Jobs — not home prices or mortgage interest rates — are the most important factor in the housing recovery, says Yale economist Robert Shiller, co-creator of the Case-Shiller Housing index.
“Right now, we still have a very high unemployment rate, and it’s not coming down very fast,” Shiller tells Bloomberg. “It looks iffy at the moment.”
The $8,000 tax credit provided by the Obama administration “interrupted what was a major slide in home prices,” says Shiller. “Homes peaked in 2006. They’ve been falling for three years, except for the interruption.”
The real question is whether or not the tax credit changed the psychology of the housing market. “Now it’s looking kind of weak, so maybe it was just a temporary boost,” he says.
A double-dip recession in the housing market is looking more likely now, Shiller says, adding that, “you have to watch these things day-by-day.”
Home prices, Shiller points out, have been falling for six months. “Maybe we’ve already begun a double dip,” he says. “We’re in a very low level of construction … kind of in a depression state.”
“That low level of supply will eventually have an impact on the market and bring prices up.”
MarketWatch reports that resales of U.S. homes and condominiums fell 2.2 percent to a seasonally adjusted annual rate of 5.66 million in May despite the boost from a federal tax credit for home buyers, according to National Association of Realtors.
© 2017 Newsmax Finance. All rights reserved.