Real estate and Recession

Amey Stone

There is a whole class of economist that doesn't believe we are in the midst of a serious real estate bubble, but is nonetheless quite concerned about the health of the real estate market. Barry Ritholtz, chief market strategist at investment firm Maxim Group, is in that camp.

He fears that a mere slowdown in real estate will lead to major job losses and much slower consumer spending. He marshals a lot of the recent evidence on his blog, The Big Picture.

Even worse, he thinks that even if housing prices don't fall by much, the economy could go into recession in 2006-2007. He wrote to clients today:

"Given the significance of this sector and the relative modest strength of the rest of the economy, we suspect the Fed will fail in their attempt to engineer a soft landing. We expect a recession in the 2006-07 time frame."

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