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Deutsche Bank- U.s. Home Prices To Fall Another 14% As Unemployment Deepens

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U.S. Home Prices to Fall 14% More, Deutsche Bank Says (Update1)

By Brian Louis

June 16 (Bloomberg) -- U.S. home prices may fall another 14 percent, led by the New York and Orange County, California, metropolitan areas, before reaching a bottom as an increase in unemployment offsets lower prices, Deutsche Bank AG said.

“Affordability is no longer the driving issue in the housing market, and we believe prices still have a ways to fall in many areas before home prices reach their trough,†Deutsche Bank analysts led by Karen Weaver, wrote in a report yesterday. “The bottom is getting closer, but we are not there yet.â€

Home prices are forecast to fall 41.7 percent from their peak, Weaver said. That’s higher than a forecast she released in March and reflects “the actual declines to date and the expected future impact on home prices from rising foreclosure inventory and unemployment.â€

In March, Deutsche Bank had forecast a 16.5 percent decline in “current-to-trough†prices. While today’s projection is less than that, many metropolitan areas will still see steep declines, the report said.

In the New York metropolitan area they may drop 40.6 percent from the first quarter to the bottom, the report said, less than Deutsche Bank’s March estimate of 47.4 percent.

Financial firms have cut more than 183,000 jobs in the Americas in the global credit crisis, driving down prices and rents in the New York area. In New York City, Manhattan co-op prices slid the most since 1995 in the first quarter, according to data from Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate.

Orange County Declines

The New York metropolitan area’s median home price peaked in the second quarter of 2007 at $552,000 and has since fallen to $446,000, the report said.

Home prices in Orange County, California, are forecast to fall another 19.1 percent, Deutsche Bank said. Prices in the Los Angeles-Long Beach-Glendale metropolitan area may fall another 11.3 percent from the first quarter to the bottom. In Riverside- San Bernardino-Ontario, they may fall 14.3 percent.

California leads the nation in foreclosures. U.S. foreclosure filings surpassed 300,000 for the third straight month in May and may hit a record 1.8 million in the first half of the year, RealtyTrac Inc. said in a June 11 report.

The U.S. unemployment rate will likely exceed 10 percent by early next year, Deutsche Bank said.

To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net.

http://www.bloomberg.com/apps/news?pid=206...id=aGiGVRe..QKQ

Still no end in sight for the US crash.

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Is that what the line on the graph is telling them (ie they have taken a ruler and drawn a line) or have they done some really advanced computer modelling?

Unemployment is still getting worse prices can only fall.

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maybe i'm imagining this but the americans, to me, seem to be adopting a much healthier attitude to HPI and HPC... very pragmatic, you know, 'well, that bubble's over, let's move on, get on with it, there'll be plenty of other ways for us to make money going forwards...' whereas we in blighty are one-trick ponies, grimly clinging on to our dreams of overpriced pwoperdee...

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maybe i'm imagining this but the americans, to me, seem to be adopting a much healthier attitude to HPI and HPC... very pragmatic, you know, 'well, that bubble's over, let's move on, get on with it, there'll be plenty of other ways for us to make money going forwards...' whereas we in blighty are one-trick ponies, grimly clinging on to our dreams of overpriced pwoperdee...

Well, most of them can simply hand back the keys and walk away scott free - can't do that here.

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maybe i'm imagining this but the americans, to me, seem to be adopting a much healthier attitude to HPI and HPC... very pragmatic, you know, 'well, that bubble's over, let's move on, get on with it, there'll be plenty of other ways for us to make money going forwards...' whereas we in blighty are one-trick ponies, grimly clinging on to our dreams of overpriced pwoperdee...

I dont know, in decent established areas of the US ive been to, looking on realtor.com non-repo homes look to be every bit overpriced as ours. They offer more square footage, but a decent family home is still $400,000+ in many areas. Yes you can buy a mansion for peanuts in detroit, or a large new build in an unfinished desert community for not much too, but good towns within an hour of DC or New York arent cheap.

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