Gary Shilling Says Housing Price Have Further to Fall (XHB, PHM)

Gary Shilling, head of economic research firm A. Gary Shilling & Co., was just interviewed on Tech Ticker. The investing legend said that he thinks house prices have another 10%-20% to fall. If that wasn’t bearish enough, he also posited that this fall would happen over the next three years, meaning that house prices won't bottom until 2013. The majority of market pundits think prices have already bottomed, will bottom later this year, or early next. He said that recognized inventories are currently running at “about 100% excess,” meaning that there is so much supply out on the market that prices cannot hold at current levels. Mr. Shilling said that there are 2.1 million extra housing units on the market, saying “that is a recipe for lower housing prices.” Gary Shilling also cited the end of the New-Home Buyer Tax Credit, as well as a large and growing “shadow inventory” for his call. He expects foreclosures and delinquencies will continue to rise over the next few years. The SPDR S&P HOMEBUILDERS ETF is off 2.19%, currently trading at $16.05. Pulte Home

, largely the most well capitalized housing builder, is off 2.05% today, currently trading at $9.55.