More Videos
- For the Jobless, 10% is Harder Than Before
- Week Ahead: Stocks Search for Catalyst in Quiet Week
- Outlook: Dollar Likely to Ride Higher on Bleak Jobs Report
- Geithner: More Stimulus, Not a Bank Tax
- Windfall is Seen as Bank Bonuses are Paid in Stock
- Buffett's Berkshire Hathaway Says Net Income Tripled
- Cramer: Earnings, IPOs Dominate Next Week
- Buying Fear: How to Own Volatility
- Administration Rejects Plan to Buy Fannie Mae Credits
- Food Network, HGTV Drive Scripps Networks' Upside Surprise
- Tommy Lee, Medical Tourism and Nasty Santa, Your Emails
- U.S. Markets Gain 3% for the Week Despite 10.2% Unemployment
- Disney's 'Carol' Tests Widest 3-D Release Ever
- Stimulus II? Jobs Tax Credit=Cash For Clunkers
- Rockwell Automation Earnings: What Options Are Saying
- Gold Will Touch Higher Lows and Higher Highs: Analyst
- Is Misery Alive And Well in Your Office?
- Consumers Haven't Changed, They Are Just Pickier
Text Size 
Housing prices will fall more than 30 percent before the market recovers and banks will continue their reluctance to lend until the credit crisis clears up, Oppenheimer analyst Meredith Whitney said on CNBC.
 |
AP |
In a wide-ranging interview, Whitney said the housing deterioration will be worse than even the doom-and-gloom predictions that already have circulated regarding the market.
Video: Click Here to Watch Whitney's Interview
Video: Why She's Become a Widely Followed Analyst
"There's one obvious area where the bad news isn't all out yet, and that's with home prices ... Home prices are going to fall much more than people expect," she said.
"I think it's going to be well worse than 33 percent, and here's why: If you look at the futures market, it's indicating a range right around between 2002-2003 levels, when home ownership rates were actually higher, but fewer people can qualify for a mortgage because you've got to put 20 percent down, and that's a lot of money for people," she continued. "Furthermore, then you've got to find a bank to lend to you, because, Countrywide's not lending to you."
Video: Housing Won't Recover Until 2010: Real Estate Expert
Uninsured Depositors May Be "Iceberg" for U.S. Economy: Larry Lindsey
While a number of factors have generated the troubles for real estate, the industry is getting no help from banks, who have largely used Federal Reserve liquidity-raising efforts not to lend money but rather to bolster their damaged balance sheets.
The Fed went on a nine-month rate-cutting spree beginning in September 2007 aimed at easing monetary practices, but banks have not responded and in fact have cut lending dramatically. Whitney said banks originated $900 billion loans last year, but just $100 billion so far in 2008.
She said it's been part of a trend that she called "weak hands to strong hands."
"If you don't need capital you can get capital. If you need capital, you're not going to get capital," she said.
The banking and housing industries will only recover, Whitney said, when banks start feeling comfortable enough to lend again.
The lack of capital, she said, is the primary reason why more banks have not consolidated
"No one has capital (and) no one wants to sell when your stock's down 80 percent," she said. But more importantly, everyone's just holding on."
Print
Email
- Rumors abound that Oprah will leave her show to start a new network. What would this mean for daytime TV?
- A private equity specialist sponsored a stand-up comedy troupe in New York to prove that CEOs can, in fact, be funny.
- Cramer did the research and found eight stocks that lead the pack. Read on to get his top picks.
- Did Hideki Matsui’s performance make it more likely that the Yankees will pay to have him back?
- Which wines should you bring—or serve—with holiday meals this year? Ask a connoisseur.
- Two competitors in this year’s World Series of Poker in Las Vegas have stories fit for Hollywood.
Data is a real-time snapshot *Data is delayed at least 15 minutes