Thursday, June 09, 2011

Shiller: Up to 25% further drop in housing prices possible

From CNN Money:
In an off-hand remark before cameras and microphones, economist and housing market guru Robert Shiller opined earlier this year that he would not be shocked if there was another 10% to 25% in the nation's home price plunge — and he's not backing down from that statement.

At a S&P Housing Summit in New York, Shiller on Thursday reiterated his fears of falling home prices. It's not a forecast, he said, just a comment on his understanding of housing market trends.

He explained that speculative markets, like stocks or commodities, act like random walks. They go up and down all the time. Housing market direction tends to be more consistent.

"I worry that this is a real and continuing downturn, like in Japan," Shiller said. "It had a boom in the 1980s that peaked in 1991. Prices declined in the major cities for 15 straight years after that."


  1. Meanwhile, back here in DC, May stats are out, and prices are, once again, up:

  2. Also, for our resident lurker, and inspiration for my name NONpartisan who wisely told us:

    "nonpartisan said...
    "WAL" (Watch and learn)

    Home prices will follow the curve. Check back in 1 year.  June 13, 2009" 2 year anniversary to the WORST CALL OF ALL TIME - BWAHAHAHAHAHAHAHAHA!!!

  3. Heres another fun one.  I (then sockpuppeting as Anon) note that DC proper median prices may get down to 350K (but no further) whereas NOZ says prices will get down to 199K.

    Best part is after I troll him into appearing, he says he will check in and "ask how im doing in a year or two"



    Well guess what Nozzie, its now two years later, and median prices in DC proper for the first 5 months of the year are:

    Jan 388K
    Feb 360K
    Mar 380K
    Apr 399K
    May 429K

    Almost certainly, you are a ghost now, but in case you are not Noz, let me say, from the bottom of my heart...


  4. It's a hoot to watch delusional people right before they go over the cliff...

  5. its a bomb and no one knows when it will go up or have unexpected downfall. If someone can predict about the outcome then it was just luck of the percentage of it was to low to be predicted.

  6. A "cliff" huh?   Oooooooooo!  Sounds scary!  Better investigate and see what the prescient "Brite Moon" means by cliff...

    For the uninitiated, all my gloating above is related to disagreements I had with Noz and Nonpartisan.  In 2009, I looked at inventory and income growth and predicted that DC Case Shiller would not go below 160, whereas Noz said it will drop to 135 by 2013, and Nonpartisan said it would go to 100 by 2013.  As it turns out, DC case shiller hit 165 in early 2009, and has risen such that its now at 183.

    This apparently correct call of mine, coupled with my arrogance, seems to cause great angst for poster Brite Moon, yet he seems unable to refute my call.  So lets try again shall we.

    Brite Moon - I am gloating because I continue to maintain that DC Case Shiller will not fall below 160.  Do you disagree?  Yes or no?

    Secondly, if you do disagree, tell me what you think DC case shiller will fall to, and when, approximately, will it bottom?

    Now, may I go so far as use my powers of prognostication to predict Brite Moon's response.  He shall either:

    (1) tap dance away from the question by responding in a manner that provides neither a CS price and time, or

    (2) he shall run away from this thread as fast as his little legs can carry him.

    OK Brite Moon, ball is in your court - whats it gonna be?

  7. You sound very very bitter if you have a very heavy chip on your shoulder.

    I would venture to say you got totally screwed by the housing market and your behavior is one of lashing out and antagonism. 

    I'm sure you'll come back and say how you already have something are the most happy person in the world and all that bullshit...but you you behave says a lot more than what you say. sound so bitter and angry.  You're  sad little man (or woman...I don't know).

  8. You've obviously not learned anything from the ups and downs of the last 7-10 years of the housing market have you?

    Are you really in that much denial?  I don't get it.  What makes you think the DC area is any different than anywhere else where pricing is still rising at an unsupported rate?

    You keep taunting people with your stupid comments yet not any of the comments you've you support your arguments from a truly foundational point of view.

    You're a shouldn't be taken seriously.  Other than being the resident blog troll, you don't add any real value to the conversation.

