Shilling’s concerned about lower corporate earnings next year, which have the potential to drag on stock prices. His worries are three-fold: A global recession will occur, hurting revenue and by extension earnings; profit margins are about as good as they can get with companies having already implemented extensive cost-cutting; a strong dollar will weigh on U.S. corporations’ foreign profits and overseas operating expenses.
Shilling continues to remain bearish on the housing market because, as he sees it, the market has at least one major factor working against it.
Follow
____________________________
;
Pingback: Shilling on the risk to stock and home prices in 2013 | Juggling Dynamite « The Affluent Boomer™
There is no doubt house prices are going to drop even more in the 2013. At least in Toronto (even the November Market Report still shows price increases) and Vancouver.
As an insider, I can say that right now, both real estate markets are living off the last moments of their glory, because many people decide to rather stay tight and don´t sell. They hope the prices will start to climb again. I expect the exact opposite, especially in mid-class neighborhoods. There is no incentive for the buyers to go crazy about bidding wars and engage with mortgages far exceeding their limits.
With current levels of household debt, there is no hope for the real estate market to stay as profitable as in the first decade of this century. We can just hope that it won´t trigger a bigger economical crisis.