Robert Shiller On Housing
Henry Blodget of Tech Ticker, a Yahoo! Finance production, interviewed Yale economics professor and MacroMarkets chief economist Robert Shiller earlier this afternoon. Blodget wrote in an accompanying post:
In part one of my one-on-one with Shiller, we discuss the grim outlook for U.S. housing, which he tackles in-depth in his new book The Subprime Solution.
Highlights of our first discussion include:
• 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.
Shiller, who warned of the U.S. housing bust a year before it began, predicts that home prices in a typical city will decline another 10 percent.
Robert Shiller Interview
Tech Ticker Video Link
Sources:
Robert Shiller Interview
Yahoo! Finance (Tech Ticker), September 4, 2008
“U.S. House Price Decline Could Be Worse than Great Depression, Economist Shiller Says”
Henry Blodget
Yahoo! Finance (Tech Ticker), September 4, 2008
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