patrick.net

John Bailo says

I keep thinking, and maybe it's just a revenge fantasy, but for the past 30 years, it always seemed like everything was just out of reach. Like I'd make more money, but then houses went up 2x, 4x, 10x in cost

You are not the only one. I suggest you look farther afield for your property investments.

Hysteresis says

shiller's got lots of data. that and he's always careful with his wording is what i like about him. he was also one of the first people to popularize the idea that people's (irrational) behavior greatly affects economics.

he has a deeper understanding of markets than pretty much everyone on patnet. yet, i think most readers prefer the anecdotal, unsubstantiated, hyperbolic and often retarded claims made here. sad.

Hes better than the boom doom and gloom guy that's for sure, but saying the recovery could take 50 years is a little far out. I can't even imagine what 2014 will be like let alone the second half of this year. I do understand that he analyzes a lot of data, more than we do here, and I know fundamentally he is right there is a lot of headwinds for this recovery. But to end it with "This might take 50 years" really spoke to me more about his character than his analysis.

epitaph says

Hes better than the boom doom and gloom guy that's for sure, but saying the recovery could take 50 years is a little far out

Recovery upside is late 2016 in my humble opinion.

Waiting - I don't know if anyone can say that the price gains will stick.

With all the Fed/Helicopter Ben stimuli, interest rates 30 % lower as compared to last year, inventory 34 % of what it was last year (at least in the SF Bay), house prices have managed to eke out some impressive gains.

I am not sure if the gain is driven by demand, or rather by a combination of diminished supply (some of it may well be temporary) and Fed stimulus.

Waiting to see if the upturn is permanent, or just a head fake. Hope - there is more clarity in the next few months

mbSFBay says

I am not sure if the gain is driven by demand, or rather by a combination of diminished supply (some of it may well be temporary) and Fed stimulus.

Waiting to see if the upturn is permanent, or just a head fake. Hope - there is more clarity in the next few months

They will find a way to blow up a bubble. They always do.

Homeboy says

Mark D says

the FHA has been in operation since when? 1930's? why is it suddenly an "abnormal" thing? not to mention the fact that it's been increasing it's premium every year since the crash.

What are you talking about? He didn't say anything about FHA. He said:

"“But it’s also a very bad housing market in that most of the mortgages are being supported by the government, and we have the Fed and this buying program. It’s a very abnormal market. There’s a lot of uncertainty going forward.”

The FHA was originally a program to help low-income people buy houses. That's nothing at all like what's going on now. You do know about the government supporting most mortgages now, and about the Fed buying up trillions in housing debt, don't you? This is not standard practice historically.

What a stupid idea helping low income people buy homes. This ratchets up the price of housing which hurts, you guessed it, low income people.

Thedaytoday says

They will find a way to blow up a bubble. They always do.

I am appalled at the collective amnesia our societies seem to be prone to.

I guess - Govts. love a bubble - inflate the asset prices, and tax collections will follow - maybe that is the intention.

Nobody seems to be looking back and thinking about the excess leverage that got us into the crisis. Instead of pulling back on the leverage - which probably is bigger now then when we entered the crisis - they are congratulating themselves on a job done well - banks have been re-capitalized, given a gentle slap on the wrists (with a wink and a nod to go forth and leverage up the wazoo).

Don't know who will be left holding the bag in the end ? Not sure if Society's future productivity gains will be outsized enough to stave off disaster.

StillLooking says

What a stupid idea helping low income people buy homes. This ratchets up the price of housing which hurts, you guessed it, low income people.

It became far worse when they expanded the price limits and started helping RICH people to buy homes.

Thedaytoday says

Property Market = PUMP & DUMP!

The entire economy is a PUMP & DUMP. We have seen the PUMP so we should see the DUMP in the near future. The sheep are falling for this once again.

HousingBoom says

Thedaytoday says

Property Market = PUMP & DUMP!

The entire economy is a PUMP & DUMP. We have seen the PUMP so we should see the DUMP in the near future. The sheep are falling for this once again.

The real estate market is too big for a "pump and dump" scam.
It's the real thing.

Raw says

The real estate market is too big for a "pump and dump" scam.

It's the real thing.

LOL

HousingBoom says

Raw says

The real estate market is too big for a "pump and dump" scam.

It's the real thing.

LOL

LOL

epitaph says

Shiller: A shill.

Seriously, has this guy ever said something positive about the US?

yes... prices over the long run are equal to inflation and incomes... therefore people should have more to save or spend as prices go up and interest rates go down.

not something you would hear from Realtors ... ever!

thomaswong.1986 says

epitaph says

Shiller: A shill.

Seriously, has this guy ever said something positive about the US?

yes... prices over the long run are equal to inflation and incomes... therefore people should have more to save or spend as prices go up and interest rates go down.

not something you would hear from Realtors ... ever!

