Time to toss around the R-word?
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Tess Vigeland: Sick of hearing about subprime? Eh, you’re not the only one. But don’t count on it going away anytime soon. A survey out today from the National Association of Business Economics may add some fuel to the fire.
The trade group’s members said defaults on subprime loans now pose a bigger threat to the U.S. economy than terrorism. And to top it all off, some pretty grim housing numbers today. Anybody want to start tossing around the R-word? Stacey Vanek-Smith takes a look.
Stacey Vanek-Smith: There are 4.5 million unsold homes sitting on the market, according to The National Association of Realtors.
David Lareah: This is starting to look like a typical housing recession.
Housing economist David Lereah says the real problem is that people can’t get the home loans they need.
Lereah: Too many homes and not enough buyers is basically what’s happening right now. There may be buyers out there, but they can’t obtain a mortgage.
That doesn’t worry UCLA economist Edward Leamer. He says banks will adjust quickly and the loan market will loosen up. Leamer says what concerns him is that home sellers are holding out for the high prices of a few months ago.
Edward Leamer: There’s sort of a stand-off between buyers and sellers. Where we’ve got to get to in the housing sector is back to normal, where when you buy a home, you feel confident that the price is going to be maintained, or it’s going to go up a little bit.
Leamer says that stand-off could increase the risk of a recession. If activity slows down too much in the housing sector he says, it could mean job losses and a serious economic slowdown.
In Los Angeles, I’m Stacey Vanek-Smith for Marketplace.
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