Roubini: Housing Market Already in Double-Dip

Wednesday, 29 Dec 2010 08:14 AM

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Recent numbers for the housing market don’t show much room for optimism.

Indeed, "It's pretty clear the housing market has already double dipped," star economist Nouriel Roubini tells CNBC in a text message. "And the rate of decline is stronger than in previous months."

The S&P/Case-Shiller index of home prices fell 0.8 percent in October from October 2009, the biggest year-over-year decline in the last 10 months, the group says.

The end of the homebuyer tax credit April 30 is one factor, Roubini says. "If you look at the data, Case-Shiller has been falling every month since the tax credit expired in May. Everyone who wanted to buy a home did so by April."

The expiration sparked a 30 percent drop in home sales, he says. The problems with mortgage documentation and banks’ resulting suspension of foreclosure proceedings also weigh on prices, Roubini says.

"The shadow inventory of not-yet-foreclosed homes — due to the moratorium — will surge in the next year," he argues. Millions of homeowners may soon walk away from their mortgages, Roubini says.

Others see a continuing slump for housing as well.

“We’ll remain in negative territory [i.e. price declines] for several more months,” Dean Maki, chief U.S. economist at Barclays Capital, tells Bloomberg. “The housing market does remain weak, and none of the recent data suggest a substantial pickup.”

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