Prud'homme thinks, in his area, with loan resets in the mix, home prices could keep spiraling downward for the next three years, at least.Quite amazing to hear a realtor talking like that; usually, they are eternally optimistic. Three years until a bottom is much more pessimistic than the vast majority of Americans at this point in time. Interestingly, there is still no discussion of the fact that some people who are otherwise able to pay their mortgage will decide to let the house go back to the bank because they are paying more on it than it is worth. I think that's coming, eventually.
On June 26, in Marketplace's weekly wrap, Reuters blogger Felix Salmon says:
I think there's a lot more shoes to drop. I mean, you are living in California which is seeing its creditworthiness deteriorate by the day. There's a lot of Eastern European sovereigns who are looking extremely dubious. There's so much bad debt that's being buried on insurance companies' balance sheets, on European bank balance sheets, and is never going to be worth what the financial system needs it to be worth for the financial system to be solvent. There's a huge amount of denial in the market, and people just haven't embraced how bad it really is.He doesn't say it directly, but reading between the lines, it seems fairly clear that Felix Salmon thinks that the financial system, as a whole, is insolvent. This is pretty significant.
