Larry Kudlow’s not-so-on-the-money predictions

“Homebuilders led the stock parade this week with a fantastic 11 percent gain. This is a group that hedge funds and bubbleheads love to hate. All the bond bears have been dead wrong in predicting sky-high mortgage rates. So have all the bubbleheads who expect housing-price crashes in Las Vegas or Naples, Fla., to bring down the consumer, the rest of the economy and the entire stock market.” – June, 2005

Analysis: Well, we all know what happened. By 2008, the housing bubble popped, home prices were in a free-fall and the mortgage-backed securities that banks had loaded up on were threatening to plunge those firms — and the economy — into the abyss.

Home prices in 20 metropolitan areas across the country dropped at a record rate of 18 percent in October 2008 from a year earlier as the fallout from the financial collapse reverberated through the housing market. The housing market has still not recovered completely or evenly and prices in many cities are still below their pre-recession peak.

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