Bob Shiller On The 'Housing Recovery': "Highly Uncertain, It's Risky"

Tyler Durden's picture

Sometimes, taking a break from the mainstream view of the world is healthy for our sheep-like tendencies to follow the herd. To wit, Robert Shiller can't understand the enthusiasm for the long-term recovery outlook of the housing market. With rentals rising and home-ownership dwindling, Shiller, in this Bloomberg TV clip, questions the positivity noting that the outlook is 'fuzzy' at best; and in fact in the short-term is negative as MoM things have deteriorated modestly (though seasonally). He note that the focus has been on multi-family residences and "if you are sitting in a suburban single-family house - what is your outlook? Highly uncertain - It's Risky!" And in one of the most prescient comments of recent weeks, Shiller admits something that many others should try: "[the outlook] could be up; but I don't see how anyone knows?" adding that another plausible outlook for the next five years is that "housing stays right where it is now," adding that Zillow's 1.3% annual real growth expectation could be too optimistic.

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SheepDog-One's picture

Huh....well let's remove all the billions of MBS buying the FED is doing and see where we're at then....something tells me the picture would be way less rosy than even this bit of slightly good few% data.

stocktivity's picture

CNBC is starting the 3pm ramp up early today....someone tell them it's only 1:45pm -

redpill's picture


Housing is finding its slow and rocky way.  It's still way below peak levels (as it should be) and looks like it will just trundle along unremarkably without much in the way of big gains or declines.

That's nothing compared to the broader economy, and certainly not the stock market, which is still operating under an insane delusion in which it is only off 7-8% from peak levels before the crash.


SheepDog-One's picture

'Signals' of 'possible deals' oh my fuck that is GREAT NEWS!! Nevermind any details, who cares about that? Let's just make sure markets are ramped for Friday close then we can dump terrible news over the weekend and be free to pump futures for Monday!

killallthefiat's picture

Larry Yun just tweeted:

"How can anyone trust a professor with such a bad Skype connection?  My Skype connection is better!"

Cognitive Dissonance's picture

All the headline reading algos will see are the words "Housing Recovery".

knukles's picture

Yeah, yeah, yeah, yeah, yeah ...
Keeps 'em chewin' on sumption' fer a while

But what about them meetings on that Fiscal Cleft thingamajigie?

Argos's picture

Friend of mine is a realtor.  She just closed on a short sale in North Scottsdale.  Guy had a $1.4 million mortgage, house with guest house on 2 acres.  Sold for $375,000.  Yeah, Arizona is on the mend I tell you!

Mercury's picture

Well, all housing markets are local so your mileage may vary but PE funds are in fact buying up single family homes with both hands...which isn't the same thing as expanding homeownership but drives prices up.

Blackstone is spending $100mm per week, Silver Bay 3100 homes to start on a new deal, Colony Financial 5500….

The maintenance logistics alone involved with banks managing scattered, single family residences (due to repos/foreclosures) was supposed to be insurmountable but apparently these guys think they can pull it off.

 If you're a local property manager with a decent book of business/experience, you might want to take that call from "Tucker at Goldman Sachs."

kaiserhoff's picture

You know Tucker?  I thought they only trusted him with the hookers and blow.


tooriskytoinvest's picture

Foreclosures Flood Housing Market: Homeowners Now Foreclosing on Banks, Home Sales Surge To Highest Level In 3 Years While Home Prices Drop In 12 Out Of The 20 Biggest Markets In The Country. Home Prices Could Drop 20%.

Zer0head's picture

Glad to see Bloomberg trying out the austerity thing with skype and what's with a cub reporter doing the interview?

knukles's picture

Hear tell closing much of the London office, transferring responsibility back to NYC (lotta folks loosing jobs) on a profitability/austerity kick.

You know, making news more local, trustworthy, insightful, all the devolution to a more basal useless plane...

Reporting Live form somewhere in the Middle East, New York, this is Charles Jaco...

..remember, against the blue screen, waiting for the pizza delivery?

Like the NYT  "All the New That Fits"

kaiserhoff's picture

Experience for yourself, the difference between the New York Times, and the news.

              Current multimillion dollar ad campaign.  I couldn't make this shit up.

Hondo's picture

People, plan sponsors etc. should start questioning (grilling) there pundits predictions and outlooks.  Most of the so called pundits have very poor track records of predicting anything let alone short term trends....most are either too stupid to call statistical noise noise they use it to lie to themselves and their clients.  Most haven't a clue how the economy or the economic numbers they claim represent to economy's progress are even put together...

WhyDoesItHurtWhen iPee's picture

"Soothsayer" is the old term for exactly what you just described.

Lucius Cornelius Sulla's picture

Shiller called it a bubble when it was a bubble and is not all that sanguine about today's market.  He stikes me as a decent analyst with a good measure of humility.

apberusdisvet's picture

I have more respect for Shiller; he refuses to be a media whore, unlike so many other "experts" who toe the propaganda line.

