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Robert Shiller: "Fragile" Real Estate Market Is "Not A Good Investment"
In a few brief minutes, Professor Bob Shiller calmly and eloquently crushed the hopes and dreams of CNBC's cheerleading muppetry as they desperately tried to spin today's house price data as great news. Exuberant at gains in San Francisco and Miami, the anchor is stunned (briefly) when Shiller dares to say "things are getting too bubbly," and warns these areas are full of speculative excess. While falling just short of calling a turn in the housing cycle (noting ), when Simon Hobbs says "my reading of this is actually very optimistic," and begs Shiller to look at the glass-half-full side of the argument, the "anxious" Professor retorts, that home sales rates "trouble him" and warns the real estate market is "fragile." Shiller then concludes that not only are stocks extremely expensive but that housing is not a good investment... the anchor fades to black...
Here is Professor Shiller popping the cheerleading bubble...
We suspect he will not be invited back anytime soon...
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M(oar)SNBC
Hobbs is the biggest asshat on TV.
Yeah he's a fairy!
They should put him and morgan pierce(what's his name) in a box and ship them two Limeys back to England.
England has long history of sending 'undesirables' to the colonies.
Somethings never change.
Can't wait until TS actually HTF and these shills attempt to explain it away. Oh wait, we don't have teevee. No matter, we trust that Tyler will compile the choicest clips.
Owning (and actually watching) a TV is probably the #1 risk factor for monetary ignorance. There is simply no good info in that little box.
How did arsewhole Hobbs EVER get this job? Unfkingbelievable
Hedge Funds and Private Equity have been done buying for a while now.
Don't count on the TBTF's to turn on the mortgage pump like '97 to '07
Happy New Year!!!!
Maybe this time will be like the last when oil bottomed out then housing. What the hell am I saying, owning a house is for the 1%.
"Give an institution power over distribution of section 8 vouchers and I care not who makes the laws."
so living in a house is bad...GOT IT
Overpaying for a house is bad.
Overpaying for a house and then trying to sell it is even bader.
Gives meaning to the phrase, 'having your face ripped off.'
Overpaying for a house and then finding out it is a piece of shit...
You're supposed to find out if it's a piece of shit first and THEN overpay for it.
Not if you think that you would be locked out of the market.
We bought in May of 2007, prices started to come down about 10% little less. Then the market took a total dump. we stopped paying and just bank roll the money now and pay an attorney to fend off forclosure. It has been working well so far, it was a MERS mortage that has a totally f'ed chain of title so our attoney has been having a field day with the banks council. (knock on wood)
"But right now it's the time to buy" sarc
As I noted recently, when you get your face ripped off slap an absorbant Pamper on it.
Ahem...
" Overpaying for a house is bad."
Indeed! And what was worse back in the bubble were the exotic mortgages people used to Overpay for their houses. I knew a couple in Kansas City with two good incomes. She a Public School Teacher, he a mid-level executive. They wanted a dream home, and felt no amount of leverage was too high, since equity in the home would rise for ever. Thus they bought way out of their league. Worse was the interest only mortgage that allowe this giant home purcahse without the big downpayment. When prices crashed and the interest began to rise and principle become due also, they crashed and burned. Went nearly bankrupt. Two nice big incomes and they still went nearly BK. Idiots, listening to CNBC housing pimps! And letting a criminal Mortgage Broker talk their little brains into exotic mortgages products. As the broker said "she was helping them into their dream home".
Finally, WHO was the force behind all these bad decissions? Yes, you guessed it. "The Woman". She bragged to everyone she could about HER new home, invited family, friends and co-workers to visit her in her new home! This happened across America, women were set free to buy anything they wanted in a house.
I barely talked my sister with her gas station income out of paying for a house I know she couldn't afford.
"My kids deserve a house"....Your kids deserve what they get.
She pays about $40/month for a rent subsized shithole apartment, and for some reason thought that she could afford a $90000 house.
I laid it out real simply after I found out she had be looking at this house for months, trying to get financed, inspections, typical shit.
So I ask "I assume you have been saving $660/month and putting it under your bed while you finalize all this house shit right"
She replies "Well, no, I can't afford to save that much money a month"
I respond "Then how in the fuck are you going to afford $700/month for a house?"
