Shiller warns prices could be in 'bubble territory'
From Global Edge
By Global Edge, Wednesday, October 28, 2009.
Editor's note: This item is republished with permission from Global Edge Marketing Ltd. The original post can be viewed here.
Robert Shiller, the man who predicted the dot-com bubble in his best-selling book "Irrational Exuberance," has warned that house prices in some areas of the U.S. could be approaching bubble territory.
Home prices in certain areas like San Francisco have risen by double digits over four months, and if viewed on an annualized basis, they look like they are in "bubble territory," Shiller said.
U.S. home prices in August rose for the fourth straight month. The Standard & Poor's/Case-Shiller composite index of home prices in 20 metropolitan areas rose 1.2 percent in August from July … the prominent fact that we are seeing with this data is that home prices are just zipping up," said Shiller.
"Bubble" could have much further to run
"It is entirely possible that even with the bad news we are getting, home prices could start a major increase … what happens from here will depend on people's animal spirits and speculative impulses," he said.
He also predicted rising unemployment would not stop prices increasing. "Even in the Great Depression real home prices were rising with the unemployment rate above 12 percent … Just because we have high unemployment does not mean the stock market cannot boom and the housing market cannot boom."
Agents and investors specializing in U.S. distressed property sales could be in for a (booming) few years.
Copyright © 2009 Global Edge Marketing Ltd.
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Submitted by Jon Astaris on October 28, 2009 - 2:58pm.
The weak dollar must figure prominently in Shiller's assumptions, but this bubble is a reflation of a collapsed one: most if not all the hot zip codes came down about 40% from their peaks. This time it will be foreigners with inflated currency. But we're lookingat very small markets. The rest of the country is going to deflate like crazy.
The Bananarama is marching on
Submitted by Larry Whited Sr. on October 29, 2009 - 6:50am.
I agree with Jon Astartis.
Larry A. Whited, Sr., CRB, CRS, GRI
President & Founder
www.maxUnet.com & www.WebMLS.net
A Virtual Real Estate Franchise System
** We will sell your home for as little as 2% + $500. Includes full service and MLS **
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Submitted by Bill Fooks on October 29, 2009 - 4:20pm.
Bill Fooks
TFT realty Marketing Service
Warwick, RI http://www.fooksteam.com
I always thought that supply and demand dictated pricing.Hmmm. Stopped making land some years ago, but not families. Now they have almost stopped making houses. Then the dollar is week. Those who have a house will be the fortunate ones. We are becoming like Europe. Not good for the middle class nor the "free loaders". This adminestration is seeing to all this. Watch! Buy now, if you can. Invest in hard assets, like houses.