Case-Shiller Index co-author Robert Shiller spoke with FOX Business Network’s Dagen McDowell about U.S. home prices which slipped in June 0.1%. Shiller said home prices “could fall another 10-20% before it’s over” but right now are “not doing anything. Dead in the water.” He went on to say that it is difficult for the government to step in with additional aid for homeowners under water because “it’s very difficult to be fair; someone who didn’t buy during the housing boom doesn’t get bailed out, it’s rewarding bad behavior. On the other hand, a lot of innocent people got caught up in this thing.” Excerpts from the interview can be found below, courtesy of Fox Business Network.
On how much lower home prices will go:
“They could fall another 10-20% before it’s over; that wasn’t a forecast, that was a concern. We have a lot of headwinds ahead of us. Right now it’s not doing anything. Dead in the water.”
On whether the government should be doing more to help homeowners:
“It’s very difficult to be fair; someone who didn’t buy during the housing boom doesn’t get bailed out, it’s rewarding bad behavior. On the other hand, a lot of innocent people got caught up in this thing. I have been advocating government expenditure increase.”
On what home prices indicate about the overall health of the economy:
“If they continue to go down, that going to throw off household balance sheets and balance sheets of lending institutions. All these institutions will contract and it would put us in a double-dip recession.”
On the chance of a double-dip recession:
“It might be over 50% but it’s not clear. We don’t know what we are going to do with Fannie and Freddie. We have backlog of homeowners who are unhappy, holding back the economy right now.”
On consumer confidence being low:
“That’s what causes serious digressions. We were worried this thing could turn into another depression. Because of aggressive monetary and fiscal policy, it only kind of smoldered on and didn’t get really bad.”
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