It seems the media is getting more and more negative. They are starting to sound like a bunch of pessimistic bubble bloggers, or maybe they just opened their eyes.
Much of the nation has had a lovely real estate boom for the last five years, but the house party is almost over and the cleanup won’t be pretty.
In recent weeks, many major investment firms have concurred. Said a Lehman Bros. report, a “turn in the housing market is central to our economic forecast.”
While there is disagreement on what a downturn will mean, it is widely held that a number of factors could bring prices down. A decline in prices will track interest rates: If rates go up sharply, housing prices will plummet, said Mark Zandi, chief economist at Economy.com, an independent West Chester, Pa., provider of financial research. If rates increase slowly, housing prices may ease gradually.
“House prices are at the mountaintop,” Zandi said. “All roads lead down. It’s just a question of how steeply.”
The CEPR report seems to have made it’s way around the web and through the press in a matter of minutes. I expected it to, it’s one of the best papers on the bubble yet (you can find the link further down the page).