As national home prices remain vulnerable, Case-Shiller Index Co-Founder and Yale Economist Robert Shiller speaks on the shaky housing market.
In February, the S&P Index showed home prices in Q4 2010 to be down 4.1 percent from Q4 2009. The Obama Administration’s homebuyer tax credit incentive helped to stimulate values, but upon it’s expiration last fall, values began to sink again.
“I believe the Tax Credit was a good part of the story because the biggest price increases from 2009 – 2010 period was in the low priced homes. And remember the tax-credit was phased out for wealthy people, but even the high priced homes reversed, so it’s a little puzzling,” notes Shiller in a recent interview with BusinessInsider.com. “The question is will it (home prices) resume the downward trend? I think it could, maybe not rapidly, but I think there could be further house price declines.”
Shiller points out the great amount of variation in local markets currently, as opposed to the widespread decline that took place in 2008. This, Shiller says, is what makes it difficult to make any concrete predictions about what’s to come in the market.
The latest S&P report showed improvement in annual growth rates from the previous month in Charlotte, Chicago, Cleveland, Dallas, Denver and Washington DC. At the same time, eleven MSAs posted new index level lows since their peak in 2006/2007. These cities were Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, New York, Phoenix, Portland (OR), Seattle, and Tampa.
According to CNNMoney.com, Shiller says the government’s winding down of Fannie Mae and Freddie Mac may negatively impact the market. Though the diversification of lenders will ultimately benefit homebuyers, the change will likely increase interest rates in the short term.