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Expert: Housing Prices Will Bottom at 50% of Value

Housing prices will continue to drop through next year and homeowners can expect their houses to lose another 10 or 15 percent of their value, bottoming out to be worth half of what was once their resale value, Whitney Tilson said in an interview on TechTicker today.

Tilson, an investor and author of the book "More Mortgage Meltdown," said that the house bust is in its "seventh inning" and the rate of decline is slowing. Currently nationwide, homes have lost an average value of 32 percent off their second-quarter 2006 highs.

Up until today's sobering Case-Shiller Index report on plunging housing prices, optimists were finding some green shoots of housing recovery.

But those signs are misleading, Tilson said. First, the spring months are a selling season when more homes get sold, pushing prices upward. Second, last fall's foreclosure moratorium by Fannie, Freddie and the big banks is over.

Now, Tilson said, banks are evaluating President Obama's housing rescue plans against the at-risk mortgages they hold. The White House measures will prevent perhaps 20 to 25 percent of the foreclosures that would have taken place without the moratorium, Tilson said, but not the rest.

As a result, he said, "there is a huge surge of pent-up foreclosures coming through the pipeline.

You can watch Tilson's interview below. If the video doesn't work in your browser, click here to watch the video.

-- Frank Ahrens
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By Frank Ahrens  |  May 26, 2009; 4:55 PM ET
Categories:  The Ticker  | Tags: Whitney Tilson, housing crisis  
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