Temporalist's picture

I like how she smiles when she lies.

Motorhead's picture

At least she's a cute liar.  I've known some fat, ugly lying behemoths...makes me want to barf just thinking of it.

optionsman's picture

she could be reading a phone book

markitect's picture

Housing is hyper local.  I'm seeing a rebound in upper middle class, wealthy but not F/U money type suburbs and neighborhoods only.  Theres some price chopping in the very high end as the market relaizes theres only so many $2 million dollar+ buyers willing to pay $50,000 or more on property taxes unless they are in Manhatten or Malibu.  The low end is also dragging while the blue collar middle class suburbanites are finding the REO next door is becoming a shiney new section 8 rental.  That will be great for middle American housing prices.  For the bulk this isnt a housing crash its a forced welfare housing program.  Maybe Valerie Jarret's slumlording management company can get the contract nation wide?  

Lin S's picture

My wife has a property we were thinking about renting out while we hold it.  Location is prime, Pasadena, California.  Values are climbing here, but slowly.

Question: would it be best to hold it over the next 10 years in the hope of making a little more off of it, or sell now before values fall again?

What does the ZH roundtable believe will happen to the housing market over the next 5-10 years?

Any advice for us?

Thanks for any info/help...



markitect's picture

I'm certainly no expert on the Los Angeles market but I've been there 3 times last year, and Pasadena seems like it fits the keeper template - upper class wealthy but not extremely wealthy, has nearby natural features to keep it unique, ie. mountains, close to major employment centers.  The areas that should be concerned are the eastern Los Angeles Riverside / san Bernadino area.  I also did see a lot of new construction in Orange County but far inland - I cant understand who would pay to live there and not be nearer the ocean or LA but many people probably ask who would pay to live in Illinois and not be by the lake / different strokes....

Rubbish's picture

10 years is a long time so you should be ok, but Pasadena has older homes. Don't forget to look at possible big ticket repairs that might hit you. Roof, water main, plumbing, appliances, flooring, termites, siding, driveway, paint yada yada.

PlausibleDenial's picture

Read about recapture @ 25%.  Yes, the government in the end makes you depreciate rental property.  If your effective tax bracket is less than 25% then depreciation hurts you.  Remember depreciation is nothing more than tax deferral that is a sneaky game.  Also, keep in mind that any "losses" from residential realty are considered passive and can be used to offest up to $25,000 of ordinary income.  However, at $150,000 of AGI the loss becomes unusable.  Crazy calc in that the loss degradation starts at $100,000 and then if fully limited at $150,000.

Equally important, how can rents be increased in terms of inflation (Shawdowstats inflation) that will be acceptable to potential renters?  Could you increase rents @ 7-8% per year with current wage suppression?  IDK, but it is Pasadena.  Good Luck


pods's picture

And most people buy a mortgage payment.  What happens to the underlying price of the house when the cost of the mortgage goes up?

That is whey the FED is in the coffin corner on interest rates. They can't ever raise them, or the whole system implodes again.

So you will instead get more "easing" by the FED when in effect they are merely having to make up for private withdrawal from the market.  And rates have to stay low so they have dug their own grave.


WonderDawg's picture

That's it, right there. Rates near historical lows. Can they stay there forever? I doubt it. Rates tick up and home prices tick down. Rates kick up, home prices fall through the floor.

fonzannoon's picture

"The United States is richer than it's ever been. We have $50,000 or so of GDP per person. But we've overpromised and we've also undertaxed to some extent, so we find ourselves with this great fiscal imbalance. But it was man made. We're a rich country. It can be solved. ... We'll be able to overcome this problem. America has faced a lot tougher problems than this one. We'll get it solved."

Buffet is such a shithead.

Lucius Cornelius Sulla's picture

A good measure of the $50,000 is propped up by under-funded union and public pensions as well as unsustainable government spending.  We will know who is swimming naked when the USG is forced to stop spending.

muppet_master's picture

Mr. Tyler,

good to see that you are more frequently referencing bloomberg INSTEAD of those screaming crankaholic fast talking cheerleaders on cnbc...

i personally don't watch more than 10-15 minutes/day of "financial" news...however both cnbc and bloomberg has stupid cheerleaders...the MAJOR DIFFERENCE between the two is that one has freaking screaming lunatics...AS IF that's going to develop a sense of urgency to CHASE and BUY HIGH !!!! LOL !! = i get headaches listening to NERVOUS FREAKS !

so I prefer bloomberg...even though they are stupid demon-rat-ic cheerleaders and want the rape of the 99% to "save" the fat cats.  My fav journalists on bloomberg = lindsey janis (my midnight girl) and dreidra bolton = the dancing moves lady (money moves)...i'm still bounded by a TIME LIMIT OF 15 minutes, MAX per day.....any more = useless waste of time.

