Home Prices Could Drop For “Another 20 Years” Warns One Economist
How likely are we to fall into yet another recession? Prospects are looking pretty bad, with a new report showing that housing prices are not only falling, but may continue to fall for as long as two more decades.
“My gut feeling is we might see a continuation of the decline” in home prices, [Robert Shiller, co-founder of the S&P/Case-Shiller home price index] said earlier Thursday at a Standard & Poor’s housing summit.
He added that a 10 percent to 25 percent slump in real home prices “wouldn’t surprise me at all,” though he cautioned that was not a forecast.
Shiller pointed to the glut of unsold homes on the market and the large amount of homeowners under water on their mortgages as pressuring prices.
As for when home prices might bottom, Shiller told Insider that was unclear and it was possible prices could slide for 20 years.
“We’ve seen five years of decline already since the peak in 2006 and I don’t see evidence that we’re coming out of it,” he said.
For those of us who bought our first homes in the heyday of the housing bubble, that could mean a very high likelihood that we literally will be three or less years away from paying off the entirety of our mortgages before we ever hit that magic “break even” point on our homes where it may become possible to sell again.
This news, coupled with job gains being stagnant, states cutting unemployment benefits, and Republicans refusing to raise the debt ceiling without serious cuts to the social safety net programs, all point to some pretty grim years ahead for the American economy.