Nice report SDR, lots of information to absorb. I’d like to echo zk’s question about whether they addressed the effects of financing, interest rate rests and ARMs. I’d also be interested in hearing if they addressed the rising rate of loan defaults and foreclosures.
The overall message I got out of all this was that they have no historical precendents for a decline that has occurred without a recession, and lacking such a precedent their analysis is that there won’t be a serious decline because there is no recession to cause it. That’s why they’re commenting on the effect of a declining real estate trend on the economy as a whole. An overly large decline in real estate could create it’s own weather if the percentage of mortgage servicing incomes does include a disproportionate share of real estate-dependent jobs.
Now I’m wondering if the lack of precedence for a real estate spike that accelerated during a period of recession (as we just experienced) has any correlation to a decline occurring in spite of a lack of recession. Perhaps the Fed’s syncopation of the mortgage rates from the rest of the economy will have a corresponing rebound effect. I dunno, I’m just musing out loud here.
Given the current disconnect between incomes and prices, they must be pretty bullish on employment and wages, ’cause it seems like there’s a long ways to go before those two trendlines merge. Net decreases of population would appear to be working against the price plateau scenario, too, even though some of those move outs are have-nots.
So now if regional employment and wages for the upper end jobs are due to increase significantly, it seems to me that the industries where those mortgage-servicing incomes are increasing should be good bets for investments. That would be a silver lining for folks to rejoice in regardless of what their current status is.