The whole thing started because she wanted to "borrow" down payment money. No way I'm flushing money down that drain. Called my father soon as I got off the phone with her to warn him. He was her next call.
Men typically look for value, women want to be fashinable in all aspects of life including thier home. They are manipulated day in and day out into the "keeping up with the Jones's" mentality by the media. Its sad as I think it leads to divorce more often than not. Also men being lazy and not being a Man is also a leading cause for divorce.
Some I know got into trouble with only one house they purchased at a reasonable price, with reasonable mortgage after which house appreciated in value drimatically. Problem was they refinanced a couple times, purchased a new Jaguar, joined a country club, expanded their house and took a couple cruises. Then came 2007 , house value plummeted, job layoff, and Boom---- mortgage and refinancing placed them underwater and they had to sell. These Trophy wives and keeping up appearances can ruin many families. Often this happens with children from wealthy parents, those trying to achieve past heritage goals and those living in afluent communities where peer pressure is greatest.
"We suspect he will not be invited back anytime soon..."
hahahahah classic..
Buy NYC!!
"When we were looking for a home, of course we wanted a place where loosies and large sodas were banned, and where the cop contact/kill ratio was near 100. We thought first of New York."
What is worse, a scum realtor or a crooked lawyer? One is making a profit from tax payer bail out money and the other from financialized corruption. Some zh's are realtors but one can still sniff out the scum in their tone, at least lawyers know they're scums. So I guess I answered my own question.
Did he just say, "too Bubbly" ... "too speculative" ... ?
WTF!?
That's the friggin last time we're putting him on the show!
Buy Whiskey Bitchez.
What does Mr. Bubbly Robert Shiller do with his money?
I learned of two places he won't be buying into.
Without historic low interest rates the RE market would have crashed and burned years ago. Schiller points that out very clearly..."look at the ten year at just above 2%...that has been driving this market".
The BlowHorn sucks.
So much for "Fed will rise rates".
Please daddy, oh please tell us the story about this thing called "market" again.
I remember the 'correction' in the late 1980's Grabbed a $845k house for $320k. This would have happened agin had the fed not propped the RE up for the past 8 years. The Big RE Plunge is inevitable given the economy and its handling.
That's why I'm waiting AND renting, even in over-fuckin-priced north New Jerz.
The way I see it, the top 5% have been stealing for so long, they might just overpay on any housing dips, thus pricing out legit buyers (mortgage) forever. They raise rents, and accumulate more props, I'm thinking the aristocracy of the USA/Foreign has changed permanently to cash buying or mostly cash on dips. No?
There ain't that many 'top' buyers and certainly not enough for the remaining junk that's left. And that would be pretty much 90% of all real estate. Most of that stuff is just some fugly $hit. Just like staycations, rehabs are all the rage; because that's all that's left. ;-)
"Fades to Black" is that racist? Where's Al Sharpton?
it's much darker than that.
best movie/soundtrack pair ever
https://www.youtube.com/watch?v=IfRY3SsozuM
No..."Blacks get Faded" would be racist. You're ok.
Actually it’s hard to tell if Shiller is anxious about real estate specifically or just asset prices and the state of the economy in general.
I'd keep in mind:
1. All RE is not created and does not stay or become equal.
2. All else remaining constant, higher rates should translate into lower home prices.
3. Either Fed devaluation shenanigans make hard assets attractive or they don't. A prolonged, crappy RE market more or less must also mean that the Fed is no longer shitting easy money.
4. The US is still perceived as the cleanest dirty shirt and US RE is still the goto location/asset class for the global elite to launder money (all-cash offers accepted, no questions asked - try doing that at a broker/bank). That’s a nice wind for an asset class to have at its back.
I agree, he seemed worried about what happens if interest rates rise. He also said his historical analysis of the P/E in stocks was 28, which would indicate a potential for a bad drop in stock prices. A big drop in stocks would go a long way in undermining consumer confidence, though it would support the bond market at least for a while.
The crazy thing about the liquidity and fiscal spending bubble is how the bond market has climbed along with stock prices. One of them has to bust, and I'm guessing Shiller is right in pointing to stocks.
SHILLER OR CRESTMONT p/e is WELL PAST 30 ! (adj for normalized int rates) but so is GAAP currently close to 28 p/e on S&P , the greatest legal fraud of "FORWARD NON-GAAP OPERATING EARNINGS" was created and is never challenged on media!
