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Boston real estate market caution sign ahead

If the reason the housing frenzy stalled was due to higher mortgage rates – and then mortgage rates come down – shouldn’t it ease the concerns? Unfortunately, the national doom-and-gloom is heavy and persuasive, and reliance on ivory-tower guesses can become a self-fulfilling prophecy.

Shiller once again thinks the U.S. housing market is headed for trouble.

“Home prices haven’t fallen since the 2007–09 recession. Right now things look almost as bad,” Shiller said. “Existing home sales are down. Permits are down. A lot of signs that we’ll see something. It may not be catastrophic, but it’s time to consider that.”

A drop in home prices, Shiller says, looks very possible.

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The Boston real estate condo market has shown some signs of slowing down, but it this just a blimp or something more? Can the Boston real estate market be heading into a Recession?

Nobel prize-winning economist Robert Schiller

Nobel prize-winning economist Robert Schiller can’t help but notice certain similarities in America’s housing sector to the run-up just before the Great Recession.

“Housing is driven by narratives. Before 2007, the narrative was flipping houses [and the belief that] home prices have always gone up,” the Yale economist said during an interview with Yahoo Finance’s YFi PM. “Then, after the Great Recession, it was tragic narratives about people who lost their home, or dangers of borrowing too much or lending too much. It’s been 10 years since the crisis. Now, those narratives are starting to be forgotten.”

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