Kondaur Capital sees another 20 percent drop in housing prices

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Distressed loan purchaser Kondaur Capital Corp. is cautioning about housing prices falling further still. As reported recently in HousingWire, Kondaur chief executive Jon Daurio and ratings agency Moody's expect prices to fall another 20 percent. Moody's downgraded ratings on multiple residential mortgage-backed securities, stating that it sees increasing potential for a double-dip recession that would cause home prices to decrease another 20 percent. Daurio said he expects the drop to occur over the next three years.

Isolated pocket communities may experience less or have some moderate price appreciation, but those are the rare exceptions. Unemployment is unlikely to improve, rising interest rates will have a negative impact on the economy, the Home Affordable Modification Program (HAMP) is failing, credit will further tighten, and Federal Housing Administration loans will become the new subprime, Kondaur reports.

Daurio believes housing prices will hit mid-90s levels. "We haven't had this much national debt on the balance sheet before. Federal and state governments' balance sheets are insolvent. There are just far too many people with homes and loans they can't afford," Daurio said.