Tags: Shiller | housing | boom | prices

Yale’s Shiller: Home Prices May Improve, But Boom Not Going to Happen

Thursday, 20 Dec 2012 07:56 AM

Home prices may rise over the coming months, but a boom or anything close to it is not on the horizon, said Yale economist Robert Shiller, architect of the Standard & Poor’s/Case-Shiller home price index.

U.S. homebuilding permits hit their highest level in more than four years in November by rising 3.6 percent, though groundbreaking activity dropped 3 percent that month.

Home prices themselves have shown signs of improvement during 2012, even surprising markets at times, though the housing sector doesn’t have enough buyers to fuel long-term improvement.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

“A lot of people seem to think if the market turns around, that means more of the same, meaning another big boom. I don’t think that’s in the cards,” Shiller told CNBC.

Home prices might beat inflation rates in the coming months, though the sector will not resemble its pre-downturn self.

“One thing that’s happening is people are moving more into renting. If you look at permits today, they’re up for multifamily housing, not single-family housing,” Shiller said.

That means those hoping to see their single-family homes make significant gains in value may be hoping for a long time.

“You’re going to have to ask, are people two or three years from now going to want to buy this house? I don’t know. It’s not obvious,” Shiller told the network.

“We may still be stuck in a slow economy. There just might not be enough buyers to support home prices.”

Some housing-sector experts are a little more bullish, pointing to rock-bottom mortgage rates and an improving labor market as ingredients to more sustained recovery in the sector.

“We’re headed higher and next year is going to be the best year for housing starts that we’ve seen since 2007,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, according to Bloomberg.

“Housing is coming back.”

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

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