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Optimism on housing and the economy!!!???!!

Posted by: Peter Coy on September 26, 2007

Jim PaulsenAll those punctuation marks on the headline are a tribute to the inimitable writing style of James W. Paulsen, chief investment strategist at Wells Capital Management. Paulsen is optimistic that housing will not tank the economy. Here’s what he says in his September newsletter:

True, some buyers [who] bought at the top of the housing market are hurting. But for the vast majority of homeowners, perhaps the adage ‘house prices have fallen to levels most never thought they would get up to’ is most applicable!

Adds Paulsen:

No doubt this crisis is real and will have real fundamental consequences. However, much of the frenzy in recent weeks, initially legitimizing this event as a crisis, has either already been corrected or may prove much easier and quicker to correct than most currently think.

Reader Comments

Dan Holbrook

September 29, 2007 1:40 PM

I beleive the houosing market is in trouble but the lenders and builders are throwing gasoline on the fire. The lack of skill at managing the distress is frightening. The current foreclosure rates increases and staggering increase in loans being taken back by banks is frightening. Most of this is brought about by lenders of flexibility when managing distress. I train real estate agents on hoe to provide valueable service to lenders and consumers in a distress market. I have spoken to 5,000 real estate agents in the last 90 days about short sales, REO's foreclosure, auctions, lease options, etc. I am trying to get the real estate industry to step up and be part of the solution that we helped create. Realtors are in the best place to help solve the housing crisis and shore up property values and rebuild consumer confidence If lenders were to be able to work with consumers through short sales, loan modifications, "real" forebearances and other creative solutions that can help preserve the value of the home, limit the loss then we can stem the tide of foreclosure. The real estate industry and the mortgage industry have to get together to provide a real solution. Right now the short sale can cut the actual number of foreclosures perhaps in half in some markets. The losses could be 50-100% less than the lenders would take in a foreclosure sale. Values in the surrounding neighborhood would be more stable and equity preserved for millions of homeowners. Unfortunately the real estate and mortgage industry is trying to solve today's problem with yestardays solution. It didn't work very well then. has some ideas and solutions that can help. is an educational platform for real estate agents and mortage lenders. We all need to do something different or this housing problem is going to end a whole lot worse than it need be.

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BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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