Tags: robert shiller | housing market | collapse | rules

Yale's Robert Shiller: New Rules Might Not Prevent Housing Collapse

Yale's Robert Shiller: New Rules Might Not Prevent Housing Collapse
(Joe Raedle/Getty Images)

By    |   Thursday, 02 June 2016 08:19 AM


Yale University Economics Professor and Nobel Laureate Robert Shiller warns that no matter how much regulation the government enacts, the housing market may still be headed for yet another collapse.

“There has been a lot of regulation” Shiller told the Fox Business Network.  “All over the world countries are putting in protections.  So, yeah, I suppose things are better.  But I don’t know that the protections are going to be enough and someday if this keeps going on long enough we might have another collapse in the housing market,” he said.

Shiller was vague and noncommittal of the timing of any real estate implosion.

“Nobody knows. If anyone knew that it wouldn’t happen.  There’s an element of truth to efficient markets.  On the other hand, yeah there are places where it’s getting exciting,” he said, without offering specifics.

The S&P/Case-Shiller Home Price Index rose 5.2% year-over-year in March.  “It’s kind of what I expected,” said Shiller, one of the index’s creators.  “Ever since 2012, that was the bottom of the market, it’s been chugging along, going up.  And it’s not exciting, but it’s positive and I don’t see why it won’t continue it for a while,”

“Well I don’t think it’s a preoccupation the way it was in 2006-2007.  Though people need a place to live, employment is growing, people bid up the price, you have to outbid somebody else to get the house.  I don’t think people are so focused on the excitement of a bubble,” said Shiller.

He also hinted that there is one factor we can never change: “We can’t fix human psychology.”

Shiller isn't alone in his fear about the housing market.

Real estate mogul Sam Zell predicts the current housing bubble could burst and he has already started selling, Profit Confidential reports.

Zell warns that an end to the current real estate bubble is inevitable as the low interest rate cycle is concluding. The recent housing market is no longer tight, testing the housing bubble’s resistance.

Zell says the Fed has intervened too much in trying to control market forces, blaming it for being too slow to act on interest rates. “I think when you talk about interest rates being close to zero for a long period of time, I’m very concerned about the fact that we have desensitized our business community to the cost of capital,” Zell told Wolf Street.com.

Meanwhile, the rise in prices comes amid lingering weakness in some parts of the market, The Wall Street Journal reported.

"Overall sales volume and new construction remain well below their pre-crisis peaks. And a broader collection of figures point to an uneven recovery that has seen a flourishing market at the high end, mainly in big U.S. cities, while the lower end lags," WSJ.com reported.

“It’s a great market if you have pristine credit and lots of money,” said Sean Becketti, chief economist at Freddie Mac. “The people starting out who are looking for that first home — they’re having a tougher time.”

(Newsmax wire services contributed to this report).

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Yale University Economics Professor and Nobel Laureate Robert Shiller doesn't know if the protections are going to be enough to stop another collapse in the housing market.
robert shiller, housing market, collapse, rules
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2016-19-02
Thursday, 02 June 2016 08:19 AM
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