Not in California. Lets get real guys, for the last 50 years California real eastate has easily beat inflation and income growth. The key is population growth.

chanakya4773 says

in pre 2007 bubble, 90% of the peope i talked to were taking short term ARMS. I cannot even find one now ( atleast in my circle)

The 3.5% down FHA/3.5% mortgage took its place. It's called frying the chicken in yesterday's grease.

chanakya4773 says

Are you seeing any ARMs ? those are usually the killers because they reset to higher interest rate

Not like in the past. Certainly not the Free Parking type of ARMs that we had in the mid-2000's (middle Oughts?). But the come-one-come-all of FHA free money loans is not a far cry if a buyer is special enough to compete in today's market.

Raw says

Not in California. Lets get real guys, for the last 50 years California real eastate has easily beat inflation and income growth. The key is population growth.

even with growth and all the boom in SFBA.. from 1975 to 1995.. the best you or anyone can say is its a draw.. Inflation DID NOT EASILY BEAT prices.. if anything we learned.. is even in SFBA prices went flat over that period.. and frankly.. why have we seen prices drop more recently...

chanakya4773 says

Are you seeing any ARMs ? those are usually the killers because they reset to higher interest rate.

they couldnt use fixed rate loans.. too costly.. so they used ARM.

at the end .. its not the mortgage used but the amount you OBLIGATED yourself to pay with a loan... THATS the KILLER.... it was never the type of loan you used..

Had prices been lower by half or more back to normal..
ARM or conventional made no difference.

thomaswong.1986 says

they couldnt use fixed rate loans.. too costly.. so they used ARM.

at the end .. its not the mortgage used but the amount you OBLIGATED yourself to pay with a loan... THATS the KILLER.... it was never the type of loan you used..

Had prices been lower by half or more back to normal..

ARM or conventional made no difference.

Nope. Wrong. Without exotic ARMs, those wishing prices would never have held. But, really, this is all ancient history.

Thomas, your chart clearly shows that Bay area prices outperforms inflation. That is what I was trying to say.
Nothing goes up in a steady predictable, so you can expect major pull backs every now and then. These pull backs are major buying opportunities, which no one should miss.
As they say....buy when there is blood on the streets.

nope.. price inflation came from irrational belief of home owners/buyers..
it started much earlier than than 2001. Nationally, Had nothing do with Int% rates population growth or anything else. Just like back in early 90s as inflation dropped
and all other factors..people expected too much..

Robert Shiller - On Home Prices Always Going Up

http://www.youtube.com/embed/d__GPqOVNbE

I remember in 2006 when most people laughed at the idea of falling home prices. hilarious!

Wages are now falling, taxes are increasing, cost of living is increasing and now home prices should go up? no way

Raw says

Thomas, your chart clearly shows that Bay area prices outperforms inflation. That is what I was trying to say.

your looking at bubbles... not any real out performance... eventually it corrects.

Raw says

HousingBoom says

Raw says

The real estate market is too big for a "pump and dump" scam.

It's the real thing.

LOL

LOL

LOL

Thedaytoday says

Hysteresis says

shiller's got lots of data. that and he's always careful with his wording is what i like about him. he was also one of the first people to popularize the idea that people's (irrational) behavior greatly affects economics.

he has a deeper understanding of markets than pretty much everyone on patnet. yet, i think most readers prefer the anecdotal, unsubstantiated, hyperbolic and often retarded claims made here. sad.

Shiller is full of shit, time after time Shiller hid the truth, how many bubbles did they ignore or misrepresent and for how long!

Fuck these bitch assholes.

I was screaming at bubbles between 2000-2006, "every single financial expert" said, " it was not a bubble".

There is no BUBBLE!

Liars , thieves and murderers.

I agree 100%
reduce your caffine intake

Raw says

Nothing goes up in a steady predictable, so you can expect major pull backs every now and then. These pull backs are major buying opportunities, which no one should miss.

no thats not the way it works.. steady predicable.. about most of the US housing has been flat on the whole..

homes are not to be traded and swapped for.. never been the case. A home is a consumable.. not a dividend paying stockor interest earning bond.

HousingBoom says

I remember in 2006 when most people laughed at the idea of falling home prices. hilarious!

i tried to tell some of past price declines SoCal in early 90s.. bloodbath !
but past news articles do not appear on the web so easily..
And than again.. many that come to Cali do get pumped the idea from realtors
ITS ALWAYS BEEN expensive line.. WOW ! talk about pimps and hustlers!

If you look at Thomas' chart, you can see that every housing boom collapsed back to pre-bubble prices. If history repeats, then we are about 50-60% done with this collapse. We have more downside.

Will this time be different? Probably not

chanakya4773 says

WRONG !! the index that you showed is INFLATION ADJUSTED.

thats right.. flat adjusted for inflation. Predictable pattern ! It should be, by now clear as daylight if a region is getting HOT as they called it back in the bubble days.. something is amiss.. and going wrong ! Cause every historical example of local bubbles as far back the 1920s Florida land speculation has ended in disaster.

