Former Goldman Sachs Executive Joshua Pollard Warns Washington: Home Prices Will Decline 15% in 3 Years

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Former Goldman Sachs executive, Joshua Pollard, releases report on the economic impact of an imminent 15 % decline in home prices over the next 3 years that could result in which trends indicate negative impact to jobs and the increased risk of recession.

Virtuous Housing Cycle

Virtuous Housing Cycle, from "Humbling Proof in High Probabilities: A Financial Imbalance," a report by Joshua Pollard (September 2014).

As an economist, statistician and housing expert I am lamentably confident that home prices will fall by 15% within three years. Home price devaluation will expose a major financial imbalance that could lower a generation’s esteem for the American dream.

Former Goldman Sachs executive and prior head of the firm’s housing research team, Joshua Pollard, cautions President Barack Obama on the economic impact of an imminent 15% decline in home prices over the next three years in a report released today.

In the report, “Humbling Proof in High Probabilities: A Financial Imbalance,” Pollard identifies the primary concerns: recent price appreciation outpacing income, the impact rising interest rates will have on already overvalued home prices and the inevitable slowdown in investor purchases whose demand could turn into an unnatural level of supply. The 15% decline equates to a $3.4 Trillion cut to consumers’ net worth.

“As an economist, statistician and housing expert, I am lamentably confident that home prices will fall by 15% within three years. Overvalued homes make up $23 trillion of consumer asset value and serve as the psychological linchpin for $17 trillion of invested capital.” Joshua Pollard submits, “Home price devaluation will expose a major financial imbalance that could lower an entire generation’s esteem for the American dream.”

The three distinct stages of the decline are outlined in the report, the first of which is already underway in US. In Stage I, referred to as Hot to Cool, home price growth slows and turns negative in large markets across the country, investors slow purchases, homebuilders lose pricing power as absorption rates decline and press outlets shift from positive to mixed. Stage II, Demand to Supply, occurs when new negative shocks cause investors to completely shift from raising prices to outbid competition to reducing prices to beat future declines. In the final stage, recognized as Deflation & Response, the broader consumer finally realizes it is again a bad time to buy a home. Banks lower their willingness to lend and deflationary economics taking full hold. The negative impact to jobs and the increased risk of recession will ultimately call for a never-before-seen policy intervention.

Mr. Pollard released the report to the public early this morning squarely targeting public finance and housing officials. As a call to action, he addressed the President of the United States and outlined potential but necessary policy suggestions in an earnest attempt to avoid another housing driven recession.

To access the full report, “Humbling Proof in High Probabilities: A Financial Imbalance,” visit http://www.joshuapollard.info.

For media inquiries directed to Joshua Pollard, contact Jasu Sims at jasu.sims(at)omicelo(dot)com.

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Jasu SIms
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