NEW YORK (MainStreet) – Robert Shiller, co-creator of the Case-Shiller home price index, says that while U.S. housing prices have likely hit bottom, it will take a generation to make up the home values lost in the past five years.
Cynics may well wonder – or hope -- if the remarks are a case of Shiller having a bad oyster at dinner, or from waking up on the wrong side of the bed that morning.
In remarks to Reuters on April 24, Shiller notes that a lousy jobs market, skyrocketing gas prices and a dour mood from consumers are all conspiring to keep home prices flat.
On the surface, that sentiment hardly separates Shiller from other mainstream economists. But it’s what he said next that might send chills down the spines of homeowners, homebuyers, real estate agents and politicians who are running for office this year.
“I worry that we might not see a really major turnaround in our lifetimes," Shiller noted.
Shiller, who launched the highly-regarded Standard & Poor’s/Case-Shiller home price index, adds that as toxic as short-term economic indicators are, the long-term impactors don’t favor high home prices, either. He cites ongoing high gas prices that would curb consumer interest in suburban markets, as younger homebuyers would buck a half-century of home ownership behavior and choose “walkable” cities over suburban towns and boroughs.
But a deeper look at those numbers show a weaker market than analysts may have thought.
“While there might be pieces of good news in this report, such as some improvement in many annual rates of return, Feb. 2012 data confirm that, broadly-speaking, home prices continued to decline in the early months of the year,” David M. Blitzer, Chairman of the Index Committee at S&P Indices said in a statement.