Most of these people will also tell you that the housing market is the key to stablizing the economy.
If real estate stabilizes, the mortgages on the books of all those banks that are in trouble will also stabilize and only then can the system start to heal. I’m not sure that is all it will take to stabilize the banking system, but it sure wouldn’t hurt.
Taking a look at this map showing the four quarter change in real estate prices (from OFHEO) gives one some hope that the process is already well under way:
What this shows is that over the trailing four quarters, house prices have risen in 30 of the 50 states. California, Nevada and Florida are going through a real estate bust. The rest of the country? Not so much…
House prices may continue to decline and the economy may fall into a deep recession/depression. Anything is possible. But so far, I don’t see it.
Reported by Alhambra Investments