Robert Shiller, co-founder of the S&P Case-Shiller Index, spoke to FOX Business Network and said that “it sure looks like a recovery” in the housing market and “the government is not going to support it [housing] like this indefinitely.”
Below are excerpts from the interview: Courtesy of Fox Business News
On the housing market hitting bottom and the rumors of recovery:
“It sure looks like a recovery. It didn’t seem likely given past performance. It probably isn’t a major boom. Everyday I’m starting to think it looks like it, so I’m in an indecisive state right now.”
On first time home buyer tax credit affecting home values:
“It goes beyond the tax credit – it’s all the support we’ve been giving to housing. The government is really in this market and the public is encouraged by that.”
“I think the government is not going to support it like this indefinitely.”
On demand acceleration in the market due to low prices:
“In San Francisco and Minneapolis, they are up 12 and 13 percent since the bottom. That’s fast in just 4 months. This is zipping up.”
On people holding out on selling homes:
“That’s a psychological factor that skews prices in all markets. I think it is definitely a factor. People are holding out because they think they might get a better price later and they’ve heard there this recovery coming. All it takes is that people think more strongly than they have that prices are going to go up and they’ll make it happen.”
On certain regions where the recovery will happen:
“So far Vegas is the only one of our 20 major cities that is still dropping. Vegas got very volatile very suddenly a few years ago and there was huge construction activity. Bad psychology got going there.”
On rising mortgage interest rates affecting home value:
“Unless it’s a major increase, it seems to me that these speculative impulses have dominated. Psychology dominates and this upward momentum is on everyone’s mind now.”
