Housing owners staring at another 10 to 20 percent price drop?
That's what housing market bears like Gary Shilling and Meredith Whitney have been forecasting for months.
Now both economists, after being dismissed as the more extreme of the bears, are looking pretty much on target after this week's dire slate of real estate reports. In case you missed it, July home sales plunged 27 percent across the country and by about the same number in the Bay State.
I stumbled across a couple interviews of Shilling on various financial news sites dating back to late June - they seem pretty prescient now.
Shilling is predicting a 10 to 20 percent fall in home prices. Moreover, he expects it to be a slow, drawn out slide, not bottoming out until 2013.
Whitney, sometimes derided as a prophet of gloom herself, has been forecasting another 10 percent dive in prices.
For Shilling, the key factor here is the seemingly unstoppable flood of homes hitting the market, with banks now pulling the trigger on foreclosures and taking back properties they previously let languish.
"Excess inventory is the mortal enemy of prices," Shilling told one interviewer.
And guess what? Inventory is rising fast, both locally and nationally.
The supply of homes on the market in the Bay State is now close to 10 months, a dramatic rise from just 6.1 months in June.
Nationally, the number is more than 12 months now.
That's bad news for prices - Calculated Risk makes the case that anything above 6 or 7 months signals a market in which home prices are falling.