Today, the only meaningful land where prices are up.. may well be the Natural Gas rich regions of middle America.. (fly over states full of people guns and bible -- now Billionaires)

But they are pumping and selling real income producing products.. you certainly dont hear Realtors talking about that.. far from it !!!

epitaph says

Hes better than the boom doom and gloom guy that's for sure, but saying the recovery could take 50 years is a little far out. I can't even imagine what 2014 will be like let alone the second half of this year. I do understand that he analyzes a lot of data, more than we do here, and I know fundamentally he is right there is a lot of headwinds for this recovery. But to end it with "This might take 50 years" really spoke to me more about his character than his analysis.

nah. you're mis-interpreting what he said. he didn't say a recovery was 50 years away, he said another big bubble is far way and he threw out 50 years.

here's the quote:

He added, “I think we’re pretty far from irrational exuberance, maybe 50 years away.”

its interesting that a man is cautious in his comments is called a shill.

Until interest rates are allowed to go back to historical levels, 7.5 to 8%, nobody will know what the real house prices, stock prices, bond prices, or gold prices are.

Zakrajshek says

Until interest rates are allowed to go back to historical levels, 7.5 to 8%, nobody will know what the real house prices, stock prices, bond prices, or gold prices are.

Exactly, you said it perfectly. . ."allowed" to go back to historical levels. The implication is that the market is well controlled. So, while many people here are frustrated by the feeling that the market should not be moving up, the reality is that it is being controlled to do so. It is another stealth bailout, and it will continue until the banks are in a safe zone.

There are studies out there that show that in a world full of idiots...the intelligent are made to look like fools. Keep that in mind if you decide to keep your housing bear hat on.

Good Luck Out There.

Zakrajshek says

Until interest rates are allowed to go back to historical levels, 7.5 to 8%, nobody will know what the real house prices, stock prices, bond prices, or gold prices are.

Interest rates are the level that they always are when unemployement is high and the economy is struggling. Rates are not going to rise until unemployment falls down to historic levels.

House prices, stock prices, gold prices, or any asset prices vary with the cost of money. There is no "real" level....

tatupu70 says

Interest rates are the level that they always are when unemployement is high and the economy is struggling. Rates are not going to rise until unemployment falls down to historic levels.

House prices, stock prices, gold prices, or any asset prices vary with the cost of money. There is no "real" level....

Easy to get unemployment numbers down. That doesn't mean much when many of the employed are underemployed. i.e. PhD working in retail selling shoes.
My worry is that we get the unemployment looking better and start moving interest rates up, only to find out that people still don't have any money to pump up the economy. How long do we go down this path of being broke but in denial. Years and years I bet. My kids will have a name for the 3 lost decades I am sure. They will laugh at our stupidity. FYI, I am buying gold for my kids. It'll be the best present for their future.

Call it Crazy says

Do you really think so ???

I guess it depends on what you mean when you say "interest rates". LIBOR, 30 yr. treasury, prime rate, or mortgage rate. The trends look different depending on which you choose.

Call it Crazy says

And when will that happen??

If/when we can get wealth/income disparity down to normal levels.

RentingForHalfTheCost says

Easy to get unemployment numbers down.

I have to disagree with that one. It's not easy at all. Even the shoe company isn't going to hire a PhD if they have enough workers to cover their needs. Employment only increases with more demand.

Looking at the US as a whole, consumers are not broke. It's a distribution problem, not a lack of money probem.

tatupu70 says

RentingForHalfTheCost says

Easy to get unemployment numbers down.

I have to disagree with that one. It's not easy at all. Even the shoe company isn't going to hire a PhD if they have enough workers to cover their needs. Employment only increases with more demand.

Looking at the US as a whole, consumers are not broke. It's a distribution problem, not a lack of money probem.

We already have the gov't ability to create fake demand. This is not an open market. We can build bridges and roads to nowhere and have the whole country employed. Won't help a bit though. We need real employment in order to justify any interest rate increase. That is not going to happen anytime soon. It'll be 3 decades of lost growth when we are through. Not 1, not 2, but 3. At the heart of many of our earning years. No house purchase will save you at all, we will all suffer.

robertoaribas says

Yes, the US economy is so bad that housing prices cannot possibly increase... That is why the have been dropping over the past 12 months...

The economy is in bad shape only because we are printing trillions out of thin air just to keep it afloat. We all know that we can't print forever and keep rates at record lows for too long. Everyone is hoping for or expects a soft landing and the Fed to GRADUALLY raise rates. I am betting that it will not be a soft landing and rates will go through the roof once the bond bubble bursts. No burst of a bubble is ever a soft landing.

robertoaribas says

Yes, the US economy is so bad that housing prices cannot possibly increase... That is why the have been dropping over the past 12 months..

as you said.. SFBA is crazy wacked out place anyway.. prices makes no sense.