Thoughts on Housing Prices

Among the bloggers I read is Ezra Klein, currently at the Washington Post.  He's a very wonky blogger, and I usually learn something new from him each day. 

I noticed two recent posts on housing prices.  The first is in reference to a business researcher (I think), Gary Shillings, who predicted that housing prices had another 20% to fall.

If Shilling is right, this'll be a big drag on the economy in 2011. And it helps explain why House Republicans are rapidly backpedaling from their once-cavalier confidence that Fannie and Freddie can be swiftly privatized and spun loose. Where the housing sector had a lax -- and occasionally fraudulent -- attitude toward lending and appraisal in the run-up to the bubble, they've tightened considerably since the bust. So considerably, in fact, that basically the only mortgages that are moving are those that Fannie or Freddie are willing to buy: (Chart here-Brian)

Incidentally, Ezra also refers to a study on the possible role of the two agencies at the Congressional Budget Office. 

That was three days ago on December 29th, and a day later, he pointed to a more optimistic view of housing prices from Ryan Avent at the Economist. 

If home prices stabilised from May of 2009 to May of 2010 while conditions were highly uncertain, then sank as broader conditions deteriorated, it is somewhat difficult to imagine how they would fall precipitously as conditions brightened to their strongest state since before the recession. Dynamics in housing markets aren't supportive of strong growth. But neither are they worsening.

That is, Mr. Avent said, unless a major policy mistake is made.

So there you have it-either it'll stabilize or get worse.  Personally, I think, in Wisconsin, at least, the prices will stabilize.  But I'm just a guy sitting at home in my pajamas, so what do I know?