10-12% Further? Housing Prices – and ratings agencies….
by Tom on December 19, 2009
in house prices
A couple of thoughts about this report:
- It’s a national report and while national reports tend to show “averages,” remember the old saying, “All Real Estate is Local.”
- Credit Rating Agencies don’t exactly have the best record in “predicting” this mess.
With that being said, I have to admit, that their projections seem definitely in the range of “feasible.”
Tom Vanderwell
When the credit crisis began, credit rating agencies created models predicting how bad things may actually get, in terms of how far down home prices would fall in America. At that time, mortgage finance players assumed this was a worst-case scenario, with an outside chance of coming true.Today, Deutsche Bank researchers say these predictions will likely become a reality, with the total peak-to-trough decline of US home prices hitting nearly 40%. In the current outlook, they say home prices will drop a further 10 to 12% from current levels.
The results are part of a nationwide projection that represents a weighted average across 100 individual metropolitan statistical areas (MSAs).
The projections come from the securitization arm of the investment bank and is the first forecast expanded to include more factors that impact home prices overall as well as a variety of ranges (month-to-month, peak-to-trough).
“A change in market psychology (which can both cause, and be caused by, recent home price increases), some signs of labor market stabilization and various government programs aimed at easing the housing crisis have all been constructive for housing,” write the researchers. “These changes may have helped abate the freefall in prices we saw in early 2009, and the “overcorrection” we started to see in home prices.”
Calculated Risk: Bank Failure #139: Imperial Capital Bank, La Jolla, California
From the FDIC: City National Bank, Los Angeles, California, Assumes All of the Deposits of Imperial Capital Bank, La Jolla, CaliforniaImperial Capital Bank, La Jolla, California, was closed today by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. …
As of September 30, 2009, Imperial Capital Bank had approximately $4.0 billion in total assets and $2.8 billion in total deposits. …
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $619.2 million. …. Imperial Capital Bank is the 139th FDIC-insured institution to fail in the nation this year, and the sixteenth in California. The last FDIC-insured institution closed in the state was Pacific Coast National Bank, San Clemente, on November 13, 2009.
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