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The commentator could hardly get himself to restate Shiller's words at the end "Wow, umm, a generation. That is a long time. Up next ..." change topic as quickly as I can...

bg says

The commentator could hardly get himself to restate Shiller's words at the end "Wow, umm, a generation. That is a long time. Up next ..." change topic as quickly as I can...

Yeah, that was the fastest interview end since Elmo walked off during a Piers Morgan interview after Morgan questioned Elmo about his tickling fetish and being found chained in a Bangkok brothel.

A lot of people walk out during Piers Morgan interviews.

Shiller's the man.

robertoaribas says

the "a generation" was referring to another nationwide bubble of the size of our prior one.

Shiller was NOT saying a generation to recover, nor even a generation to reach past peak real prices.... but rather, a generation to be as completely distorted compared to normal metrics as it was this time.

Says the dude with 15 rental properties! I think I will go with Shiller over your biased BS Bob.

Shiller knows more than any one of us regarding housing. Housing is not even close to a bottom. The End

robertoaribas says

the "a generation" was referring to another nationwide bubble of the size of our prior one.

I heard something different. I heard "a generation to get the real enthusiasm back." He routinely changes the tone of the interview when people try to get him to forcast "exciting" news about how great it is to buy a house.

Earlier in the interview he cites a source with which I'm not familiar. The "C&E" or "CME" which is forecasting "real" growth in housing prices of a "little under two percent per year." Shiller seems to agree with that number and it supports the huge amount of work he's done quantifying past housing price performance.

robertoaribas says

I'm curious, where is shiller's prediction for Phoenix from say two years ago, that prices would go up by 50% in nothing flat? I can't seem to find that one...

I've not found Shiller forecasting much, if at all. In most of the interviews he avoids forecasts and simply comments on the current data. Sometimes he commens on current data in light of past data. So I don't think you'll find Shiller predicting Phoenix.

He has, however, suggested that Phoenix looks to be in another bubble. I think he does that because the growth percentages are much higher than historical growth. That observation suggests a change to lower, or negative, growth.

FunTime says

That observation suggests a change to lower, or negative, growth.

And I don't say that to rain on the Roberto Aribas Phoenix parade. Since you're on top of very short-term changes, you're participating in a much different way than one person or familiy purchasing one house in which to live. So you might see the change happening and make your own changes to keep making money. What you do sounds like a lot of work and doesn't sound very fun, which is why I wouldn't do it. You might make a ton of money for all I know.

HousingBoom says

Shiller knows more than any one of us regarding housing.

robertoaribas says

I like and respect Shiller, but for individual investment timings, I don't think even he would claim to have advice for those.

Schiller came up with this Index at a time of rising prices, and easy mortgage lending.

If you look at websites, like redfin, zillow, or even trulia they all have those links, and ads to mortgage brokers.

What I have thought is an Index about Real Estate pricing is that it may have been a marketing tool for lenders.

Schiller has given us all kinds of data that is splashed across Real Estate sales sites, but I think he's more of a data guy than a Real Estate expert.

He may just be feeding the group think mentality of Real Estate.

David Losh says

He may just be feeding the group think mentality of Real Estate.

Oh, I disagree with that idea. He's published papers which show how he was trying to start an investment/security which acted to balance the risk associated with mortgage lending. He points out that buying a house is a very huge risk and represents a rare situation in economics. He then proposes to set up investments that act as a balance to this risk. As I understand, which isn't saying much, his ideas haven't panned-out well yet. They did start a fund, but didn't get many investors.

He is definitely working to improve the financial performance of the real estate industry by suggesting improvements. This is a natural development out of his research though, and his contributions to the economic development of the U.S.

http://cowles.econ.yale.edu/P/cd/d16a/d1648.pdf

http://cowles.econ.yale.edu/P/cd/d11b/d1177.pdf

He also tried to explain the connection between house prices and other consumer spending since that is a very large economy driver in the U.S.

http://cowles.econ.yale.edu/P/cd/d13a/d1335.pdf

Don't pull out the champagne cork just as yet my dear bearish friends. The Case Shiller index is an anaytical tool, not a predictive tool. He is brilliant when it comes to devising analytical tools and formulas, but when it comes to forecasting he is a disaster. Ask yourself, if he can accurately forecast why isn't he a billionaire?
If you must take your forecasts from someone else I suggest you do so from someone with a proven track record. Like Warren Buffett for instance?

Raw says

Ask yourself, if he can accurately forecast why isn't he a billionaire?

