Housing prices nationwide could keep falling and might not bottom out for years, says Yale Professor and housing expert Robert Shiller.
In February, Shiller said housing prices could still fall 10 percent to 25 percent in real terms before hitting bottom. He recently told Yahoo’s The Daily Ticker he's standing by the prediction, adding that the economic big picture is looking worse.
"I think the economic situation looks more precarious now," says Shiller, one of the authors of the S&P Case-Shiller Home Price Index, which was down 4.1 percent year-on-year in July although up from previous months earlier this year.
Politics aren't helping, he says.
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Robert Shiller
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"I think it's politically uncertain right now. There's a Senate Finance Committee hearing coming up on whether to eliminate the mortgage interest deduction. That would be a double whammy on the housing market. I think they won't do it now, but they may plan for it in the future and it will hit home prices now," Shiller says.
"You can't base it on comparisons with past episodes. I think that we are in too unusual of a circumstance. We might not hit bottom for years."
The mortgage interest deduction is a tax break that may come under fire as part of government efforts to cut government deficits.
Other experts are pessimistic as well.
"This is still a seasonal period of stronger demand for houses, so monthly price increases are expected," says David M. Blitzer, chairman of Standard & Poor's index committee, according to the Associated Press.
"While we have now seen four consecutive months of generally increasing prices, we do know that we are still far from a sustained recovery."
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