Home prices dropped 1.6 percent in the year through November, and residential real estate is in the midst of another recession, says star economist Nouriel Roubini.
“The housing sector is double dipping,” he tells Forbes video.
“Of course if you can find a buy at a price much lower than listed, then it is a buy. But if you're looking at the macro data, in the spring of last year, prices were going up and demand and supply were increasing, but that was all driven by the first-time homebuyer tax credit.”
So anyone who wanted to buy a house did so by last April before the tax credit ended. “As soon as the tax credit expired, demand collapsed, prices started to fall again,” says the New York University professor.
“So demand is falling, and supply is increasing because there is a shadow inventory of millions of not-yet foreclosed homes. Therefore, prices are going to fall even further.”
Home prices will likely drop another 5 percent, he says, putting another 8 million homes underwater.
Others are bearish on housing too.
“The housing market is in a state of hibernation,” Zach Pandl, an economist at Nomura Securities International in New York, tells Bloomberg.
“We have a very severe foreclosure problem. Prices are going to keep weakening this year.”
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