Marketplace Logo Donate

Daily business news and economic stories from Marketplace

Time to toss around the R-word?

A foreclosure sign hangs in front of a home in Miami. Joe Raedle, Getty Images

Subscribe to our Newsletters

TEXT OF STORY

Tess Vigeland: Sick of hearing about subprime? Eh, you’re not the only one. But don’t count on it going away anytime soon. A survey out today from the National Association of Business Economics may add some fuel to the fire.

The trade group’s members said defaults on subprime loans now pose a bigger threat to the U.S. economy than terrorism. And to top it all off, some pretty grim housing numbers today. Anybody want to start tossing around the R-word? Stacey Vanek-Smith takes a look.


Stacey Vanek-Smith: There are 4.5 million unsold homes sitting on the market, according to The National Association of Realtors.

David Lareah: This is starting to look like a typical housing recession.

Housing economist David Lereah says the real problem is that people can’t get the home loans they need.

Lereah: Too many homes and not enough buyers is basically what’s happening right now. There may be buyers out there, but they can’t obtain a mortgage.

That doesn’t worry UCLA economist Edward Leamer. He says banks will adjust quickly and the loan market will loosen up. Leamer says what concerns him is that home sellers are holding out for the high prices of a few months ago.

Edward Leamer: There’s sort of a stand-off between buyers and sellers. Where we’ve got to get to in the housing sector is back to normal, where when you buy a home, you feel confident that the price is going to be maintained, or it’s going to go up a little bit.

Leamer says that stand-off could increase the risk of a recession. If activity slows down too much in the housing sector he says, it could mean job losses and a serious economic slowdown.

In Los Angeles, I’m Stacey Vanek-Smith for Marketplace.

What's Next

Latest Episodes From Our Shows

Listen
Jul 1, 2022
20:04
Listen
Jul 1, 2022
27:05
Listen
Jul 1, 2022
1:50
Listen
Jul 1, 2022
7:20
Listen
Jul 1, 2022
8:00
Listen
Jun 30, 2022
31:02
Listen
Jun 28, 2022
26:17
Exit mobile version