Housing prices fall in December, nearly back to its lowest level since the crash began

Well, house prices rose again in DC, but prices fell for houses in 18 of the 19 other markets being tracked. All this shows that the federal government is able to do a good job taking money from the rest of the country and bringing it to DC. The index for the entire country shows that most of the drop in housing prices last year occurred in the fourth quarter.

Real estate prices slid in just about every part of the country in December, pushing a housing market that once seemed to be rebounding nearly back to its lowest level since the crash began.

At this dismal point, some economists and analysts say that the damage has been done, and there is nowhere to go but up. Many others argue that the market has still not finished falling.

And then there are those who maintain that, possibly, things are about to get a whole lot worse.

Robert J. Shiller, the Yale economist who is the author of “Irrational Exuberance” and who helped develop the Standard & Poor’s/Case-Shiller Home Price Index, put himself in this last group. Mr. Shiller said in a conference call on Tuesday that he saw “a substantial risk” of the market falling another 15, 20 or even 25 percent.

The 20-city Case-Shiller composite is already off 31.2 percent from its peak, according to data released Tuesday. Average home prices in Atlanta, Cleveland, Las Vegas and Detroit are below the levels of 11 years ago. A drop the size that Mr. Shiller says he thinks could happen would put Chicago, Dallas, Charlotte and Minneapolis there, too. It would create a lost decade for housing in much of the country even before the effects of inflation.

Mr. Shiller said several political trends indicated a dreary future, including the uncertainty over the mortgage holding companies Fannie Mae and Freddie Mac and proposals to reduce the mortgage tax deduction.

Mr. Shiller’s colleague, the economist Karl E. Case, a professor emeritus of economics at Wellesley College, says he does not think the outlook is so dire. He said in the conference call on Tuesday that he thought the housing market was at “a rocky bottom with a down trend.” . . .

Most analysts seem to fall between Mr. Shiller and Mr. Case in their forecasts. . . .

Also released Tuesday was the Case-Shiller quarterly index that covers all homes in the country. It showed prices fell 3.9 percent in the fourth quarter and 4.1 percent for all of 2010. . . .

This is hardly good news. It would have been nice if Fox had put the discussion here on the slight increase in sales in context with the drop in house prices.