Economist uses the D word

Star Tribune Wed, 23 Apr 2008 05:21:58 GMT
A troubling forecast for housing prices

A respected economist says the housing slump could approach or surpass levels not seen since the Depression. NEW HAVEN, CONN. - An influential economist who long predicted the housing market bubble cautioned Tuesday that the slump in the U.S. housing market could cause prices to fall more than they did in the Great Depression and that bailouts will be needed so millions don't lose their homes. Yale University economist Robert Shiller, pioneer of the widely watched Standard & Poor's/Case-Shiller home price index, said there's a good chance housing prices will fall further than the 30 percent drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15 percent since their peak in 2006, he said. "I think there is a scenario that they could be down substantially more," Shiller said during a speech at the New Haven Lawn Club. Shiller's Standard & Poor's/Case-Shiller home price index is considered a strong measure of home prices because it examines price changes of the same property over time, instead of calculating a median price of homes sold during the month.

[[keywords: Housing;Metro;]]