What's worse now is that the speculative bubble over the last few years has created home owners who are willing to walk away from the house, and the worsening economy will push the bottoming process into next Spring at a minimum (link - with video)
The current housing downturn isn't over and is "much much worse" than past downturns, says Barbara Corcoran, who built The Corcoran Group into a multi-billion firm during the real estate busts of the mid-1970s, 1980s and early 1990s.
This downturn is "grossly different" than those past cycles because homeowners are much more willing to "walk away" from homes, says Corcoran, who sold her namesake firm in 2001 for a reported $66 million and is now an author and widely cited real estate guru.
Just a few foreclosures - which Treasury Secretary Paulson says are unavoidable - can "put a pall on an entire neighborhood" by putting downward pressure on all local prices, she says.
The good news is that there's a "Macy's Day sale" in housing right now and buyers are starting to step in. But there aren't enough "brave souls" to stem the decline which Corcoran says will take prices down another 5%-to-10% nationally and end next Spring - in a best case scenario.
A slowing housing market impacts retail expenditures on durable goods and home improvement - manufacturing and retail areas that will trend downward with the housing decline as well.
With the cost of food rising, and energy prices causing price increases in a large number of sectors, it could be a pretty dismal year ahead.
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