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Morgan Stanley: U.S. Home Prices At Risk for At Least Three Years
Published: December 10, 2007
New York--U.S. home prices could continue to drop for three years or more in an unprecedented residential decline, according to a Morgan Stanley report released late last week.
The global financial services firm, headquartered in New York, says that price levels of the RPX Index--a derivative index compiled from home prices in 25 U.S. urban areas--show a strong possibility that prices will fall for the next three years, Reuters reports.
A recovery is most likely to happen in three to four years, says the report, which also said that although no national home price declines have lasted for three years or longer in recent years, regional data shows that extraordinary price increases can cause continued corrections.
"The fundamental argument for going long housing is that history has never seen such extended periods of house price declines," Morgan Stanley said. "We think that such arguments have limited credibility because of limited periods of data and over-reliance on analysis using national level data."
The report was compiled using data from the Office of Federal Housing Enterprise Oversight going back to 1979.