    So get back to us when you actually have something substantive to say...such as why you think DC pricing is going to hold up given how unaffordable it is.

    That's where you should start....otherwise stop driveling the same nonsense over and over again.

  9. Points to you:

    Not so much bitter as I am bored out of my mind at my job.  Also, recall that I am an admitted troll.  Thus, I enjoy this back and forth exchange. 

    I did buy, but truth is, it was and is a scary proposition.  I do still come here for affirmation I did the right thing. 

    Now that that is dispensed with, for the record, you did respond by tapdancing around the question.  You say I am "delusional" and headed for a "cliff", yet, when I ask you for a time and price to refute my DC Case Shiller 160 call, you have nothing to say.

    You complain I have nothing substantive to say, note my post where I came into being way back in early 2009:

    My posts are (anon) at the 3rd comment (futures suggest Case Shiller bottoms at 160), 5th comment (noting inventory is just about gone) 7th, 8th, 12th, 13th, 15th (noting DC incomes increased +30% over inflation in the last decade), 19th and 28th.  You will note that they are all substantive (angry, but substantive).  Back then I was harping on the same fundamentals I am now (inventory and income growth).

    The problem is, back then, as is the case now, no one here is willing to listen to a reasoned, substantive call for why the fundamentals support a bottom of DC Case Shiller at 160.  Thus, at that point the troll in me kicks in and figures its just better to agitate than it is try to inform those who are not willing to listen. 

    Which brings me back to you Brite Moon, my new favorite toy...

    If we are headed for a "cliff" please tell me why my call of DC case shiller bottoming at 160 is oh so wrong. 

    So whats it gonna be my puppet?  Are you going to answer, or are you going to go tippity tap, tippity tap, tap tap tap dancing around the question?

  10. Seek help...that's all I can say.  You're a sad little troll.

  11. Your right, that is all you can say.  Clearly, you cannot refute any of the facts:

    DC case shiller bottomed in March 2009 at 165;

    Today, DC Case Shiller is at 183;

    Incomes in the DC area went up at the fastest clip of all large MSAs in the country;

    Inventory in the DC area is at multiple year lows; and, (most importantly)

    There is NOTHING to suggest DC case shiller hits 135 by 2013, or 100 by 2013.

    Soooo, as I said in the beginning, the comment which agitated you so that you felt compelled to warn about some "cliff" (which you predictably cannot in any way quantify in terms of time or price)...

    I TOLD YOU SO!!!  

  12. BM - you may want to join our forecasting competition and put your numbers where your mouth is. We're two months into a 24-month Case-Schiller DC area price index forecasting challenge, Partisan won last month and I won the month before. Jump on in.

  13. A measure of caution.  Bricks from the housing bubble exploding are still falling.  Two delusional statements drove millions of buyers over the cliff 1) Housing Always Goes Up and 2) If One is wrong, housing always goes up HERE.  Number two is usually followed by a list of local factors that promise to make the area in play into an insular wealth engine.

    DC is rising, that is good, certainly better than going down, but don't think that it can't or won't change. 


  14. Cant disagree with anything you said.  All very salient points.

    Notice however, there is a major difference between what I actually said versus what you caution about.  Nowhere, do I say that prices "always go up" or "can only go up" or any similar nonsense.  I cant belive anyone would make (or believe) such a ridiculous claim.   

    The claim I do make is that based upon the FUNDAMENTALS of this economy, the bottom for DC will not be lower than Case Shiller 160.  Note too, if/when the FUNDAMENTALS do erode, I will turn more bearish, just like I was in 2005 when I thought a fairly serious crash was possible.

    Until then, I will remain what I am now, an antagonist troll who believes the DC case shiller index will rise a mere 1.36% in the next year, causing great rage and furious anger amongst clueless megabears like Brite Moon who think there is some undescrible "cliff" we are going over in the very near future...


  15. Dont count on it.  Just so you know, since your forecast doesnt put DC Case Shiller below 160 either, you too are technically "delusional" about to go over some unforseen "cliff".