He's let a few comments slip that he's done quite well investing in the stock market. In one video clip, I remember him saying it was just a matter of math that disciplined investments in stock markets over time will make you wealthy. I like to cite my sources and don't have one handy for this one, but I'll see if I can find it quickly.

So maybe not a billionaire, but I suspect his net worth is substantially higher than mine.

I don't think he tries to forecast. I think he looks at past data and makes decisions that align with that data. He tries really hard to comprehend what the whole set of data means, not just what one year or another means. He knows this isn't any kind of sure bet, but I think he's seen that it also works.

FunTime says

I don't think he tries to forecast.

That is because he is smart enough to know his limitations.
95% of professional money managers, the so called "experts" can't even beat the S&P index over time. They are a joke.
I do think the index Shiller devised must have made him a lot of money.
I'm not pointlessly knocking this guy. I have a lot of admiration for him. I just don't think anyone should try and use him to forecast future real estate prices.
There is no formula to accurately forecast future prices of stocks, commodities or real estate. It remains an art.

5:50
http://www.celebritynetworth.com/watch/ZeC34GWALD0/robert-shiller-finance-the-good/

Each man puts his money where his mouth is. The core of Siegel's investments is in indexed mutual funds -- that is, funds that reflect broad market sectors or the market as a whole. "The average investor will do best by diversifying among all classes of stocks," Siegel writes in the third edition of Stocks for the Long Run, due out this spring. "Trying to catch styles as they move in and out of favor is not only difficult, but also quite risky." Siegel has cooled off a bit on indexing the market as a whole, now preferring to tilt toward "small value" stocks.

Shiller, by contrast, has almost nothing in the market, aside from a few shares of Kmart inherited from his mother, which he obviously holds only for sentimental value. Much of his net worth is tied up in Case Shiller Weiss, a real estate firm that develops risk management products like home equity insur-ance and real estate indexes. (Siegel is on the firm's advisory board.) Like Siegel, Shiller believes in diversification, but his definition is different: He holds municipal bonds, real estate, investment trusts, and an international value fund that invests in low-priced stocks outside the United States. But perhaps his favorite vehicles of all are "index bonds" -- U.S. Treasury Inflation-Protected Securities (TIPS) that offer a guaranteed 3.5 percent return above inflation.

"If someone had to pick -- all my money in the stock market or all my money in index bonds," Shiller says, "TIPS would win hands down. But very few people are able to keep that perspective right now. There's just so much excitement around the stock market and so many varied games to play, and for many people it's a part of their lives -- you know, it's just fun to watch, and index bonds can't compete with that."

http://cowles.econ.yale.edu/news/shiller/rjs_02-05-bloomberg_shil-sieg.htm

Raw says

I do think the index Shiller devised must have made him a lot of money.

Yeah, I just read it was sold to Fiserv and S&P. I figure that was a nice deal for him.

robertoaribas says

Case and Shiller wanted people to be able to hedge risk in real estate, like you do in anything else...

I wish I'd explained this more like you. Yours made more sense. I get confused about how much of his idea was aimed at industry and how much was aimed at individual investors.

http://www.thefreelibrary.com/Fiserv,+Inc.+Acquires+Case+Shiller+Weiss,+Inc.%3B+Leading+Provider+of...-a085936347

FunTime says

"If someone had to pick -- all my money in the stock market or all my money in index bonds," Shiller says, "TIPS would win hands down.

I like stocks, but if I had to choose something in bonds, TIPS would be it.
With rates close to zero, rates cannot go anywhere else but up, which would spell a disaster for bonds. Ofcourse, Uncle Sam will be footing most of that bill when the time comes.
http://www.cnbc.com/id/100431901

Raw says

He is brilliant when it comes to devising analytical tools and formulas, but when it comes to forecasting he is a disaster. Ask yourself, if he can accurately forecast why isn't he a billionaire?

actually he has done well $$$ writing about the irrational behavior of investors. and frankly his predictions did come true both to the stock and later home price bubble. Frankly, his book Irrational Exuberance i expect to be classic reading for decades to come but not as economics but behavior sciences.

"The behavioral finance school gained new credibility following the October 1987 stock market crash. Shiller's work included survey research that asked investors and stock traders what motivated them to make trades; the results further bolstered his hypothesis that these decisions are often driven by emotion instead of rational calculation. Much of this survey data has been gathered continuously since 1989, and is available at Yale's"

He did not create any tools that were not already there be they the Price to Earnings multiple for stocks or Home price to individual income multiple to home prices... its been around for decades for any individual to see.

If anything, Shillers tools is a simple question... Why do you believe you will get 20% appreciation on your home ? And let the emotions fly.....