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The House Price Outlook

The House Price Outlook. Presented by: Mark M. Zandi, Chief Economist. March 3, 2008. An Unprecedented Housing Downturn. % change from peak, Sources: Fiserv Lending Solutions, Census, Moody's Economy.com. Home Sales. Housing Starts. House Price. Forecast peak-to- trough. Peak to 07Q3.

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The House Price Outlook

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  1. The House Price Outlook Presented by: Mark M. Zandi,Chief Economist March 3, 2008

  2. An Unprecedented Housing Downturn... % change from peak, Sources: Fiserv Lending Solutions, Census, Moody's Economy.com Home Sales Housing Starts House Price Forecast peak-to- trough Peak to 07Q3 90s peak to trough 80s peak to trough

  3. ...Throughout Much of the Country Projected peak-to-trough house price decline, % <-20% Sources: Fiserv Lending Solutions, Moody's Economy.com, OFHEO -10% to -20% 0% to -10% >= 0% U.S. = -20%

  4. The Housing Market Is Awash in Inventory... # of excess vacant homes for sale, ths Sources: Census, Moody's Economy.com

  5. …As Foreclosures Surge First mortgage loan defaults, ths, SAAR Sources: Equifax, Moody's Economy.com

  6. The Mortgage Securities Market Is Broken… Bond issuance, $ bil, annualized

  7. ...And a Credit Crunch Has Set-In Net % of banks tightening mortgage loan standards Subprime Sources: FRB, Moody's Economy.com Non-traditional Total market Prime

  8. Recession Already Plagues Parts of the Country In recession Near recession Expansion

  9. An Econometric Analysis of What It Would Take …To reach a bottom in the housing market by spring 2009 Baseline outlook Job growth

  10. The Banking System Is At Significant Risk… Residential RE assets of large commercial banks Source: Federal Reserve Board Share of assets % (R) $ bil (L)

  11. ...And the Infection Spreads... Change in Delinquency Rate, 07q4-05q4 Source: Moody's Economy.com

  12. …Adding Up to Big Losses Household debt in delinquency or default, $ bil, annualized

  13. The Federal Reserve Must Be More Aggressive… Federal funds future contract for September 2008 Source: CBOT

  14. …As Do Fiscal Policymakers Non-conforming share of 2006 originations, U.S. = 50% >=60% 60% - 40% =<40% Sources: 2006 HMDA, Moody's Economy.com

  15. www.economy.com

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