Robert Shiller: 10 Years From Now, ‘Home Prices Will Be About Where They Are Now, In Real Terms’

I can’t believe it’s been 8 months since I last blogged about Yale economist and housing expert Robert Shiller. Back on September 18, I wrote that Dr. Shiller, who was out there in the mid-2000s warning anyone who would listen about the housing bubble and subsequent crash, wasn’t sure residential real estate in the United States had bottomed-out just yet, noting there already had been 4 attempts at a housing recovery since the subprime crisis struck.

On April 30, Robert Shiller appeared on Yahoo! Finance’s business show The Daily Ticker. Speaking to host Henry Blodget, Dr. Shiller had this to say about where he thought home prices were heading:

BLODGET: And so you have studied home prices going back hundreds of years. You’ve watched the bubble form here. You called the top of that. You called the crash. What do you think will happen to house prices over the next 5 to 10 years?
SHILLER: Yeah, well I wrote several New York Times columns about this. I think it’s hard to say. It could go up. It could go down. You know, in the 20th century, typically, in a decade, real inflation-corrected home prices went up 15 percent or down 15 percent. Usually not because of any bubble or anything like that. It’s just supply and demand, right? The existing home stock might be in the wrong location and the economy is moving somewhere else. So it loses value. Or, then it might be some new interest in owning a home. These things are hard to predict.

But my guess that is, 10 years from now, home prices will be about where they are now, in real terms.

Dr. Shiller also had this nugget for real estate investors:

So it looks like there’s a tilt toward rentals. What that suggests to me that if you want to invest in housing, you want to look toward housing that is suitable for conversion to rental.

You can watch the entire interview on the Yahoo! Finance site here.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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