Online financial news

PBS Newshour interviewed Carl Case & Bob Shiller (inventers of the famous Standard & Poor’s Case-Shiller index) in the story: Home Price Experts Give Take on Markets in Atlanta, Beyond

ROBERT SHILLER, Yale University: We have had the biggest bubble in American history, as regards to the whole market. It was everywhere, and it was huge, and it peaked in — it went up for almost nine years up to 2006, and it’s been going down now for over three years.

PAUL SOLMAN: And that suggests that it’s going to go down more, it’s going to come back? I mean, looking, again, long-term, what’s your best guess?

KARL CASE, Wellesley College: Well, there’s reasons to believe it’s going to stay down, and there are reasons to believe it’s going to come back, but…

PAUL SOLMAN: You know that’s why — that’s why you economists drive people crazy? You understand that?

KARL CASE: Absolutely. But here’s the thing. Prices are down 30 percent. We believe that, when prices go down, people — people buy more. So, the attractiveness of this property when prices have been falling for three years is pretty high.

PAUL SOLMAN: So attractive that Bob Shiller, a longtime NewsHour guest, who warned early and incessantly about both the stock market and real estate bubbles, now worries that another bubble could be forming.

ROBERT SHILLER: People have gotten very speculative and very quick to respond to changes, and they think that the recession is over, and you want to buy before the market turns up very much. And, so, you want to buy in advance and ahead. And that sparks new speculative excitement.

PAUL SOLMAN: But Chip Case, normally more optimistic than Shiller, fears another crash more than another bubble.

KARL CASE: We did 6.5 million home sales this year. That’s a huge number. But it’s — it’s not for sure that this is a bottom. I mean, if you look at the four states where half the foreclosure auctions have come from, there’s just a huge inventory still there. It’s going to take a while for that to clear.

PAUL SOLMAN: Those are?

KARL CASE: Florida, California, Arizona, and Nevada.

Similar Posts:

• Underwater Mortgages Still Increasing
• 5 Dangerous Misconceptions People Have About Money.
• British Gas raises prices by 18pc
• OBR warns on effect of inflation and rising oil price
• U.S. Mortgage Refinancing Applications Rose in the First Week of 2010.