Industry News

Real estate market is weak, but won’t crash

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An economic report by the American Express Bank Ltd. concludes that a crash in U.S. house prices and an economic recession are unlikely, though the housing market "is particularly weak." "U.S. house prices will probably be flat or down for awhile, although price falls in former hotspots will be compensated by continuing catch-up in other regions," according to the "Economics for Investment" report released this month by the bank, an international subsidiary of American Express Co. "The authors acknowledge that weakness in the U.S. housing market and a moderate economic slowdown does make the risk of a U.S. recession greater in 2007, but argue that a 'soft landing' is the most likely outcome. Moreover, any signs of a harder-than-needed landing will likely be offset by lower interest rates and bond yields." The run-up in house prices was "significantly smaller" in the United States than it was in the United Kingdom and Australia, the report states -- U.S. house prices increased 97 perc...