Having covered the economic crisis extensively I am always perplexed when the US media reports on US home prices recovering to where they were during the real estate bubble of the 2000′s – which were unrealistic prices.
If home prices began an unsustainable climb in 1999, which is year zero for the housing bubble, then any price increases that occurred after that were unrealistic and should not be considered as a ‘recovery point’ or barometer for US home price stability.
The fact is that US home prices need to correct back down to 1999 levels, which some markets already have, before recovery can begin. But, what do I know? I’m just the guy who sold all my real estate at the peak of the market in 2006 and bought some gold.
(Reuters) – The Housing market is likely to remain weak and may take a generation or more to rebound, Yale economics professor Robert Shiller told Reuters Insider on Tuesday.
Shiller, the co-creator of the Standard Poor’s/Case-Shiller home price index, said a weak labor market, high gas prices and a general sense of unease among consumers was outweighing low mortgage rates and would likely keep a lid on prices for the foreseeable future.
“I worry that we might not see a really major turnaround in our lifetimes,” Shiller said.
The SP/Case-Shiller composite index of 20 metropolitan areas gained 0.2 percent in February on a seasonally adjusted basis, the first uptick in prices in 10 months.
But Shiller called it “a very mixed bag.” Nine of the 20 cities recorded falling or flat prices on the month.
He said suburban areas in particular might endure further price declines as high gas prices increase demand for “walkable cities.”