate Joint Economic Committee; Expect Global Depression if Obama Signs On for a discussion.
Mike "Mish" Shedlock
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