Home, Home I'm Deranged, Part 23

Economist Robert Shiller, of the Case-Shiller housing index, is warning that we have a long way to go until bottom in the housing depression.


"My gut feeling is we might see a continuation of the decline (in home prices)," Shiller said.

He added that a 10 to 25 percent slump in real home prices "wouldn't surprise me at all," though he cautioned that was not a forecast.

Speaking at the Standard & Poor's housing summit, Shiller said recent data showing U.S. home prices fell into a double dip in March could prove to be either a seasonal effect over the winter months or part of a downward trend.

Another uptick in the unemployment rate might also start to point to a double-dip recession, he said.

Real median housing prices are already coming apart.






Housing prices have dropped to 1990 levels now in real terms.  A 10% drop in median housing prices would put them at 1978 levels or so.  A 25% drop from this point?  You'd have to go back to the 1960's.  We're talking housing prices cut by more than half from their peak in 2005, and everyone who bought a house in the last 35 years losing money on it.

The real estate bubble has detonated, and we're now right back to where we were before the bubble started.  We now have the crash part to retrace, and that's going to put millions more Americans underwater on their mortgages, causing millions more foreclosures to flood the market, causing housing prices to drop even more...

Eventually housing prices will bottom out.  But it will be years before that happens.