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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: X Y Zebra who wrote (29224)	4/7/2005 8:32:24 PM
From: CalculatedRisk	Read Replies (1) \| Respond to of 306849

I'm working on it. I've crunched some numbers and I've gotten results ranging from a slowdown (close to 0% GDP growth for a few quarters) to numbers that really scared me! Most economists think a housing slowdown will just slow GDP growth to 3.5% this year and maybe 3% next year. So my most optimistic view is significantly worse than the consensus. I think the impact on the general economy will start later this year, but timing is always a guess. Bubbles go on longer than anyone expects. I've tried working bottom up: layoffs in RE (agents, mortgage brokers, house inspectors, etc) and construction. Add to that a multiplier effect on the local economy (impact on restaurants, retail) and it looks like zero growth or a mild recession. But when I come at it top down, and subtract out the mortgage equity withdrawal - the recession looks more severe. Of course I'm not adding in a financial disaster like FNMA needing a bailout. A financial crisis could lead to a deep recession. I'll post some numbers as I come up with them. So much depends on people's pessimism - psychology plays a huge role in economics. If many people stop spending because they are afraid of losing their jobs, then watch out.