Monday, September 22, 2008

Why rising numbers of foreclosures have little or nothing to do with home values

Don't let the Doom and Gloomers tell you otherwise.


"Rising foreclosures will not cause U.S. home values to plunge, despite widespread concerns to the contrary. That's the conclusion of a new study by the National Bureau of Economic Research (NBER). The effects of foreclosure shocks seem to be smaller than many have feared.

In fact, even under their most extreme scenario, in which foreclosure rates would substantially exceed current forecasts, the resulting average drop in home prices between the national peak in the second quarter of 2007 and the fourth quarter of 2009 would be less than 6 percent, predict the authors...."

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