Another Year of Housing Weakness

by James & Miel on December 24, 2008 · 0 comments

Hi All,

Just saw this 12 minute video from 60 minutes. Basically, the story predicts another year of downturn for the housing market. Why? Well, credible analysis indicates that another class of questionable mortgages may implode in 2009. Specifically, Alt-A and option arms are projected to increase their default rates by as much as 9.6% into mid next year (1).

Why does this matter? Well, the current financial crisis was ignited when mortgage defaults outstripped bank cash reserves. In the event that loan default rates remain high, the financial sector will come under even more pressure. As a result, the rest of the economy will experience more stress.

Hat tip to Nirav at Living of Dividends for this one.

Best,

James

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