Pete Palern, Home Buyer in San Diego, CA

Housing Drop Only 50% of the Way There (Article)

Asked by Pete Palern, San Diego, CA Mon Feb 23, 2009

Shiller: House Prices Still Way Too High

Posted Feb 23, 2009 07:00am EST by Henry Blodget in Investing, Recession, Housing

When Yale professor Robert Shiller stopped by recently to discuss Obama's housing fix, I also asked him about the housing market in general.

Specifically, where are we in this historic price collapse? Finally nearing the bottom?

Not a chance, said professor Shiller--unless the government finds some way to miraculously levitate prices again.

Despite the 25 percent nationwide decline since the 2007 peak, U.S. house prices have still only fallen halfway to fair value. So whatever you think of Obama's plan, don't count on a quick housing-market turnaround.

Reference: http://finance.yahoo.com/tech-ticker/article/190712/Shiller-…

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I don't think any of us are thinking we might have a quick housing market turnaround. A small change in sentiment would be wonderful. I like Jim Cramer's idea of offering everybody a 4.5% 30 year fixed rate government backed loan. A once in a lifetime deal. Do you think the phones would start ringing? Of course the devil would be in the details, but it would certainly get things moving!
1 vote Thank Flag Link Mon Feb 23, 2009
Hi Pete,

I like the article because it looks at our housing situation on a national level. The interesting aspect of Professor Shiller's comments is "U.S. house prices have still only fallen halfway to fair value".

I am not a proponent of the San Diego market reaching bottom like many are saying. However, fair value IS and HAS been determined by the marketplace. This is true for any and all businesses that are effected by supply and demand and how that graph effects pricing.

People forget the S&L collapse of the 80's, the recession, run away inflation and 17% fixed interest rates. It is completely possible we will get there again, and inversely the same as well...that we will not. My data shows we do have further to go in San Diego, perhaps a lot.

The most important thing for people to remember is:

1. The Affordability Index is up almost 100%, hence, more people are buying.
2. Every market has local effects that trend separately from the national statistics.

Great info, thanks for putting it out there. Time will tell.

Mark and Kari Shea
San Diego Real Estate Experts
REO, Short Sale & Investment Specialists,
Development Opportunities & Traditional Real Estate
1 vote Thank Flag Link Mon Feb 23, 2009
Pete,

Thanks, I read the article but did not see the video link. I will go back and watch it.

Mark
0 votes Thank Flag Link Mon Feb 23, 2009
What I found interesting about Shiller's opinions were really found in the video link. He spent about 5 mins discussing the housing market in what I thought was an objective analysis. If you want to see it, I referenced it at the end of the article.
0 votes Thank Flag Link Mon Feb 23, 2009
Always good to get a different point of view...
0 votes Thank Flag Link Mon Feb 23, 2009
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