Bob Shiller: 'Decline May Well Continue for Some Time'
Yale econ professor Robert Shiller had an op-ed in the Times this weekend that talked about why there’s not necessarily an end in sight for the decline in the country’s housing market. The piece examines why other declines have dragged out for years: “Despite the uptick last week in pending home sales and recent improvement…
Yale econ professor Robert Shiller had an op-ed in the Times this weekend that talked about why there’s not necessarily an end in sight for the decline in the country’s housing market. The piece examines why other declines have dragged out for years: “Despite the uptick last week in pending home sales and recent improvement in consumer confidence, we still appear to be in a continuing price decline…Several factors can explain the snail-like behavior of the real estate market. An important one is that sales of existing homes are mainly by people who are planning to buy other homes. So even if sellers think that home prices are in decline, most have no reason to hurry because they are not really leaving the market. Furthermore, few homeowners consider exiting the housing market for purely speculative reasons. First, many owners don’t have a speculator’s sense of urgency. And they don’t like shifting from being owners to renters, a process entailing lifestyle changes that can take years to effect.” He concludes: “Even if there is a quick end to the recession, the housing market’s poor performance may linger. After the last home price boom, which ended about the time of the 1990-91 recession, home prices did not start moving upward, even incrementally, until 1997.”
Why Home Prices May Keep Falling [NY Times]
Real estate prices will keep falling simply because there is still no rational correlation between mortgage payments and hypothetical rent on a similar property.
Plus the economy sucks and only rich people can get loans . . .
Congrats lechacal on the rental – sounds great. Was too busy today to participate too. Wasder, I agree with all your points made today here on other threads. I think this article, and the drying up of parents’ help in other article discussed here today, bolster my bets of continued declines. Beyond the Williamsburg hipsters, we’ve noticed plenty of people in other neighborhoods benefiting from parents’ largesse to buy that property, pre-crash, and now that kind of parental help is much harder to come by given stock market declines since last year. The NYT “honk if the end is near” article, however, was just plain silly.
Paul Krugman hates America? I think the certifiably insane one is named Sam.
jackal. see the forum
I mean at least September 2010.
too bad i missed this thread today – super super busy these days. would have wanted to participate.
As it turns out I may be out of the market for quite some time. I might have just found an unbelievable opportunity to rent a lower duplex with a yard on a great block in a good school district in a brownstone owned by someone I know pretty well and is looking for a trusted renter. Price would be something I can’t say no to. This will take me out of the market until at least September 2007.
When is the next brownstoner event?
daveinbedstuy: Roubini will hang himself in front of his students at NYU.
“Don’t take it personally, wasder. I’m talking about asset bubbles. Few get rich (they call them ‘smart’ money) and most lose their shirts (they call them ‘dumb’ money). It’s unfortunate that homes had to get speculated on but that’s what happened.”
Nothing taken personally BHO. We are having separate but parallel conversations it would seem. I am extolling the value and joy derived from home ownership from a position only slightly informed by the financial-based perspective, while you have put your eggs in the bubble deflation basket. I assume you can see the world through a broader prism than that so I will not castigate you for your narrow focus here. But I am sure that many people, if not most, on this site (at least ones who own or are seriously considering buying) are not doing so with the laser like focus on the bottom line you use. My life simply could not function if I was obliged to chase a market up or down and move accordingly.
no. never been to argentina. but I share your soft spot for the bus.