Freddie Mac CEO: Home price decline ‘halfway through’
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Worth noting, and worth double-posting, from Tom Petruno’s Money & Co. blog at LATimes.com: Richard Syron (pictured), the CEO of Freddie Mac, says we’re only halfway through the decline in home prices:
Since the date of our first quarter call, recent data have prompted us to increase our estimate of future house price declines. Previously we said house prices would fall at least 15% nationally peak-to-trough. Today’s challenging economic environment suggests the housing market is far from stabilizing. As a result, we now believe that national home prices will fall 18% to 20% peak-to-trough. . . . The long and short of it is we now think we’re about halfway through the overall peak-to-trough decline.
More, from Tom Petruno: ‘Today, given Freddie Mac’s second-quarter loss (which was more than three times larger than Wall Street had expected) and the company’s decision to slash its dividend at least 80%, investors again are bailing on the stock. It was down $1.48, or 18.4%, to $6.56 at about 12:25 p.m. PDT. The price had bounced as high as $10.80 in the weeks after the Treasury rescue plan was announced on July 14.’
My back-of-the-envelope math: If Syron is correct, and if we are coincidentally also halfway through the price decline in Los Angles -- two very large ifs -- the numbers could fall like this: Median sales prices peaked at $550,000 and have fallen to $415,000, a decline of 24.5%, according to DataQuick. If prices were to fall another 24.5%, median sales prices would bottom at $313,000 in Los Angeles County. Very big ifs, as I say.
--Peter Viles
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Bloomberg News