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Nouriel Roubini: 'Housing Prices Can Only Move Down'

The second factor putting downward pressure on home prices is the ongoing chaos with mortgage documentation, and the consequent suspension by banks of mortgage foreclosure proceedings—which has actually worsened the underlying problems in the housing market. "There has been an effective moratorium on foreclosure," said Roubini. And the beginning of the end of that moratorium means more housing supply is about to become available on the market. "The shadow inventory of not-yet-foreclosed homes—due to the moratorium—will surge in the next year," Roubini says. Both factors, taken in concert, set up a scenario where market fundamentals put downward pressure on prices: "Supply will increase, demand will drop," Roubini said.

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