Home-value declines crimp consumers more...

Date: Fri, 31 Oct 2008 15:27:10 -0400
Home-value declines crimp consumers more than portfolio losses

Consumers react more to changes in their home values than changes in
their investment portfolios, according to a recent study.

In fact, real estate economists at UCLA and the University of Southern
California found that a 10% decline in housing wealth from the 2005
highs would result in a $105 billion, or 1.2%, drop in personal
consumption expenditures.That 10% decline in home values translates to
roughly a 1 percentage-point
reduction in real GDP growth, researchers said.