RICHARD KOO: Get Ready For Two More Years Of Housing Market Nightmare
The U.S. should expect home prices to continue to decline through 2013, and that will have a devastating effect on the balance sheets of consumers, according to Nomura's Richard Koo.
Koo highlights that the U.S. real estate market is still someways away from its pre-bubble trend.
From Richard Koo:
The recent declines in house prices imply significant progress in restoring housing values to the pre-bubble trend line.
If the downtrend that began in 2010 persists, housing prices will fall back to the pre-1998 trendline in the first half of 2013 (Figure 2).
That would mean the loss of an additional $2trn in household wealth and a return of house values to 2002 levels.
It would also mean a further decline in the ratio of household housing assets to debt to 1.48x, from 1.62x at present, and that could easily spark another round of household deleveraging.
That further loss in wealth could be the trigger for another round of U.S. deleveraging, and stymie the nascent consumer recovery.

Don't miss: Richard Koo explains why we're in a balance sheet recession >
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See Also:
- Home Builder Sentiment Index Takes Another Dip
- Existing Home Sales Fall Sharply, But Come In Better Than Expected
- OOF: Horrible Chart From Richard Koo Shows Why The Economy Will Stink Until 2020
Source: http://feedproxy.google.com/~r/businessinsider/~3/JX_5mAh7_eQ/richard-koo-house-prices-us-2011-6
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