Robert Shiller, is a Yale University economist and co-developer of Standard and Poor’s S&P/Case-Shiller Home Price Indices, a highly regarded measurement of the housing market. He believes that home prices could go much lower beginning next year.
"There is a probability of a continuing decline for a period of years, bringing prices in many cities down in the 10s of percent," Shiller said in an exclusive interview with Reuters. "The bottom is hard to predict," he said. "I do not see it imminent and it could be five or 10 years too."
It is nice of Mr. Schiller to sugar coat the news.
While Schiller’s predictions are not in the majority, the overall view of the housing market does seem to be moving his way. Most studies show that markets like California and Florida have a long way to fall. High oil prices are not likely to help consumers fell flush and ready to go out and buy new houses.
If the prediction of a long, debt recession is correct, several industries could see awful wrecks among their most visible companies. Home builders like Beazer (BZH) and Hovnanian (HOV) could simply go under. The pressure on Countrywide (CFC) which says it would be badly hurt by another downgrade of its bonds, could end up in liquidation. Large commercial and investment banks could face devastating write-downs.
Other than that, everything is fine.
Douglas A. McIntyre
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