Thursday, August 20, 2009

Robert Shiller: "There could be another bubble. Absolutely. There could be."

...But the market is predicting flat housing prices over the next five years.

It's a 10 minute interview.


  1. I realize that when talking to a national audience you have to make "national" statements, but the underlying reality is that real estate markets are far more local in nature than is being discussed. Yes, they can all rise/fall with national economy and sentiment, but subtracting out that essence, we see that local economies and population migration have dramatic effects - letting some areas rebound and prosper while others seek bottom.

    Trends for individual markets should be examined and reported.

    Robert T. Boyer, Ph.D.
    Co-Founder - The Cashflow Search Engine

  2. The local argument is's one of the many misinformation tools used by people in the financial, housing, and RE markets to hype crap up and make people feel they are justified in buying overpriced piles simply because they are in a "local" market.

    If that's the case, go and buy a property a block away from Compton that's up and coming...since it's local you won't have a problem with that.

  3. Schiller's just being prudent in this interview.

    Main points:

    -- What the market believes is that in five year the market will be 4% higher than it was in May.
    -- He says the market can be wrong. The economy is much less forecastable than believed. There could be another bubble. But he says later that the odds of it are low.
    -- Conversely, Schiller says a market that is 50% lower than today could happen as well.
    -- Citing high unemployment, he is worried that recovery will be "exceptionally weak."
    -- "We have to be ready to do more stimulus."

  4. Noz, no, it is not hogwash... nor propwash. And I don't recommend buying overpriced properties. Let's not even get into the discussion of the definition of fair price right now.

    But, as an example of real estate being local... much of the country is still in decline while in San Diego we have seen nearly a 20% increase in home prices in the last five months. Our inventory is now at about 1-month for single family detached homes for most price ranges. I've a chart posted at

    My belief of what happened is that the price pendulum swung too far - locally - and future homeowners and investors jumped on the disparity between value and price. And the current lack of supply is likely to drive prices beyond what is reasonable. (But it is not really all that different from how we bi-peds walk in a straight line.)

    Robert T. Boyer, Ph.D.
    The Cashflow Search Engine
    Home of the FE-Score

  5. San Diego housing on the rise????????

    You've got to be joking...SD has some of the worst hit areas and continues to suffer. 20% increase from what? 0?

    SD's job growth is getting worse. MUCH worse

    Come on..I've been following Piggington's website long enough not to fall for that stuff.

    What you don't the the actual numbers of increasing sales...rather you carefully mention only percentages.

    Percentages don't mean squat in a market where sales are at an all-time low, people are losing their jobs at a prodigious rate, foreclosures are mounting on an already artificially backlogged inventory, etc.

    SD RE is completely screwed up...I'm not about to believe that there's a 1 month inventory and prices are going to rise because supply is low.

  6. Yes, hard hit San Diego has been on the rise. Another major contributing factor is that the CA moratoriums on foreclosures and the processes put in place have drastically cut the supply of REOs.

    If they all get dumped on the market at once, it will be a very black day and prices will again free-fall.

    We also have a major risk coming up with the Alt-A resets coming due in 2010-2012. But, these are going to hit the higher end of the market.

    I am surprised that the unemployment factor has not played a larger role in detering buyers. Unlike the 90's, our economy is more diversified, but that still doesn't explain it.

    Absoluetly some of San Diego has been terribly hard hit. But when home prices get so low that you cannot possibly build a house for the price you can buy AND that rebuild cost does not include the cost of land, then the freefall winds down.

    I'm not asking you to fall for anything, Noz. Check the data for yourself.