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Moody's Predicts Housing Bottom

Posted by: Chris Palmeri on January 26, 2009

Moody’s Chief Economist Mark Zandi is coming out with a new study on the housing market. He’ll discuss it in a conference call with clients on Feb. 5.
Moody’s offered a sneak peak. Among the conclusions:

· Home prices will stabilize by the second half of this year.
· The national Case-Shiller home price index will decline by another 12% from the third quarter of last year for a total peak-to-trough decline of 30%.
· By the end of this unprecedented downturn, house prices will have declined by double digits peak to trough in nearly 62% of the nation’s 381 metro areas. In about 10% of metro areas, price declines will exceed 30%.

Reader Comments


January 26, 2009 6:57 PM

Is this the same Moody rating agency that was giving AAA+ rating to all the sub-prime CDO simply because it was insured by AIG? Can we trust them on their call for "bottom"?
The housing will reach bottom when all the ARM reset to higher interest rate and the unemployment reach its peak and it won't be this year or even next year!


January 26, 2009 10:17 PM

as a new homeowner, i certainly WISH he is right. But he wont be. Price will continue to decline, hopefully slowly going forward.
As i see it, affordability is entering into a peak zone.
as 30 year fixed rate go up, price will go down. and inventory still need to be worked through.
if you are an investor with no need to finance, you should wait. as for me who need financing, i buy now. because i am so tired of the apartment.


January 27, 2009 3:24 AM

Don't trust Mark Zandi or any "experts" from rating agencies such as Moody's, Standard & Poor and others. These rating agencies have repeatedly failed to do their job. They failed to warn investors about the collapse of BearStearn, MerrilLynch, LehmanBros, Countrywide, AIG, Wachovia, WaMu, IndyMac, Fannie-Freddie, CitiBank, BoA, etc, etc, because they are either inept or drinking too many Kool-aides with clients. As a matter of record, just days before the collapse of BearStearn, Moody's announced publicly that all is well at BearStearn. The writing is on the wall. Like NAR's discredited and former chief economist, David Lereah, who pushed the virtue of real estate investment even as the bubble was collapsing, some of these so called "chief economists" at the rating agencies were encouraging equity positions in the financial companies even as the banking sector had imploded. They are no better than used car salesmen. It is these self-anointed "experts" of the economy and corporate managers whose greed and excesses are cause of America's biggest economic disaster. Remember the WorldCom/Bernie Ebber, Enron/Ken Lay, Tyco/Koslowski, Adelphi/Rigas, Lincoln S&L/Keating, OmniMedia/Martha Stewart and today's Madoff ponzi scam? These corporate scam artists have costed the taxpayers at least a trillion dollars--so far. The time has come for American investors to ignore these imposters.


January 28, 2009 12:11 PM

If enough analysts guess, someone is bound to "get it right" by pure luck. I think I am safer flipping my lucky quarter.


February 2, 2009 1:14 PM

I too believe we will see a housing bottom in the second half of this year, along with a time of 12-18 months without any price appreciation.

I differ on the bottom though. ALL gains from 1999+ will be returned. If a house was 144,000 in 1999 and 250,000 in 2005, it will again be 144,000. I'm just not sure if we will even see inflation adjusted values.

Hopefully the public will recognize the scam among lenders, builders, and the retail industry, and fail to fall into the trap of buying more house than they need and can afford.


February 11, 2009 9:33 AM

Ditto on skepticism about the greedy jerks at Moody's who gave good ratings to bad paper based on the input from those they were rating (who just happened to pay them for the ratings). They are ignoring the employment situation and ignoring the coming consumer credit defaults and putting too much emphasis on inventories and anomalies of the last two months. They are wrong...again.


June 13, 2009 6:13 PM

watch where the money goes...

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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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