Fitch Projects A Further 25% Decline in US Home Prices

Fitch Updates Ratings Model; Projects Steep Housing Price Declines
By: PAUL JACKSON
July 24, 2008
HousingWire.com

Fitch Updates US RMBS Model, Warns on More Downgrades

Fitch Ratings said Thursday that it had enhanced its U.S. residential mortgage loss model, called ResiLogic, a key component of the agency’s overall approach to assessing U.S. RMBS new-issue ratings. While the new-issue market has been essentially dead for all of 2008, Fitch’s revisions suggest that the agency is preparing for where the market might be headed next: seasoned mortgage issuance.

They also suggest a very bearish take on housing prices over the next five years: Fitch said in its report that it is expecting home prices to decline by an average of 25 percent in real terms at the national level over the next five years, starting from the second quarter of 2008. (If we get enough monetary inflation people may keep the illusion of price appreciation. Twenty-five percent inflation over five years is probably a lowball estimate. - Jesse)

And that’s the base case scenario....

For more information, visit http://www.fitchratings.com.