NOT A RE-RUN: I pretty much buy this. First Trust chief economist Brian Wesbury explains why, as brutal as the likely coming collapse in home prices could end up being, it won’t cause the same sort of broad economic and financial disruption as the last big crackup did.
“While sales are clearly under pressure, this is not a repeat of the 2006-11 housing bust. Unlike the previous housing bust, we do not have a massive oversupply of homes. Meanwhile, a flood of new inventories hitting the market due to foreclosure remains unlikely. Adjustable-rate mortgages make up a much smaller share of overall mortgages today than in the lead up to the prior housing crisis. Many current homeowners have locked-in fixed long-term mortgages at extremely low interest rates, which would make them very reluctant to default on their mortgage even if the economy turns for the worse. “[Emphasis added.]
Makes sense, right? Then again, should home prices absolutely crater, it will be interesting to see how mortgage borrowers—even non-subprime ones—will react once they see how deeply underwater their home values have become.
LEAVING THE BUSINESS: Oh, and while I’m on the topic of the uncertainty lately roiling the housing market, the number of Realtors has begun to fall.