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View Diary: Obama's November Victory? In One Word: Roubini. (38 comments)

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  •  Housing Prices (5+ / 0-)

    Of course all of Roubini's points indicate a dire situation but would a sharp reduction in housing prices be a blessing in disguise? Affordable housing is a pipe dream in many parts of the country and of course a huge expense for folks in the middle class is rent/mortgage/housing related costs. The news is obviously bad but more affordable housing could be an unintended benefit. Now, the question is will there be any jobs for people to pay the bills in the first place.

    •  We're talking: "Deflationary Spiral." (9+ / 0-)

      Housing prices drop to the point where 40% of the population (that's Roubini's projection) is "upside-down" in their homes. Many folks just walk away. Others stop spending on anything other than the most necessary of items. (Discretionary spending becomes a thing of the past.) Retailers go out of business, adding even more stress to the job market; adding even more stress to the deflationary spiral; adding even more stress to the LACK of demand for homes...and home prices keep plummeting.

      Roubini's current projections call for continued downward pressure on residential homes through 2011. Read his link to Investment News in the diary.

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Sun Sep 14, 2008 at 04:00:50 AM PDT

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      •  IC (4+ / 0-)

        So basically the frame I presented concerning housing prices missed the point. A deep recession will not result in some type of "natural correction" in terms of housing prices but will cause an unsafe plummet, to use your word. The point you make of people being upside-down is downright scary. This is probably happening in other areas of the country as well but here in Phoenix you have people who are upside-down on loans and they walk away and buy another house. It does make sense though, what do lower housing prices matter when the job market is collapsing along with it.

        Another thought I just had relates to if there are any jobs and/or industries that may do well in such a deep recession, if any?

        •  Consumer staples, commodities, alt. energy... (4+ / 0-)
          Recommended by:
          pattisigh, flight2q, pixxer, WestDem

          ...should all hold up or do well...among others.

          Yes...when there's a drastic oversupply (versus demand) in housing stock, you have neigborhoods deteriorating (due to lack of upkeep--folks just get up and leave; homes remain abandoned bringing surrounding property values down along with that). Additionally, basic quality-of-life issues related to community are drastically diminished. Bonds can't be floated for infrastructure upkeep and maintenance of basic services; tax base shrinks dramatically, and so forth...

          "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

          by bobswern on Sun Sep 14, 2008 at 04:49:54 AM PDT

          [ Parent ]

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