Special Commentary

Housing Chartbook: December 2007

Mon, Jan 7 2008, 12:22 GMT
by Adam York, Mark Vitner

Wachovia


Downturn Sharper & Deeper, Where’s the Bottom?

Tightening credit underwriting standards have pushed the housing slump into a decisive new phase. We are now looking for deeper declines in sales and new construction and have also pushed the recovery out a few more months. Sales of new and existing homes are now almost entirely being driven by credit market concerns and affordability issues. Price declines are spreading beyond the formerly booming areas of California and Florida and we now expect outright price declines in all of the major national price indices in 2008.

The adjustments we have made to our housing forecast incorporate the recent disruptions in the credit markets and accompanying tightening in underwriting standards. Sales of new and existing homes plummeted late this past summer, when parts of the mortgage market seized up and several mortgage providers shut their doors. Conditions improved slightly this fall in the conventional mortgage market but there has been little to no improvement in the subprime market. Interest rates on jumbo mortgages also remain high relative to the benchmark 10-year Treasury note. The net result is that the markets for entry level homes and second homes have weakened considerably.

Published on  Mon, Jan 7 2008, 12:25 GMT

Wachovia Corporation  | P.O. Box 025383 Miami, FL 33102-5383
http://www.wachovia.com | sam.bullard@wachovia.com

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The information and opinions herein are for general information use only. Wachovia Corporation and its affiliates, including Wachovia Bank, N.A., do not guarantee their accuracy or completeness, nor does Wachovia Corporation or any of its affiliates, including Wachovia Bank, N.A., assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or any foreign exchange transaction, or as personalized investment advice. Securities and foreign exchange transactions are not FDIC-insured, are not bank-guaranteed, and may lose value.

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