Home Prices to Fall Another 30%: Analyst Who Called Crash Makes Bearish Call on Real Estate

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Several readers have emailed me over the past few weeks asking my opinion on the current state of the real estate market after my post on mark-to-market accounting practices.

The gist of these questions went something like this:

Is now the time to buy a house?

Have we hit a bottom in the real estate market?

Good questions!

My answer to all was a resounding:

I don’t know!

I’m not the all-knowing swami, and making sweeping projections that could cost a reader a six figure faux pas (if I’m wrong) really isn’t the purpose of this blog.

However, one of the few analysts who made the correct call in 2007 to get out of the market — or more correctly, to get out of the financial sector altogether — continued her bearish predictions about the banking sector in a late day CNBC interview.

However, her most bearish statements related to the housing market where she feels housing prices will continue to sink lower.

According to (superstar?) bank analyst Meredith Whitney:

Housing prices could fall as much as 30% from current prices!

[See CNBC video below. Housing comments ~ 4:45 min]

Timing the Real Estate Market?

The best advice I can give is to anyone attempting to time the real estate market is this:

Follow proven finance professionals (like Meredith Whitney, Peter Schiff) who made the correct calls.
Track the historical price of homes where you want to buy. If prices suddenly spike, hold off on buying. If prices take a dive, start looking for a home that meets your requirements.
Use your own best judgment based on your financial situation. Don’t buy a house that you can barely afford just because it drops 30% in asking price.

But remember, trying to pick the absolute bottom is really a suckers game!

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Posted by Matt SF @ 6 April 2009 3 comments

3 Comments
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Comments

Apr 7, 2009
7:57 am

#1 Ana :

Interesting article.

[Reply]

Apr 7, 2009
10:48 am

#2 Kyle :

I hope we have hit the bottom, I am happy that I haven’t dropped below what I paid for the house, even though right now I don’t know if I could sell it for that price, and minus Realtor fees I am definitely in the hole.

[Reply]

Apr 8, 2009
9:39 am

#3 Matt :

@ Kyle

That’s good news considering all the bad press lately. I read somewhere that the housing dip has “only” hit a few selected areas around the US more than 10%. Areas like south Florida, Phoenix, etc. were the big losers.

Then again, I would imagine there are people in Kansas or North Dakota still asking…

There was a Real Estate Bubble?

[Reply]