Economy Watch: Shiller Survey Predicts Home Prices to Continue Slump

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Home prices should bounce back eventually--just not yet. And Warren Buffet gives his take on the resilience of Japanese markets.

MacroMarkets L.L.C., the outfit run by Robert Shiller of Case-Shiller fame, said on Tuesday that the results of its March 2011 Home Price Expectations Survey were downbeat indeed for 2011. Among other things, the survey asked how U.S. home values would do during this year, and the mean answer was 1.38 percent down.

The survey was compiled from 111 responses by economists, real estate experts, investment and market strategists between March 1 and March 15. Though 2011 wasn’t expected to be a recovery of any kind for the housing market, the respondents did collectively think that prices would wax positive eventually, but not until 2013 at least.

“Many more experts are now projecting a double-dip after witnessing the double-dead-cat bounce that came in the wake of expired government stimulus programs,” Terry Loebs, MacroMarkets managing director, says in a statement. “In December, only 15 percent of our panelists were projecting that a new post-crash low would materialize for national home prices. Now, just three months later, almost 50 percent foresee a double-dip happening this year, and not a single panelist expects national home prices to recover to the pre-bubble trend in the coming five years.”

According to the latest numbers by the Federal Housing Finance Agency, that double-dip already seems to be underway. The agency said on Tuesday that U.S. home prices (counting properties guaranteed or owned by a GSE) dropped 0.3 percent in January compared with December, the fifth monthly drop in a row, and that year-over-year prices in January declined 3.9 percent.

But home prices were not down everywhere, at least month-over-month. In the agency’s West South Central division, which includes Arkansas, Louisiana, Oklahoma and Texas, they were up 1.6 percent from December to January, though down 0.5 percent compared with a year ago.

Buffett sees Japanese silver lining

On Monday in Daegu, South Korea, Warren Buffett commented on Japan’s ultimate resilience, comparing the current situation there to that of the United States after Sept. 11, 2001. The attacks “didn’t change the future of the U.S. or the economic prospect of the U.S. People in Japan have the same energy, they have the same desire to move on and the same resources to rebuild.”

The next day, the Nikkei 225 spiked 4.4 percent. Coincidence, or investors listening to the Oracle? Or maybe just bargain-hunting in anticipation of the mass clean-up ahead. Also on Tuesday, shares of Tokyo Electric Power, whose facilities include the Fukushima Daiichi, were up 16.8 percent. (Buffett further said that “frequently extraordinary events really create a buying opportunity.”)

After a run of up days, Wall Street saw a downtick on Tuesday, with the Dow Jones Industrial Average declining 17.9 points, or 0.15 percent. The S&P 500 lost 0.36 percent, and the Nasdaq dropped 0.31 percent.

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