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Yale University economics professor Robert Shiller weighs in on the drop in home prices.
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Home prices in most major cities falling in December for the fourth straight month -- so is this just another sign that housing.
-- is gonna keep getting -- arts.
Only one -- -- and it would be Robert Shiller the co author of the SP Case Shiller Index professor of economics at Yale good to see you as always professor Shiller.
You told -- is -- could get ugly and well this wasn't great to -- -- It's not really are -- part of this is seasonal this is gonna we're reporting on December of that Saddam season.
By half of that is seasonal.
But you have a home prices have been drifting slowly down for three years now I -- slow it was fast down from 2006 to 2009.
And then in the Obama years with them down slowly.
What's gonna stop it what's gonna stop the price and.
Well we have a lot of good news right now you still optimistic -- -- optimistic.
Last year well I think that it might be a good time to -- I don't know depends -- the neighborhood and all that.
On the other hand it's still going down what's gonna stop.
About these things have their ups and downs.
You know things are getting better -- Reagan passage.
Stocks so I think it deck on -- -- I mean as you say what's gonna stopping implicit in your question might be.
That it's gonna go zooming up again and I'm not sure that it's going to.
It's not going down very fast now.
Home prices have come way down so that they're not expensive anymore but you know that that there could bid.
I'm from a possibility there could be a downtrend for five or ten -- you.
-- -- and that would be in some senses a good thing has productivity increases the construction industry.
Moves ahead and makes things -- -- it could be.
That we just don't know the future right now it is very ambiguous we have these good chart run signs and you know housing starts and permits and they're up.
But.
The the market isn't responding.
Because in the broader economy we're trying to figure out where we aren't in recovery as well the consumer confidence number today.
Pretty good but then you say to yourself boy I wonder about.
Gasoline prices which have gone up even since that number was measured and people where they're gonna go up even more amid efforts confidence.
Right and we're worried about the Middle East and there could be a crisis there which would.
Shoot gasoline prices way up that's what happened in the 199091.
Recession and that broke -- housing boom there was a boom and it started going down.
A little bit after that.
That kind of thing and in Europe these are all things kind of weighing on our minds.
And its new -- and be able to be hesitant.
Even though I think in most people expect home prices to start going up the end.
Substantially that's just the general view -- but not right now is everyone's has isn't.
Another reason to be hesitant we've discussed this before -- -- interest rates if you think interest rates are gonna stay where they are do you think that do you think that I will be able to -- A thirty year fixed rate mortgage at roughly the same rate today than a year from now.
Well rates this is it very interesting question -- -- easy answer.
Rates have been drifting down generally long rates since the you know 1980 or so.
We have a thirty year downtrend and we we reached record -- So where does it go from here that it it's one of these thing when you're out of the range of historical experience.
Is it still gonna keep going down is pretty low now.
But there -- are going up and so I wouldn't be averse to buying a house -- even now I worry about more price declines because rates are so low and there's so affordable.
For an economic recovery which is the kind of the chicken or the egg and all of -- some people will tell you that you cannot have a recovery in the economy broadly speaking without housing.
And others say wall -- the job market gets going which it had started to.
Then we'll get you know housing everything else will parent will follow.
Yeah I think that the outlook might be for a slow recovery of this is insane and the exciting right we've been in a slow recovery.
Ever since the recession ended in 2009.
And yeah -- and housing.
You know housing starts are up in construction and road.
Come back maybe -- of -- of these slowly but it will help fuel a recovery.
You do because it at this point it's like we can recover without housing -- along so is even irrelevant well housing you know is only if you know.
Four to 6% of the GDP.
-- it's associated with other expenditures when when people start getting optimistic they buy houses than -- -- furniture and the whole thing so.
It it would help if housing came back and you know it's been suppressed for so long that the stock of housing is diminished.
But -- but so -- of the households because household formation has been down and now that's starting to pick up.
But bottom line we can have an economic recovery albeit slow one with our that's kind of the outlook right now likely -- you feel good -- -- feeling good.
I thought I would I don't want to say that because we still have eight point 3% unemployed and I don't feel good about these people I'd like to see them get jobs.
Said Bob it's great that you're thank you so much Bob Shiller on housing and confidence and everything else very -- to -- moving on here.
