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Robert Shiller, co-author of the Case-Shiller Index, breaks down his latest report and gives insight into whether housing can bounce back in 2012.
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Shiller home price index show home prices down.
In most US cities down nineteen out of twenty cities down month over month the year over year decline.
Overall the twenty city index down 3.4 percent in October from one year ago and joining us in -- first on Fox Business interview.
Is Robert Shiller author of that Case Shiller Index professor of economics at Yale University tell me it doesn't get much worse from here but maybe can hunt.
Well the market and housing market has been declining for five years it was declining at a rapid clip.
In due 2009.
Cents that's been very very slow.
This is it's we're going into the bad season for housing and it's nothing to alarming but that the the worry is that this found and could continue for years mar.
What's it may what would make it continue what would make housing.
Com precipitously worse from here could a look at low interest low mortgage rates the job market seems to be coming back a little bit confidence -- great thing.
Yeah so you you normally give you a bad scenario us thought well this is not always numbers are good stuff a lot like what would make it percent.
The bad scenario would be some collapse in Europe.
And banking problem there that conveys to the United States and then I think -- European.
Collapse could harm confidence here.
Because it's kind of a related story I mean it's a story about debt.
There you think the government's borrowing too much -- here about the government's borrowing too much here too so we have kind of an analogous and and people have been -- to that's how we got into this correction.
What do you think it because we had to Peter -- on earlier and he's asked his one of -- -- forecast -- -- -- -- so I it will as did GA in value of it could not not in your direction first and foremost.
But -- the -- -- if buying a home was a good investment here -- -- sure if you can get a three and a half percent or else mortgage and from the FHA.
But then we are then we're heading to did the burden the government burden our way if we take advantage of these -- -- -- even get Fannie Mae Freddie Mac mortgage and we are.
Putting a greater burden on the federal government.
I have.
And heard many people use that -- Really what it's -- -- in the government's giving out money in this isn't welfare right this is most people will just take it.
So that that's that if you can qualify and now mortgage rates can be so low.
That and indeed you can lock in.
If for thirty year -- a lower rate that that's -- -- for now the question is whether rates will go up I kind of suspect they will.
But I don't know when you know they've been low for quite awhile now and fed policy with QE2 is to get them as low as possible.
And so far they've succeeded so maybe there isn't any urgency to to lock in your mortgage rate I don't now.
But it's certainly something that makes houses affordable right now.
And you got to but there's no sign you don't believe that the government will take a significant step to get out of the mortgage market anytime soon to even get out of -- propping up the housing market because without the government we don't you know worried it.
Right -- the government is supporting most of the housing market but the other problem is the government's going in too much debt and you know the president and his American Jobs -- proposed cutting back on -- mortgage interest deduction something like that.
Might harm the housing market now obviously would be a blow to the confidence in the market to what would you do that.
What -- I do this well which it is.
A lot of things have to be done for the long run the problem is managing can -- Confidence in the short run.
To me I think that doing some fundamental.
Reform.
Of these institutions.
Would help.
Being -- it would help reduce uncertainty it would bring confidence back but I don't see that we're on the verge of doing that now.
Not and what let me on the verge of how much low because we always asking this but how much lower do you think home prices can go from here -- you lowered.
I guess you are here worst case scenario is it worse than you thought it was just a few months ago to the thing that's posit.
The right now is that confidence.
Is up.
So that the conference board numbers they're still not high but it was a big increase for the last two month in Michigan.
Consumer sentiment saying the same thing and the national association of home -- -- have a housing market index.
Which is are leading indicator that's sharply up so maybe -- -- is that I was going to say that I don't see any reason for.
That downtrend to be reversed but maybe this is -- -- navy were looking a little bit better.
Thank you -- talked to an otherwise he's -- -- and -- books where we'll see you before then Patrick we will I promise to have you on top -- but.
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