muppet_master's picture

but, YES BUT

WHO is manning the stupid SHOE SHINE BOY/GIRL PERFORMANCE CHASERS (cnbc "reporters")...someone has to listen to them and bet against them....maybe hire cheap foreign labor to monitor the shoe shine idiots...

someone has to listen to them 8 hrs a day..and report back to us, so that we can peruse through  their "advices" in 5 minutes and bet against them by initiating positions or just RIDING.

jim cramer the crank-aholic

april 2011:  SLV @ $45 he says BUY = me short now @ $29

sept. 2011:  gold @ $1800, he says buy = me @ $1655

NFLX @ $300 he says BUY = me @ $90....(now i didn't just hold...i covered most profits....and feel like shorting NOW)

AAPL @ $628..he says "$1000 makes ARITHMETIC SENSE"..then tanks to $540....i covered...then @ $700 here on ZH in real time I said  = TOP

and recently the crank said last week:  DON'T SELL, THIS IS YOUR BUYING OPPTY (OPPTY to BUY HIGH !!!! LOL !!!)

i go to his stupid website and listen to him for 5-7 minutes and that's all i can handle...plenty of informative regarding his positions "advice" = me bet against the PERFORMANCE CHASING FOOL with "30 years experience" CHASING bubbles.

CH1's picture

i personally don't watch more than 10-15 minutes/day of "financial" news...however both cnbc and bloomberg has stupid cheerleaders

Friend, why do you punish yourself? Really.

Titus Flavius Caesar Vespasianus Augustus's picture

housing is a great investment for banks and large corporations...


you'd get bailed out for any losses, aren't really paying taxes anyway, and hell - all those people who lost their homes are gonna need to rent a place, aren't they?


They aren't making more land...

tahoebumsmith's picture

What you see is free money from the FED going to investors buying up all the homes to they can rent them to the sheep. What is even more rediculous is the investor that gets its money from BOA so they can buy a forclosed home from BOA at a rock bottom price and then BOA collects mortgage insurance and federal money to make up the losses from the original note. Who the fuck do they think their kidding? Household income has been dropping and very few retail buyers can afford to come up with 20% down. Just another ponzi scheme between the banks and investors to steal more money from the taxpayer and make everything look like a recovery. So where has the 20 TRILLION DOLLARS GONE? LOL

SheepDog-One's picture

Housing prices 'up 4%'? Dollar is down -4% in value at least so who cares? What are these financial people, fucktards?

Dre4dwolf's picture

All you need to know about housing.

1) If your in it to flip homes, your too late, that game has come and gone.... home prices will not rise, they will stabalize if anything at a new bottom and begin to rise gradually over 20 ~ 40 years as inflation of w/e new currency is introduced in America is put in place and starts to rise (because banks can't resist counterfeiting money its the only way they have to make themselves look "smart")


2) If your in it to buy your own house to keep and hold for generations, theres no reason not to doit if you can afford it as the decline or rise of a homes value really has no effect on the value you yourself derive from the house, also if you intend to rent the property, than its a good LONG TERM investment, but the problem is that states and governments are raising taxes soo high to the point that no one will be able to afford to rent these places with the newly decreased average wage accross America (people will be forced to split rent and have room-mates to have housing or to live in vans and cars or "micro appartments").



sbenard's picture

And when inflation rages, and the Fed decides to reverse its monetary mayhem, who is going to want to buy that toxic soup?? Investors will run from it faster than they would a nuclear mushroom cloud!

SanOvaBeach's picture

$10.000 in cash for proof of a R.E. agent that says, "Now is not the time to buy!"

dirtbagger's picture

Best information on So. CA property is this blog

Element's picture

So how's the shadow inventory going? It it even on the books? I doubt CRE is any better. Fred Sheehan pointed out a few years ago that the last hotel built in New York before the Great Depression RE collapse, was the Waldorf Estoria. No more new hotels were built in New York untill 1962, so large was the overbuild of un-occupied hotel 'inventory' from prior to the Depression.

That won't be the case this time though.



neutrinoman's picture

Shiller and Case have been consistently raining on the "housing neo-boom" parade. The best you can say is that it's bottomed. All depends on ZIRP and MBS purchases without end, amen. And even there, it gets you a mortgage only if you meet historically high credit standards and your property is F/F-conforming. If not the latter, it's harder (not impossible); if not the former, it is impossible.

I've met and talked with Case, and he's pretty cautious in private. But he's fairly cautious in public too. And he insists on reminding everyone of two things: real estate is ultimately local; and the bounce is off a low bottom. It's take a 100% rise to cancel a 50% fall.

P.S. And Sara Eisen, itsy-bitsy cutie that she is, is both a hot babe and crackerjack reporter. Does Bloomberg know what it's doing, or what? :)

e-recep's picture

cnbc whores look better than bloomberg whores.