SHILLER OR CRESTMONT p/e is WELL PAST 30 ! (adj for normalized int rates) but so is GAAP currently close to 28 p/e on S&P , the greatest legal fraud of "FORWARD NON-GAAP OPERATING EARNINGS" was created and is never challenged on media!
Gee so surprised. ......
the anchor tells Schiller that he is wrong about his own survey. Only in USSA.
With the bloodbath going on in the O&G sector and no end in sight there, I'm betting we'll see a huge drop in house sales. I've already talk to some engineering buddies in Houston who are scared stiff. They are saving every penny in the hopes they will not lose their house when layed off.
Will throw a wrench into Rick Perry's campaign plans when O&G employment plummets.
Seems a little early for O&G employees to panic. After all, we've had price drops before that were short-lived. On the other hand, it took the shale boom to finally boost RE prices in the Houston area and I wouldn't want to be paying a mortgage in that over-built market if the oil price stays low for another 6 months.
Let me say this , here in Lafayette La oil /gas supply , manufacture is big ...they say it only aacounts for 10%
Bullshit...6 out of 10 vehicles say oil/gas/ whatever services and you got money washing around here like it's raining $100 bills 24 hours a day..home prices are so outta reach with the attitudes to go with it...
There is nothing to do here but hunt ,fish,and shop...only shit for kids is fucking sports and every fuck here thinks there kid is going to be a pro at whatever sport there in..
I was stupid enough to move back to work in a new shop to make a extra 20k a year in my field (auto collision) and I was laid off in June..cause it failed due to poor management...
point is the o/g sector people living high life which with oil cut in half so will the jobs..Haliburton bought Baker Hughes..someone was smart to say let's get the fuck out while we can..that will be many layoffs in that merger alone...you don't need 15 people to move a box... very redundent and generation tied..
People living in glass houses should double down and buy more houses.
Especially those that reside in low-lying FSA Flood zones.
Glass will not slow down the FSA folks who are searching for racial discrimination retributions in your living room and garage...
My recent obervations have been that people are really casual about debt. The time to borrow money is when rates are high, not when they are low.
Not when that high rate is for 30 years.
Explore the magic of compounding interest.
you want to buy when rates are rising. folks bought their house in the 50's at about 3 1/2% and paid it off in ten years, backed by higher wages. by the 70s rates went over ten percent and they were putting their money in CDs. the difficulty now is that although rates are low, the average worker keeps losing value, and has to refi to extend their debt. i see people now close to retirement age who have twenty years left on their mortgage, if bonds did yield more, or a lot more, they havent any capital to invest. if they did raise rates only corporations would have the cash to take advantage of the yields. the retail investor is stuck in the stock market/pension fund trap, which gives me another reason to think the bond market may suddenly rise from the ashes. good for wall street, bad for main street
That was then, I think, and this is now. So much of this excess liquidity is in the stock market, and Shiller still says to be there rather than real estate. When yields rise, these leveraged equities positions will be sold, destroying the stock market bull. RE is even more leveraged and should fall faster and further. House buying is almost always about the monthly payment, which will rise along with interest rates. Can wages rise faster than interest rates?
How many XX must it B said????? Location!!LOCATION!!!! L O C A T I O N !!!!!
http://dealbook.nytimes.com/2013/03/27/hedge-fund-titan-buys-hamptons-pr...
Why would a WS Fucktard buy a house that has a basketball court. That @sshat cannot even pick up his own luggage, much less play hoops.
People buy houses to sell, not live in.
GWTP
Professor Bob Shiller as of today you are officially black listed by the MSM
So he prefers the stock market over housing, although he is concerned that his cyclically adjusted P/E ratio is approaching 28 (!). Not exactly a housing bull.
Miami and LA went up , hence nouveau/ old rich(Chinese and the 0.1%)
the sheeple cant afford to buy let alone in those two cities
LA high end is already starting to wobble after RUS debacle and US govt seizing RUS property in Beverly Hills based on foreign corrupt practices: http://www.rferl.org/content/lesin-wicker-real-estate/25477122.html
"ZEES MAHNEYS FOR ZEES CHOUSES EEZ GOOD MAHNEYS NO U VORRIES"
He prefers the stock market over real estate. What a stooge.
