U.S. Home Prices May Fall for Years, Shiller Says: Chart of Day

U.S. Home Prices May Fall for Years, Shiller Says: Chart of Day
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By David Wilson
June 8 (Bloomberg) -- U.S. housing prices are in the midst of a decline that may last for years, according to Robert J. Shiller, a finance professor at Yale University.
Shiller, who helped create home-price indexes bearing his name, wrote in a New York Times story yesterday that declines in real estate tend to be relatively long-lasting. As an example, he mentioned land prices in Japan’s major cities, which fell for 15 straight years after a 1980s housing bubble burst.
The CHART OF THE DAY shows what happened in Japan, based on data compiled by the country’s Real Estate Institute. Prices in the Tokyo area and in five other cities -- Kobe, Kyoto, Nagoya, Osaka and Yokohama -- sank 76 percent from 1990 through 2005.
Less than three years have passed since the Standard & Poor’s/Case-Shiller indexes of U.S. home prices peaked. The S&P/ Case-Shiller national index has fallen 32 percent from a high in the second quarter of 2006, as depicted in the chart.
“Prices may continue to fall, or stagnate, in 2010 and 2011,” Shiller wrote.
Shiller’s article followed an estimate by T2 Partners LLC, a hedge fund, that the national index will hit bottom in mid- 2010 after dropping 40 percent to 50 percent from its high.
Indications that the housing market has stabilized look like “the mother of all head fakes,” Whitney Tilson and Glenn Tongue, co-founders of T2 and co-authors of the book “More Mortgage Meltdown,” wrote in a June 2 report.