Friday, September 26, 2008
house prices and household formation
If the ratio for the post-2000 period is to return to its historical value, house prices would drop 21 percent from second-quarter 2008 levels.
this dovetails nicely with jpmorgan chase's estimation of house price losses going forward may look like -- per calculated risk, revealed in the presentation that went along with hoovering up wamu.
JPMorgan presented three scenarios: a base case (with national prices falling 25% peak to trough), a deeper recession (28% decline), and a severe recession (37% decline).
Currently the Case-Shiller futures are predicting a 33% decline peak-to-trough, Goldman is forecasting 27%, and Lehman was forecasting 32%.