Tags: Shiller | homeownership | housing | finance

Shiller: Homeownership Isn't the Path to Riches

By    |   Friday, 07 June 2013 08:12 AM

The conventional wisdom that Americans can gain wealth through homeownership is simply wrong, says Yale economist Robert Shiller, one of the country's foremost housing experts.

While housing prices have surged over the past year, "I've documented that home prices in real terms didn't increase from 1890 to 1990," he tells Forbes. "That was the bubble thinking, but it's still fresh in our minds."

So what's a better way for young adults to walk the path to riches?

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

"Go into finance or a related field. It's a lifetime decision," Shiller suggests. "Finance is the technology for making things happen. Accountant, auditor, market maker ... these are big occupations."

Those who do attain prosperity have an obligation to give back, Shiller declares. "If you are wealthy that means you are powerful, and you have to care about others."

As for financial markets, Shiller says he learned from his thesis supervisor, MIT Nobel laureate Franco Modigliani, that the efficient market theory is only half correct.

Modigliani's work on how inflation distorts markets led Shiller to put all his money in stocks during the early 1980s, when Federal Reserve Chairman Paul Volcker slayed inflation. That turned out to be a wise move.

Many analysts don't share Shiller's skepticism of the current housing rally. They were encouraged by the 10.9 percent increase in the S&P/Case-Shiller home price index during the 12 months through March. The index, of course, is named partly after the Yale economist.

"We have a continued, gradual recovery" in the housing market, Brian Jones, a senior U.S. economist for Societe Generale, tells Bloomberg. "The data is solid."

Editor's Note:
Startling Proof of the End of America’s Middle Class. Details in the Video

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Economy
The conventional wisdom that Americans can gain wealth through homeownership is simply wrong, says Yale economist Robert Shiller, one of the country's foremost housing experts.
Shiller,homeownership,housing,finance
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2013-12-07
Friday, 07 June 2013 08:12 AM
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