Investors are speculating that the Fed will cut interest rates again next week in an effort to prevent the down turn from exacerbating weakness in the broader economy. But, lower interest rates may not spur home buying as many would suspect.

Not to mention that with the economy at serious risk of falling into a recession many potential homebuyers may wait to see how secure their financial future is before making a major purchase. Several top economists believe that the chances of a recession are better than 50 percent.

"There is likely to be little or no increase" in gross domestic product this quarter, Harvard University economist Martin Feldstein told the Senate Finance Committee in Washington today. "The probability of a recession in 2008 now exceeds 50 percent. If it occurs, it could be deeper and longer than the recessions of the recent past." ... Former U.S. Federal Reserve chairman Alan Greenspan said Thursday the odds of a U.S. recession are 50 percent or "slightly more," as he defended the risky subprime mortgages that accelerated a drop in the American housing market and subsequent economic downturn. ... "The probability of recession is probably 50 percent or maybe slightly more, but we're not there yet," Greenspan told a Vancouver audience. ... “What is the probability that the U.S. economy will fall into a recession in 2008? We would answer, 65.5 percent … What we do see for 2008 is an economy teetering on the brink of recession.” Paul Kasriel, director of economic research, at Northern Trust Bank in Chicago. ... "In sum, the recent employment report strongly suggests that an official recession has arrived.” David Rosenberg, chief North American economist for Merrill Lynch.

Of course, in my opinion, economists are like weathermen: no matter what happens, you can't prove them wrong. If the weatherman tells me that there is a 10 percent chance of precipitation and we get the worst downpour since Noah built his ark, well... he told me that there was a 10 percent chance.

What I can't understand is so many economists would so boldly state the chances are around 50 percent - why don't they just say "we don't know." The housing market, and the broader economy, are in chaos. What will happen tomorrow is any one's guess. But, today, things are bad. Of course, you don't need me to tell you that - that is the like the weatherman that says "right now, it's raining."

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About the Author

Robert A. Franco has been in the title industry for nearly 15 years in the state of Ohio. The owner of VersaTitle, a full service abstracting and title company, and the founder and president of Source of Title, a Web site devoted to providing media and marketing services to the title industry, Franco has dedicated much of his professional career to furthering the role and significance of title examiners in the title insurance industry.  You can read more from Robert's blog or write him at rfranco@sourceoftitle.com .