Depressing but filled with good information. This is Gary Shilling of the Cash-Shilling housing price index, so he knows what he’s talking about.
Major reasons:
- Reversion to the long-term mean.
- High unemployment expected to continue.
- More houses now underwater.
- More houses now in foreclosure.
- Low rate of household formation.
- Excess inventory, including the shadow inventory of repossessed homes.
- Repossessed homes tend to sell for firesale prices, which depresses the market.
- Interest rates will go up, which historically pushes house prices down.
- Credit is getting tighter, which means there are fewer buyers.
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