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Economists on Housing Crisis: 'The Worst is Yet to Come'

Economists at San Diego’s annual Economic Roundtable today analyzed the causes of the plummeting housing market and issued warnings for the coming year. KPBS reporter Alison St John has more.

Economists on Housing Crisis: 'The Worst is Yet to Come'

Economists at San Diego’s annual Economic Roundtable today analyzed the causes of the plummeting housing market and issued warnings for the coming year. KPBS reporter Alison St John has more.

UCSD Economics Professor Dr James Hamilton says the coming year could be disastrous in San Diego.

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He says he’s worried about the ill-advised mortgage lending practices that have led to high foreclosure rates and the credit crunch. Hamilton cited San Diego County’s pension fund as culprit in the risky lending practices that contributed to the crisis.

Hamilton : It seems to me the worst is yet to come. There’s a tremendous incentive for any of these public funds to say ‘gimme the highest return and that’ll solve my problems.’ That, I think, is part of what brought us into the national problems in the first place and part of the reason we my see particular problems this coming year. It seems to me the worst is yet to come.

Economists at the roundtable say home prices in San Diego are vulnerable to more severe drops, but could bottom out later this year.

The disparity between rising home prices and increasing low wage jobs means San Diego’s standard of living is not rising as fast as the rest of the nation.

Alison St John, KPBS News.