US Experts Warn of Rough Future
A stern warning is out from the Financial Times. Here’s a piece:
Fresh economic shocks on the scale of the current credit squeeze will occur if US house prices continue to fall, one of the country’s leading housing experts warned on Wednesday.
Robert Shiller, a Yale university economist, told a US congressional panel that he feared “the collapse of home prices might turn out to be the most severe since the Great Depression”.
“The decline in house prices stands to create future dislocations, like the credit crisis we have just seen,” he told the Senate’s joint economic committee.
With housing prices declining it becomes unreasonable for a normal homeowner to pay down a home loan. Adjustable rate mortgages lead to expenses quickly spiraling out of control with little hope of debt consolidation.
Should housing continue to decline, it seems likely that many homeowners will elect in favor of foreclosure in lieu of never ending debt.
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