If House Prices Keep Falling This Fast, The Economy Is Screwed
Dec. 29, 2010
Housing guru Robert Shiller says the decline in October’s Case-Shiller house-price index was much worse than expected (over 10% annualized).
He also says that if house prices keep falling this fast, the economy will face “serious reasons to worry” (which, for Professor Shiller, is an apocalyptic statement).
6 of the 20 cities in the index have now hit new lows, below the lows reached in 2009 before the “recovery” in house prices. In several cities, prices are back to where they were 10 years ago.
If prices continue to fall at this rate, Shiller expects the panicked Congress will issue another home-buyer tax credit or other emergency measure to stop the fall, despite the fact that it’s an unfair gift of taxpayer money from renters to home-buyers and homeowners. When the ship is sinking this fast, Shiller says, you do what you have to do.