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Tuesday, June 30, 2009 3:19 PM

Shiller: Home prices stabilizing

David Berman

Yale University economist Robert Shiller has good things to say about the U.S. housing market. While cynics might be tempted to dismiss the upbeat views of an economist, it’s certainly worth making an exception in the case of Mr. Shiller.

For one, he’s the guy who lends his name to the S&P/Case-Shiller home price index, which has become the go-to reading of house prices in the United States. For another, Mr. Shiller is something of a professional bubble-watcher – writing about insane stock market valuations and stretched real estate prices in his book Irrational Exuberance, first published in 2000 on the eve of the dot-com collapse.

Now, after the release of the S&P/Case-Shiller home price index for April , Mr. Shiller sees some stability ahead, according to Bloomberg News. That’s potentially terrific news for anyone who believes that stability is necessary for an improvement in financial sector and the start of an economic turnaround.

“My guess would be that home prices are going to level off – they’re not going to keep falling,” Mr. Shiller said in an interview with Bloomberg Television.

The index showed that U.S. house prices fell 18.1 per cent in April, year-over-year, which is a slight improvement over the 18.7 per cent dip in March. Month-over-month, prices fell just 0.6 per cent, which is the smallest decline in a year.

According to Mr. Shiller, the year-over-year decline should slow to just 12 per cent by the end of the year, and the reading on Tuesday suggests the pace could be even slower. However, don’t expect a noticeable improvement in house prices any time soon.

“I am not optimistic that we’re going to see any sharp rebound,” he said.

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Markets Blog Contributors

David Berman

David Berman

David Berman has been writing about business and investing since 1995. He began his career at Canadian Business magazine, where he wrote full-length features on a range of topics, from goose slaughterers to broadcasters. Later, he moved to MoneySense magazine, where his emphasis turned to investing. More recently, he worked at the Financial Post as an investing writer and daily columnist. He has a bachelor of arts degree from the University of Toronto and studied journalism at Ryerson University.

 

David Parkinson

David Parkinson has been covering business and financial markets since 1990, and has been with The Globe and Mail since 2000. A Calgary native, he received a Southam Fellowship from the University of Toronto in 1999-2000, studying international political economics.

 
Globe and Mail Reporter Simon Avery.

Simon Avery

Simon Avery has covered telecom and technology for the Globe since 2004. Previously, he was a staff reporter for The Associated Press in Los Angeles and for The Wall Street Journal in San Francisco. He covered the boom and bust in Silicon Valley for the Financial Post between 1998 and 2001. Mr. Avery holds a Master's degree in journalism from Columbia University and a Bachelor of Arts in English and political science from the University of Western Ontario.