TrafficCourt

Shiller Says Housing Market May Not Recover for Years

RSS

This isn't technically a retail real estate story, but I think it's always interesting to see what Robert Shiller is saying. He called the tech bubble in his famous "Irrational Exuberance" book and warned about the housing bubble for years. Contrary to the most bullish projections--which call for a rebound in housing next year--Shiller thinks the recovery may take a lot longer than that.

I think the importance is that the housing bubble did help prop up consumer spending. It's estimated that homeowners were pulling out between $600 and $700 billion a year through home equity lines and then using that money to fund consumer spending. If Shiller's right, we're not going to see that dynamic return for a long time.

What's more, Shiller, who is also co-founder and chief economist of the financial firm MacroMarkets LLC, said predictions for a bottom within the next year or so are probably wrong, with price declines in 2008 possibly worse than those seen this year.

"There is a probability of a continuing decline for a period of years, bringing prices in many cities down in the 10s of percent," Shiller said in an exclusive interview.

"The bottom is hard to predict," he said. "I do not see it imminent and it could be five or 10 years too."

Please or Register to post comments.

What's TrafficCourt?

Industry news, views and occasional strange stuff.

Contributors

Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
Blog Archive
National Real Estate Investor Related Sites

Sponsored Introduction Continue on to (or wait seconds) ×