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]
I’m not sure if that exemption still exists for the first time home. ALL others pay tax with the $250k/500k deduction as the others have indicated.
> “With all this run away gov’t spending”
Thank Heaven there was none of that during Shrub’s tenure.
> “exemption for single taxpayer is $250K, $500K if married.
> Anything above is taxed.”
The Colonel is correct.
Joe, exemption for single taxpayer is $250K, $500K if married. Anything above is taxed. Currently long term cap gains rate(assets held longer than 2 years) is 15%.
With all this run away gov’t spending, the capital gains rate will definitely being going up soon. At the very minimum to the pre-Bush level of 20% and more likely 35% once the Dems get their way.
j bummer, unless rules changed recently, no cap gains (250k per person or $500k for married couple) on primary residence where you live 2 yrs (during a 5 yr time frame)
m4l — ok, I suppose I am being too wonkish — in finance terms your basic position can’t be it’s own hedge, but I see what you mean.
BHO so what’s the final final — I didn’t understand your post. If I sell my first home and go rent permanently, do I pay tax on the gain?
j bummer, my “hedge” reference is for in case my prediction of mkt continuing to go down is incorrect and instead it goes up, the fact I still own an apt unit means I get to partake in the upswing (albeit I don’t believe it). So it’s a hedge against me being wrong on my read of the mkt
the carry cost argument doesn’t hold any water. it just reflects your financing position, and you’re ignorning the opportunity cost of foregone investments. you need to look at the total round-trip after all costs, like BHO says.
I didn’t see the original “hedge” line, but if you’re really holding a house as a hedge, it means you are naturally short real estate, which is not normal. perhaps the poster means something else.
the lambo argument is great — if you own it because you love it, just ignore all this chatter and focus on stuff like getting your front door up to the landmarks code!
BHO, I consider myself to be LUCKY vs SMARTER than others. I’ll take LUCK any day over SMARTS