Home prices have rebounded since bottoming in 2012, but it hasn’t exactly been a soaring recovery. The S&P/Case-Shiller index of home prices in 20 cities rose only 4.3 percent in the 12 months through November.
It's almost nine year since home prices peaked, notes Nobel laureate economist Robert Shiller, co-creator of the index.
"This is the most dramatic slump in housing we've ever had," he told Yahoo Finance.
"The government has taken over risk management through Fannie Mae, Freddie Mac and the FHA [Federal Housing Administration]." Those agencies back the overwhelming majority of new mortgages.
"It's not even much of a private market," Shiller explained.
He reiterated his view that owning a home isn't for everyone. "There is an argument for helping low-income people get a house. I think it makes them feel better about their attachment to this country and themselves," Shiller said.
"But there's no reason to bias people toward owning a house as opposed to getting an education or starting a business — other things people can do."
The Yale professor and Starwood Capital CEO Barry Sternlicht offered clashing views of the housing market on CNBC.
Shiller said, "Home prices are . . . at about the right level based on history. So maybe they won't go anywhere in the near future."
But Sternlicht sees it differently. "The housing sector is going to be a major asset class in this country," he said. And it's an asset class that is "actually trailing asset bubbles," Sternlicht argues. "It's cheaper to buy a house and finance it than it is to rent in many markets."
Existing home sales rose 2.4 percent in December from November, according to the National Association of Realtors. And the median home sales price for all of 2014 rose to its highest level since 2007 — $208,500.
Granted, Americans are "a little nervous about taking mortgages," Sternlicht said. But he thinks falling gasoline prices will boost consumer confidence.
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