Shiller: House Prices Could Fall For Years

Juicy, long lasting flavor!

http://tinyurl.com/6dkhv2n

Most interesting Shiller quote:

"This is the problem with economics; economists are good at predicting a stable environment where people don’t change their patterns of thinking, but something has changed, we’ve gotten more speculative in housing and that speculative attitude means that; I hate to say it, but we could have another bubble. We could even have it soon."

Economists are terrible at predictions and the evidence is their track record.
That said, Economists are not Futurists. What they are good at or should be good at are helping to model scenarios. Wonder what scenarios they've been employed to model these past 15 years?

Rent Stabilizer---what is your profession?

Criticizonomist?

Real estate broker opening the door:

http://tinyurl.com/zxpn5

I am not sure about this report, primarily because new homes are selling again, based on Dec figures.

I do believe there is more supply than demand, though, and no one buys today unless they are convinced they are getting a steal.

I think prices for homes and all other goods will start to head way up by the end of the year. There is no option, considering the inflation that is hitting China right now. When was the last time you bought something that WASN"T made in China? I think the rising tide of inflation will lift the housing boat as well, starting early 2012.

If I were to buy, I would buy now: plenty of inventory, good prices, some negotiation softness will come from the "double-dip" reports, and when inflation hits, our dollars will buy so much less. I think this is a good year, but the last year, for stealing houses.

Bu I am wary of anything offered up by Business Insider. I've read a few of their articles the last few months and they seem to be very sensationalistic. They seem to make a lot of noise about every little thing in an attempt to be relevant. This story will have legs, because BI wants it to.

>Rent Stabilizer---what is your profession?

Are you in a rent stabilized apartment? While you have the rights and legal benefits associated with such status, how can you be considered to be in a position to either discuss owning or renting? Nothing wrong with being rent stabilized here in NYC. Are you? If no, carry on, if yes, it seems to carry a disclosure obligation around your real estate opinions.

snaps to alan with the great visuals

Home Prices Projected to Begin Rebound in 2011 (ARTICLE DATE MAY, 2010)

U.S. home prices will begin a gradual recovery by next year, according to a survey of 92 economists and other housing analysts by MacroMarkets LLC.

The analysts surveyed by MacroMarkets on average expect home prices, as measured by the S&P/Case-Shiller national index, to rise about 12% in the five years ending Dec. 31, 2014. As of Dec. 31, that index was down about 28% from its peak level in mid-2006.

Mr. Shiller, who didn't contribute a forecast for the survey, said in an interview that the average prediction of a 12% price rise over five years was "a plausible scenario."

FULL ARTICLE: http://online.wsj.com/article/SB10001424052748704912004575252530764637448.html?mod=WSJ_hpp_LEFTWhatsNewsCollection#articleTabs%3Darticle

So, a complete reversal on Shiller's part, since May?

I believe that he can only "predict" in hindsight.

"So, a complete reversal on Shiller's part, since May?"

Can you do basic math? A 12% increase over 5 yrs implies a 2.29% growth rate annually (using annual compounding). Inflation runs more than 2.29% a year; have you seen gas prices lately? So if your home is 12% higher in 5 yrs, it has lost value in real terms.

If you don't understand the difference between nominal prices and real (inflation-adjusted) prices, pls do not waste anyone's time responding to this post.

"I believe that he can only "predict" in hindsight. "

Sorry, I just had to respond to this comment too: You probably don't know that Dr. Shiller wrote "Irrational Exuberance", calling the tech bubble, in 2000. Or that he called the housing bubble in 2003. He predicted the two twin crashes of our era earlier, more famously, and more stridently, than any other economist I know.

Open a book...

Yes, "Irrational Exuberance" was published in March, 2000 with a total focus upon the stock market bubble.

His second edition of "Irrational Exuberance" was published February, 2005, with an added chapter on the housing bubble.

His timing hasn't been too shabby.

That said, he is more than a little humble in his predictions lately.

Yeah, Shiller has been spot on, not sure where this hindsight BS is coming from.

AND, how about this... within a week of the stock market bottom, he published an article in the NYTimes saying (I'm paraphrasing) "I am buying stocks now, you should too.... not saying prices can't go lower, but this is a historic buying opportunity". It was posted on this board, basically about his trailing-PE calculations.