Sunday, September 7, 2008

The ‘D’ word appears with increasing regularity

Shiller: Housing slump may exceed Depression

Yale University economist Robert Shiller, pioneer of the widely watched Standard & Poor’s/Case-Shiller home price index, said there’s a good chance housing prices will fall further than the 30 percent drop in the historic depression of the 1930s.

Posted by gardeniadotnet @ 11:56 PM (633 views)
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4 thoughts on “The ‘D’ word appears with increasing regularity

  • gardeniadotnet says:

    An old article that has been updated here…

    http://finance.yahoo.com/tech-ticker/article/53094/U.S.-House-Price-Decline-Could-Be-Worse-than-Great-Depression?tickers=%5Egspc,fre,fnm

    * Home price declines are already approaching those in the Great Depression, when they plunged 30% during the 1930s. With prices already down almost 20%, it’s not a stretch to think we might exceed that drop this time around.
    * There are about 10 million homeowners whose debt is higher than their home value, which has broad implications for how Americans feel about their wealth and spending habits (read: more pressure on consumer spending).
    * The current hopeful consensus — that house prices will bottom soon and then begin to recover — is most likely a dream. Housing markets don’t usually have “V-shaped” recoveries. And even if house prices stabilize in nominal terms, after adjusting for inflation, most homeowners will continue to lose money.

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  • Shiller believes that ,allowing for inflation, American house prices have n’t risen at all in the century 1890-1990.Does this analysis hold for UK? It would be very contrary to popular opinion if it were- then again ,Shiller has always pointed out that popular beliefs on property do not check out.

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  • worth reading, schiller says:
    “Basically we’re in uncharted territory,” Shiller said. “It seems we have developed a speculative culture about housing that never existed on a national basis before.”

    Many people became convinced that housing prices would increase 10 percent annually, a notion Shiller called crazy.

    Those crazy yanks! Obviously we brits are much more sensible.

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  • mark wadsworth says:

    House prices will fall on average by 42%. 800 visitors of this site say so.

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