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S&P/Case-Shiller Index co-author Robert Shiller weighs in on the current state of housing.
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Home prices continue to fall in the month of January hitting a new cycle low for this housing downturn.
That according to the Standard and Poor's case Shiller home price index and Robert Shiller is with us right now the co author of that report and it's always great to have -- -- particularly in days when the report is released what should we take away from today's number.
Well I don't think it's all bad in fact it's a little bit higher than I think was expected.
And on a seasonally adjusted basis it's flat not declining.
Trying to be optimistic I see there he still feels optimistic that it's seeing improvement of the pending home sales numbers were up more than 9% area -- down this rights -- right month over month a year over year stilts and certainly -- also off the weather worry here again.
Well I think most homebuyers -- long term.
Buyers and so he's month to month fluctuations unless they indicate -- beginning of a whole new -- don't mean a whole lot.
And -- big question is what -- home prices do over the next five years.
I honestly don't know I think they could go either way if I might be excuse and just say that they could go down or they could go up.
It's just -- risky and less well this is trying to cut and so we don't expose yourself too much to do -- You're -- thought that's a more -- -- than some of the death and on and that's a definitive about say all the stock market's gone back some have no idea.
This kind of scary though is that -- that you have -- you -- you're the expert have no idea what's gonna happen.
Well because there's so many.
Factors this political effect we have Fannie and Freddie that -- government hasn't decided what they're doing they're doing most of the mortgages.
Part of the problem of them -- the market now as we don't have many mortgages were at -- and mortgage originations.
We have this whole unsold inventory of of homes.
How do you quantify how can anyone know what all of this book how we'll turn out well.
Now we know why Ben Bernanke has been and so -- adamant.
In his in.
Standing by his -- your interest rate policy keeping those -- there.
Until then to -- fourteen -- and clearly with an eye on longer term rates in keeping mortgage rates down.
But on that -- I want to ask you point blank because you called how that stock market -- -- called the housing bubble.
Is there clearly a bubble in treasuries right here right now.
-- I don't -- -- ever definition of above us.
There were the result of some kind of excitement and social contagion and and we have other's successes.
That might be a factor in the treasury market.
I tend to think of -- Mars a flight to quality.
So and I'm sure it fits into the bubble category.
But on the other hand I it would be you a little bit wary of investing in treasury I wouldn't.
Put a high proportion and because.
Yields are so low it suddenly gone up somewhat.
That yeah it may be unsustainable.
The state motivation that you have for buy an asset class in this case government bonds preclude.
A bubble from existing so that if people are just rushing there because it's kind of the best that intensive flight to safety or quality as you point out that needs that can't be -- -- Well there could yet prices could go even higher.
They've been at record low -- -- are ready for government ten year treasury.
Never been that low but it could still -- lower absolutely.
We've just learned that bonds have have been a good investment people think that stocks are always the best investment.
Hasn't been true lately for thirty years that don't extrapolate that you know nobody knows the future and I think and I'm a finance professor teaching course -- -- hands and I've diversification.
Is really.
The Smart thing to do are -- speaking of.
-- issue of the new book out cough finance and the good society Bob going panel found that in just trying to defend the finance in the finance industry not everyone my name -- finances actually somewhere below journalists and car salesman at this morning.
That's right now but I think there are good people.
An idealistic people who go into the finance.
You can go into any of a number of things that that is one of the things -- idealistic young and not so young people who want to make a change in the world even now.
Absolutely.
You can give it away by the way I can make money selling derivatives that -- months.
Well Goldman Sachs that we give you go back.
You -- Whitman who has the that John Whitman was the chairman for many years he.
Was a very -- -- he is that he's almost ninety years on the very Philanthropic -- involved for example he was chairman of the United Nations association which promoted the activities of the United Nations.
He was involved is at Harvard and -- in the these directives of Harvard University.
But I'd like a million things like that he has done.
And so get caught.
You know that.
There is there is that sort of person not -- was very involved who has a managerial mentality wants to exert leadership over good causes.
And I believe that there are lots of people and finance like that I wanted to talk about that in my book the people who should know that.
Not all -- aren't exactly we just don't make movies with them as you get a second benefit is not as in finance and gets decided that I will be down a little bit about the idea Brooke thank you sir -- -- with the very thing.
