The outcome depends greatly on economic trends. Credit market issues are *really* problematic right now, not just for housing. Article yesterday about Daimler-Chrysler. I just scanned it but believe they’re closing up their Chrysler Financial services division because of inability to secure financing from Wall Street.
If the economy tanks, Fitch’s scenario is easily plausible. I’d even go so far as to say we’ll see a 47% nominal decrease if the economy craters. Unemployment, bankruptcies, continued bailouts, Fannie/Freddie, Wachovia, Lehman, WAMU, etc. Possibility of broader war in the ME, dollar-crisis, $200/barrell oil, etc. Most of the risk on the downside.
OTH, if we get through this okay, slow growth, inflation in check, etc. maybe it’s another 15% nominal, primarily in areas that haven’t fallen yet, with 5 years of 5% inflation, which gets us to around 40%. I think Fitch’s scenario is fairly plausible assuming current conditions for the next five years.
Breakthroughs in energy technology might lead to a re-tooling of our economy and possibly trigger a tremendous wave of growth. Imagine turning the vehicle fleet over for electric cars, powered by new forms of energy perhaps renewable or less costly than current means. Billions in oil money going to ME (blood money) stay here at home and create jobs and wealth.