Rent. Leave vanity behind. Get ahead later. I'm in the real estate business. Nobody really knows the market value of a house. No legitimate clearing was allowed.
"No legitimate clearing was allowed."
A statement that should be on billboards across every interstate...
Where are you people renting an acre that backs into 15 acres of woods with stream, 3 bedrooms, 2 baths, full basement, and garage for under $500/month?
I pay $445/month (that includes taxes/insurance) for my humble home in flyover country. No way I could rent cheaper, rents here are $800-$1000.
nonsense. You buy a fixer upper in LA, add 5 slabs of granite at 1200 a pop, a bit of wallpaper, and a nice chandelier, and then you flip it for a 100k profit.
television has spoiled that gambit, now even the most unsophisticated buyer can see what the house sold for, what the amenities cost, and calculate how much vig the seller is asking.
From a earlier thread..
If this price isn't a bubble bath....
Houston and Lafayette La should be on that list...
http://www.forsalebyowner.com/listing/2-bed-Single-Family-home-for-sale-...
Zillow which to me is crap shows price lowered week of Christmas from $265 a foot...not waterfront, no beach , no park or woods to speak of, no mountains...nothing ...Fuck that. Not even worth half that price...
http://www.zillow.com/homedetails/107-Beaulac-Ln-Lafayette-LA-70508/1142...
Must have smoked too much oil or something....doesn't even have bathtubs....
"I'm a low brow but I rock a little know how
No time for the piggies or the hoosegow
Get smart get down with the pow wow
Never been a better time (To $$$Buy) than right now"
heres why Shiller is wrong (and i know he is right, for all the right reasons) the reasons hes wrong is this is how a crony capitalist system works. ONE Bernanke sees the imminent collapse of the mortgage industry as a threat to the banking institution (he also cares about you poor ducklings being thrown out in the cold) so he absorbs the bad paper onto his balance sheet, which is really USTAXPAYER.com, okay so far. eventually the asset value of these homes starts to fall, just like the rain. (oil leads the way). to back up a bit, with a wink and a nod from the Fed chief, the hedge fund industry (and the Chinese) bought a lot of these distressed properties, and now they are slowly heading underwater on their investment (although many bought for cash, but no one likes to see a hard asset lose value, even gold bugs get nervous about that) TWO Bernanke needs to get those assets moving higher, and that is going to take a healthy dose of inflation, and it better be inflation in housing and not in food and energy? how can we do that? rents are moving higher, but that is a component of CPI, equivalent rents is their HOUSING inflation indicator. and so far its working, and with lower energy prices, lower food prices, higher rents, someone is having a goldilocks moment right now. THREE the Fed doesnt work in a bubble, they have government to help with fiscal policy, and the next big thing is shovel ready jobs for gentrification of the neighborhoods where most if not all of the homes and land is owned by wall street hedge funds and chinese hot money investors. Scotus has already established precendent on eminent domain, it only remains for someone higher up to put it in a national bill to repair urban america. all that is required is a healthy shot of inflation, which the supply side always draws sustenenace from, while the demand side, the consumer can never catch up. (wages and COLAS rise slower than inflation) so if you think they want inflation, and they can get inflation, then bet on housing.
the reasons why housing is a bad investment is that it has a high maintenance or carry cost, gold has very little compared to housing. if they cant get inflation going, the fiscal side remains ineffective, or you just happen to be in the wrong neighborhood, then housing is a bad investment, but large areas suitable for gentrification will do fine, and of course scrap any immigration bill, as you need people to live in those houses.
+1. Cogent argument ungrateful. I agree. The continued interest rate suppression policy of the FED will ensure neighborhood beautification measures of the kind you speak of, courtesy of shovel ready inflation sponsored by fiscal policy. The two go hand-in-hand, and Janet will "enable" the inflation by continued interest rate suppression.
But, sooner or later this too runs out of fuel, does it not? Overpriced assets arrive yet again, relative to income, the outcome of which remains unsustainable housing prices (market) - regardless of who is living in those shacks.
