Robert Shiller, who coined the term “irrational exuberance,” is one of our favorite economists. He really nails it here on the structural shifts taking place in housing. We agree there is a generational change going on in the sector where the younger “connected” cohort groups are shunning McMansions in the ‘burbs.
Also, the risks of a Japan-like multi-decade slump in housing is much higher than the markets perceive. Is Mr. Bernanke listening?
Many young people are choosing to live at home for a longer period of time instead of buying. Moreover, would-be homebuyers are settling into modern apartments and condominiums, further hindering a housing rally. Shiller says the shift toward renting and city living could mean “that we will never in our lifetime see a rebound in these prices in the suburbs.”
A perpetually sluggish housing market, which Shiller believes has become “more and more political,” might push the country in a “Japan-like slump that will go on for years and years.”
Disclaimer: This page contains affiliate links. If you choose to make a purchase after clicking a link, we may receive a commission at no additional cost to you. Thank you for your support!
Leave a Reply