Saturday, March 21, 2009

Karl Case on the housing market outlook

The co-developer of the S&P/Case-Shiller Home Price Index gives his thoughts on the housing market outlook:
The U.S. housing market slump is nowhere near over and home prices will probably keep falling well into next year, one of the property market's best-known economists said.

Karl Case, the co-developer of a widely watched gauge of the housing industry, told Reuters that the hard-hit U.S. housing market has gone from being the primary source of the U.S. economic recession to one of its biggest casualties.

"Never say never, but it is looking increasingly probable that we will not see a housing market bottom until next year," said Case, an economics professor at Wellesley College in Massachusetts.

"If the housing market was independent of the economy, we would be getting closer to a bottom, but that is not the case and we have a horrible economy," he said in an interview late on Tuesday. ...

Case, whose research has focused on real estate markets and prices for over 20 years, said he did not anticipate the extent of home price depreciation that has transpired since the peak in the second quarter of 2006.

"I did not think it was probable that we would have a home price decline of this magnitude," he said.
For the record, he was a bit over-optimistic a year ago.


  1. What Case is actually saying is that the housing decline is now secondary to overall economic decline.

    As far as being over-optimistic a year ago ... No one knows what is going on. Sure, there are a lot of who, in hindsight, saw this but it's kind of meaningless. You get enough monkeys typing away....

  2. Case has been a bit mercurial for a while...Here he is calling bottom (in 09) just two months ago.

    I liked him alot more when he was just this mythic figure who called bubble. Now, after all these bottom - no bottom - bottom - no bottom calls, Im beginning to think these guys dont know more than the rest of us do.

  3. Have you read the piece about one solution to solving housing problem? Let foreigners immigrate to america to buy them. It's an interesting piece, though I suspect it will raise lots of operational issues for administering. It's still better than watching home prices falling and falling.

  4. I'm pro-immigration, but letting home prices fall is a good thing. There's a housing bubble!

  5. Case should listen to Lance :-)

  6. Statistics got us into this problem -- and could keep us here.. No one buys a "national " house -- it is all local -- and each market is very different. Buying in SF or Boston is very different from Phoenix... 48% of foreclosures are in four states -CA FL AR NV -- because they had by a wide margin much higher price appreciation. How many have noted NYT report last month that housing affordability is at its HIGHEST level --since 1971 !!!!
    Now since most economists felt this run-up could go on forever -- I take their continuing pessimism with great skepticism -- now we should believe them? There will be a lots positive surprises this summer and fall...