Robert Shiller was quoted in this Reuters’ article today; here are excerpts:
“My gut feeling is we might see a continuation of the decline” in home prices, Shiller said earlier Thursday at a Standard & Poor’s housing summit. He added that a 10 percent to 25 percent slump in real home prices “wouldn’t surprise me at all,” though he cautioned that was not a forecast.
Shiller pointed to the glut of unsold homes on the market and the large amount of homeowners under water on their mortgages as pressuring prices. As for when home prices might bottom, Shiller told Insider that was unclear and it was possible prices could slide for 20 years.
“We’ve seen five years of decline already since the peak in 2006 and I don’t see evidence that we’re coming out of it,” he said.
I think he’s right about the national stats being on the decline for years to come.
It’s due to people downsizing, and it has multiple fronts:
The elderly going off to the ‘home’.
Seniors in two-story homes who are trying to give up the stairs – and re-establish savings.
Middle-age families who are being more fiscally conservative with all their choices + savings.
First-timers and investors preferring the cheaper stock.
These forces working together should cause the typical statistics to show a surge in lower-priced homes, while the higher-end struggles.
But there are more parts of the puzzle. What’s occuring is a re-shuffling of all housing priorites.
Examples of buyers re-sorting their housing priorites:
Multi-generational – elderly who buy a new home with their kids who help them to the finish line.
Older folks who sell a long-time residence in the more- expensive coastal areas, then buy a home in the upper price ranges of a smaller town – and still bank some money.
First-timers moving further out to spend less money, but get more value.
These are examples I’ve seen just this week, but it makes sense that as long as you’re moving, you might as well look hard at every component. Improving the quality of life seems to be the biggest priority – for many that’ll hopefully mean that they move to, or stay in San Diego!
As a result, while we will probably see national statistics reflect more downward trends, the best-quality areas could dodge the bullet.