Robert Shiller: Here’s Why Today’s Big Dip is Not the End for Home Prices

Case-Shiller Index co-author Robert Shiller spoke with FOX Business Network about data out today showing that United States home prices have fallen for the eighth straight month, down 3.6% in March. Shiller said the data suggests “housing prices (NYSE:IYR) will fall further” but this does not indicate “a bad future for this country.” He went on to say he is “optimistic” that home prices will suffer a 20 year drop because it would require the “housing constructions industry (NYSE:XHB) gets ever more efficient.”

On whether home prices could fall for 20 years in the United States as they did in Japan (NYSE:EWJ):

“They have done it before. Yes I am optimistic they might do that. It’s a good thing for America if the housing constructions industry gets ever more efficient. They have been doing that. They have produced more and better houses (NYSE:IYR). That’s what we want. That’s the American dream. Affordable housing for everyone. If our incomes don’t fall, that means we could buy more housing. It’s not a bad future for this country.”

On whether the “American Dream” of owning a home still exists:

“We’ll  probably be a nation of homeowners for a long time but I think its pulling back. People are less included to think of a home as an investment. This is a country of homeowners but I think renting will back somewhat. There is a problem. If people want more to rent, then the existing housing stock is not well suited as rental. There is scattered properties. I think it suggests housing prices will fall further.”

On whether housing prices will continue to fall:

“There is a risk they will continue to fall, which is bad for someone who is holding housing as an investment (NYSE:IYR) but good for the next generation that housing will be affordable. People are worried they might keep going down. After a bubble it takes a long time for people to get their enthusiasm back.”