U.S. House Price Decline Could Be Worse than Great Depression, Economist Shiller Says

I am losing money every day in my portfolio. However, the thing that really frosts me is the escalation in my property taxes by local county government based upon the recent "valuation". Last year a one year jump of 46% was applied "to bring it up to value." Now that the real value is halved, how quickly do you think the taxes will be adjusted downward??? Another government steal to keep the ineffective wheels turning.

Don't worry - VP Sarah Palin, relying on her extensive economic and fiscal policy experience, will know what to do ... ;-O

About this part in this article " Home price declines are already approaching those in the Great Depression, when they plunged 30% during the 1930s" .The difference between 1930 and 2008 is that in the 1930 there was not a housing bubble. Prices of the houses in 2006-2008 have been falling because of a huge housing bubble and it is called housing market correction. I strongly belief that your comparison of the 1930s and the present is very wrong.

Housing as we know it today will never recover to past levels. The real fact that we continue to deny is that our underlying economic basis of exponential growth is mathematically impossible in a finite world. I was able to predict the housing downturn in my own book prior to Shiller. After all, it's only math. That same math points to the very real fact that our economy failed around 1970 and has been supported by inflation and debt since that time.

I don't really agree with that. That Armageddon scenario they are describing is a worst case scenario and *might* come to pass, but probably not. An examination of the most recent Case-Schiller data suggests the rate of decline is decelerating. For example, 7 months ago, all 20 markets in the index were showing dramatic declines in home prices. The most recent report for June shows that nine markets had *positive* CI scores. If that trend continues, we will see a positive value for the overall index soon. That would be a positve development even taking into consideration the slight seasonal bump that typically happens this time of year. As far as homeowners being upside down, there are two upsides. First, for those trapped in high interest ARMs, the housing bill will allow qualified indivuduals to refinance into a 30 year fixed rate mortgages, greatly reducing the financial burden. Second, real estate values typically appreciate at about the rate of %10 per year and that trend will continue soon as it is impossible for the decline to continue indefinitely. Thirdly, I see comparisons to the Great Depression all the time. Poor comparison. The unemplyment rate at that time was something on the order of 30% (contrast that with the 5.7% we have today) and the GDP of that time wasn't humming along at a 3.3% clip. Our current situation is nothing like the Great Depression.

Bugman: You are an idiot!! One of the main contributors to the current economic RECESSION (yes it is one even though the current administration will not use the word) are the policies put forth by the cons and neo-cons who have wrecked the economy.

The housing fiasco did not have to happen. Bill Clinton and Charlie Rangel decided in 1994 that every american is entitled to own a home whether they could pay for it or not. Pressure was put on the industry not to redline any dead beat or person in over their head. The race was on to make garbage loans which payed a handsome profit. Where is the profit now? The American economy is in the toilet because of incredibly stupid lending and borrowing. Many of us saw the trap long before the bottom fell from the bucket . So it will be until the next dot-com bubble or housing bubble comes along. Maybe it will be Tulips?

I agree with the other person who comment thet the house prices are only adjusting to reality , it is ridiculuos that exacly the same house in one town is worth 80,000 and in los angeles for example , it will be worth 500.000 .

Dumb republicans are responsible for this and several other crisis. These war mongers can't think positively and waste money in un-necessary wars and result is a poor economy at home. Clinton's $3 Trillions surplus is turned to $3 Trillion debt. Throw these blood thirsty evil republicans out of congress, senate, and white house and world will be a much better place.

No one ever loses money on real estate or so the real estate pundits said! If you saved on a regular basis and lived within your means, then you wouldn't be so dependent on the day to day valuation of your house to finance current lifestyles. The discouraging fact to me is in current society that very few ( including wall street) want to take responsibility for their actions, but want the government to bail them out. What is a mortgage contract or general debt other than a piece of paper, If things don't work out you just walk away.

It is not surprising there has been a correction in house prices. Looking back over the 5 years to 2008 house prices were rising at an unsustanable rate.

great news. hope it continues. the real estate is not worth it .people don't get those salaries anymore and the country will adjust to diminished expectations

bugman29102 you must be a rich republican. The American Rich are the only people saying that the Republican's are doing a good job. Live on my side of the tracks it is not the same look. When the Democrats where in office I was living a good life making good money. Now like most American's I live paycheck to paycheck with constant worries I will walk into work one day and get the pink slip like many of my ex-co-workers. Being positive is not going to solve anything, we have done this for 8 years now & it has gotten us in Trillions of dollars in debt.

H.R. 3221 The ban on downpayment assistance programs was written into law by President Bush when he signed H.R. 3221 Housing and Economic Recovery Act of 2008 on July 30, 2008. While H.R. 3221 was intended to “rescue” the housing industry, the elimination of the DPA program will have the exact opposite effect of its intended purpose. Not only did it eliminate DPA programs, it also instituted a downpayment requirement increase from 3 percent to 3.5 percent. This combination will further hurt the already crippled housing market. Add on top of less buyers , all the foreclosures dragging down house prices. I know a neighborhood I was looking at on one side of the street was a house for $229K short sale and on the other $355K. Same square footage. For the extra $126,000 you can do a lot of fixing up. Problem is the house fixed up should be priced about $260,000 and the one needing tons of work the short sale should be priced even lower than the 229K to pay for all the repairs needed.

If you need a place to live in the next 5 years, you would be smart not to rush into buying a house. For the better part of my life, and I've owned a home now for 30 years, a house was understood to be not an investment but rather requiring a lot of work and money for upkeep. It was considered an inflation hedge but not a real investment. It is my opinion that housing needs to get to the point where people once again look at it more as a utility, not an investment. Prices have further to sink as our disposable income has erroded considerably in the past few years. Only when houses become more than reasonably priced will the bust be over.

Housing became a gamble just like stocks and a Casino. If you are a gambling man or woman you would have seen it coming. I cashed in my winnings on a house in the Northeast and moved to the Southeast. I now have money in the bank, twice the house, 1/2 the taxes and utility bill, more job opportunity (for same pay!) and live in a newer/cleaner neighborhood with parks and entertainment galore. It's not all bad!!

HOMES WILL NEVER AGAIN BE CONSIDERED AN INVESTMENT VEHICLE. The fact that homes were considered investment vehicles (by homeowners and speculators) caused home prices to become inflated and unaffordable for most people. HOMES SHOULD BE CONSIDERED A BASIC NECESSARY EXPENSE FOR SHELTER. Homes are a basic human necessity and therefore they should be purchased with the intention of living in them for a long period of time. Buy a home....live in it....and don't be concerned if its value goes up or down. A HOME IS NOT A WEALTH GENERATING VEHICLE BECAUSE WE SHOULD CONSIDER A HOME A BASIC HUMAN NECESSITY.

I am so sick of so-called analysts bring the market down with this doom and gloom on everything. If you are just speculating you should not be allowed to have the title of analysts. Have a bibliography when you post your findings and at least let us know what brought you to your conclusions. Same for the media. What are the sources for the so-called news? Does anyone ever wonder any of this when they read on the internet. Does anyone everthink ,hey is this person writing this sitting in there basement smoking pot? I am self proclaiming my self as an analyst. Why not.

Funny , There is no such thing as V- shape recovery at all... This was created by Wall street people... to suck you back in the Money game ! :)

Funny , There is no such thing as V- shape recovery at all... This was created by Wall street people... to suck you back in the Money game ! :)