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Gary Shilling Predicts Home Prices Will Fall Another 20%

realpropertycheck.com November 15, 2021

Gary Shilling Predicts Home Prices Will Fall Another 20%

A. Gary Shilling, who predicted the U.S. housing collapse and the Greek crisis of 2010, says house prices will fall another 20% before the market hits bottom. With excess inventory of unsold homes in the millions he sees no other way for house prices but down.

Massive Deleveraging

Shilling, who is president of the investment research firm A. Gary Shilling & Co. in Springfield, New Jersey, believes the Fed’s efforts in stimulating the economy will fail. He says that this recession is unlike the others: This time around, massive deleveraging is under way.

Savings rates will keep climbing as consumers realize they have not retained enough resources to retire on. Home equity withdrawals have already ceased as a result of falling house prices.

A Stock Market Sell Off Will Decimate Retirement Savings

Shilling also thinks the stock market is overvalued and we are in for a “significant” sell off within a year as the Federal Reserve fails in its efforts to stimulate economic growth. This will further decimate many Americans’ retirement savings.

No matter how hard the Fed tries, Shilling believes overall borrowing will continue to decrease.

Given his recent track record, you can’t dismiss him out of hand. He predicted the housing collapse. He foresaw the Greek crisis of 2010 and called for investors to short the euro only days before its spectacular collapse in early May.

Shilling sees this trend continue for at least another decade. He lays out his outlook in his new book, “The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation.”

Shilling’s predictions are in line with the outlook in the most recent research report by Zillow (we have a summary for you right here).

If the purchasing power of Americans keeps sinking and with it the rents, some seemingly cash-flowing real estate deals may turn out not to be such great investments. Prepare for the worst.

Please comment below.

Filed Under: Books, Buying, Investing, The Economy Tagged With: A. Gary Shilling, home prices, investment strategies

Zillow Research Reports: An Unprecedented Double-Dip Turning Into A Freefall

realpropertycheck.com November 10, 2020

Zillow Research Reports: An Unprecedented Double-Dip Turning Into A Freefall

In its most recent housing report dated November 9th, 2010, Zillow paints a bleak picture of a housing market in free fall.
In the report, Zillow economist Stan Humphries says that the real estate market has yet to hit rock bottom. Humphries not only sees no signs of a stabilization but predicts that the unprecedented double-dip in the real estate market is turning into a free fall.

A Bleak 4th Quarter 2010 and a Disastrous 2011 Ahead

The home value depreciation began to accelerate in September 2010 due to two main contributing factors: lower transaction volumes and an ever growing level of inventories. As we pointed out earlier, the stubborn persistence of the housing market slump has some good reasons.

Zillow housing report for 2010-09

Stan Humphries goes on to say that home values dropped 0.4% from August to September and 4.3% from September 2009. How dire the situation in the real estate market really is shows the fact that home values are 25% below their peak. For a total of 51 (fifty-one) straight months, prices have been in steady decline. Given how this trend is shaping up for the months ahead, we are going to quickly match the spectacular length and severe depth of the declines the country had experienced during the Great Depression and not yet since.

Zillow housing report for 2010-09

In order to put today’s numbers in perspective suffice it to say that from 1928 to the end of 1933 (60 months), nominal home values dropped off the cliff by a whopping 25.9% . We are not there yet but getting closer by the minute.
According to Zillow, prices are not going to to stabilize at least until the summer of 2011.

Nationally, we now don’t expect home values to hit bottom until first half of 2011 at the earliest due to continuing increases in foreclosure volumes.

In the meantime, new economic realities will be taking shape. With the Republicans wielding decisive power over the budget (Markets Expect Political Gridlock And Why It Could Actually Be A Good Thing) about the only form of stimulus we are going to see will be of Bernanke’s making (The Fed Is Buying Up Long-Term Debt Of The U.S. Government (On Credit!)).

Unless something unforeseable happens, we will beat Depression-era price declines hands down.

Read the full report here: Zillow Real Estate Market Report.

Filed Under: Investing, The Economy Tagged With: double-dip, home prices, unsold inventory, Zillow

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