Jennifer Schonberger at Motley Fool interviews Professor Robert Shiller on housing and the stock market.
A couple of comments from Shiller, first on real estate prices:
Robert Shiller: Home prices have been going up for nearly a year now, according to our data, the S&P/Case-Shiller indices … Normally we could extrapolate that kind of upward trend because historically home prices have shown a lot of momentum. But I think we’re in a very unusual circumstance because of the massive bailouts, the homebuyer tax credits, the Fed’s purchase of mortgage-backed securities — and these things are coming to an end. So it’s an unusual period. So I don’t trust the trend that we have. I’m worried that it might get reversed.
And on asset prices:
Shiller: We have had kind of a mini-bubble in the stock market and the housing market. It wasn’t just because of rate cuts. It was also because of government stimulus and bailouts. So the question is: Are we at risk for even more price increases, and another bubble? I think we are at risk, but I’m not predicting it. I think it’s more likely we don’t do so well from here.