It's not a question of IF they can get inflation going, just the type of inflation. And in this case, it will be of the Hyper variety. Prepare accordingly and don't whine if you didn't. Besides, you will only be met with the SPAS-12 at my joint. ;-)
Japan has had nothing but inflationist policies yet has been stuck in deflation for what, 20 years?
The only way out of this trap is a massive restructuring (defaulting) of debt. That debt is owned by the wealthy and the pension funds. Those are the two groups that are going to take the most damage when the defaults hit (as they eventually must).
No tears for them. The system is way past it's overdue date. No more stick saves left. Next one will be it.
4.4% is not bad by historical standards. People just got infected with the greed virus after the dotcom bubble and the housing bubble and think they must make 10% minimum per year forever. Expectations are too high and investors get now disappointed.
American middle class incomes are down 10% from before the 2008 crash. YET, we are to believe THESE same people are going to fuel a new housing bubble? Seems to lack long term market insight, if I do say so myself!
Time to start looking for better hiding places for your excess fiat. If it can be taxed, it will be. Until the revolt that is. Coming soon... Tick Tock Bitchez...
It is the job of government to enforce majority rule on the minority, which is incredibly stupid if you think about it. That’s like encouraging your children to vote on whether they are going to have candy for breakfast before you drop them off at head start. Congress fairly represents the majority, whether anyone likes to think so or not. Labor carries all that gravity up the hill to drop it, to raise the next generation.
My wife nearly doubled the food and dramatically increased its quality, for food bank recipients. When two people quit before Thanksgiving, she did her job and theirs. The remaining two managers buckled under the weight. And the executive board ordered them to replace her, with a kid that can’t stay off pot long enough to pass a drug test without someone else’s piss, to drive on ice in the mountains, and she was surprised, by her mother’s participation. Crack me up.
Management’s job, regardless of corporation, is to prove that labor is replaceable, with real estate inflation. If you step forward, the system collapses automatically. A woman can no more do a man’s job than a juvenile male, or a man can have a baby. The only way you are going to move that weight under equal rights is to replace that man with three juveniles at 1/3 the pay, or a machine, which is what you are observing, and most are complaining about, while they participate.
The critters will consume everything in their environment and kill each other fighting over the remaining scraps, which is why a moron like Edison is in the textbooks, Tesla Motors is building batteries, and the critters are all carrying I-phones, to eliminate privacy and impose the errant will of peer pressure on the individual, in an increasingly closed monetary system. Endangered species wearing t-shirts in ostensible support of other endangered species doesn’t get you very far.
Maglev is already two generations behind the curve, and programming high VIAC is not something you want to leave to majority vote, or its juvenile with a joy stick in a cubicle, playing games, but do what you want. Obama isn’t bemused by accident, playing golf, while the living standards of blacks, along with most everyone else, continues to fall, but keep counting that money and hoarding those commodities expecting a different result.
The critters always think that they have you cornered on their turf, which they stole and know nothing about. The empire is a snake digesting a rat, and those demanding equal outcomes are welcome to it. Funny thing, about small towns and big city politics, in a positive feedback loop...
Sit on those resources just as long as you like, watching first responders chase their own derivatives on Empire TV, expecting the planet to have no response, and wonder why labor has no response, because it responded decades ago. Not everyone chooses to accept the misdirection at birth, or with the increasing weight.
Don’t expect mercy from labor.
How do you generate high VIAC with incremental oscillation of an elevator, and brake its fall with no mechanical devices?
Housing prices have taken a brief rest the last couple of years, but as expected, the next downturn will plummet prices into territory not seen since the 1960s....
http://www.globaldeflationnews.com/inflation-vs-deflation-part-3how-the-...
Just back from California, and saw my brother's 5600 square foot castle, in a gated community, that his wife pulled him into buying in May.
The broker was his wife's voice coach of 15 years.
While my brother's employer was being bought out; he has been without income since September.
His wife is pushing him to make the transition from middle-aged engineer to corporate executive.
Is there really anything good you can say about this; anything?
Time for your brother's wife to start singing for a living, or encourage her to run off with her voice coach
You didn't fall into the same cookie mold.
The good thing is that in the not-too distant future you will have a reliable grateful paying tenant in your basement (your dumped, nearly-broke, barely-employed brother). Start looking now for a girlfriend for him; someone who is not picky.
The good news is that it is your brother in that situation, and not you.