Friday, November 13, 2015

Flashback to 2006: "Housing prices have got a long way to fall"

by Bill McBride on 11/13/2015 12:21:00 PM

Sometimes I look back through some older posts. Back in 2005 and 2006, the primary subject of my posts were the housing bubble, and the potential impact of the then coming housing bust on the US economy.

There were a number of people warning about the housing bust.  Here is an interview I came across this morning.  In this September 2006 post, I linked to a Bloomberg video of Paul Krugman discussing housing:

"I think we are looking at a housing cycle that we've never seen.
...
If history is any guide, housing prices have got a long way to fall and the housing industry is going to go through a long drought."
On a national basis, according to Case-Shiller, house prices declined 25% following that interview to the post-bubble lows. In Las Vegas, house prices fell 60%.

And on the "long drought" ... housing starts fell over 70% ... and are still 30% below the level of September 2006.

Sometimes economists and analysts get it right.