Shiller: House Price Decline Could Be Worse than Depression
Shiller's main points:
• 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.
Source:
U.S. House Price Decline Could Be Worse than Great Depression, Economist Shiller Says
Henry Blodget
Yahoo Tech Ticker, Sep 04, 2008 01:36pm EDT
http://finance.yahoo.com/tech-ticker/article/53094/U.S.-House-Price-Decline-Could-Be-Worse-than-Great-Depression#
Friday, September 05, 2008 | 12:30 AM | Permalink
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Comments
I think that most people STILL believe that housing is a GREAT investment. I honestly believe that we will not see the bottom of this until at least half say 'Screw it, housing is a losing proposition.'
That would be the official end of the irrational exuberance, at least in that asset class...
HCF
Posted by: HCF | Sep 5, 2008 12:40:29 AM
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