John Templeton, interviewed in Equities Magazine:
"Every previous major bear market has been accompanied by a
bear market in home prices... This time, home prices have
gone up 20%, and this represents a very dangerous
situation. When home prices do start down, they will fall
remarkably far. In Japan, home prices are down to less than
half what they were at the stock market peak. A home price
decline of as little as 20% would put a lot of people in
bankruptcy."
"Emphasize in your magazine how big the debt is... The total
debt of America is now $31 trillion. That is three times
the GNP of the U.S. That is unprecedented in a major
nation. No nation has ever had such a big debt as America
has, and it's bigger than it was at the peak of the stock
market boom. Think of the dangers involved. Almost everyone
has a home mortgage, and some are 89% of the value of the
home (and yes, some are more). If home prices start down,
there will be bankruptcies, and in bankruptcy, houses are
sold at lower prices, pushing home prices down further.
After home prices go down to one-tenth of the highest price
homeowners paid, then buy." |
