Robert Shiller: "Fragile" Real Estate Market Is "Not A Good Investment"
In a few brief minutes, Professor Bob Shiller calmly and eloquently crushed the hopes and dreams of CNBC's cheerleading muppetry as they desperately tried to spin today's house price data as great news. Exuberant at gains in San Francisco and Miami, the anchor is stunned (briefly) when Shiller dares to say "things are getting too bubbly," and warns these areas are full of speculative excess. While falling just short of calling a turn in the housing cycle (noting ), when Simon Hobbs says "my reading of this is actually very optimistic," and begs Shiller to look at the glass-half-full side of the argument, the "anxious" Professor retorts, that home sales rates "trouble him" and warns the real estate market is "fragile." Shiller then concludes that not only are stocks extremely expensive but that housing is not a good investment... the anchor fades to black...
Here is Professor Shiller popping the cheerleading bubble...
Video length: 00:04:33
We suspect he will not be invited back anytime soon...
Disclosure: Copyright ©2009-2014 ZeroHedge.com/ABC Media, LTD; All Rights Reserved. Zero Hedge is intended for Mature Audiences. Familiarize yourself with our legal and use policies every time ...
more
The only reason the real estate market is still alive is because of the government which has socialized all but the high end with Fannie and Freddie. I wouldn't buy real estate now for the same reason I wouldn't buy Russian stocks. A socialized market is a dumb one to be in.
Why do you say that? Real estate is not my area expertise, but it was my understanding that it was also a matter of supply and demand. People couldn't get mortgages so they had to rent. So many people were in the market for rentals that the cost of renting went up, while so few were buying homes that the cost of houses fell. The result is inevitable - eventually it self corrects and now it's becoming cheaper to buy. That couples with an easing of on mortgage restrictions is putting new life into the housing market. I believe it will continue.
I say that because the mid and low end of the market is financed through government bodies which has all but vanquished competition and those very bodies now dictate all rules regarding home buying much like a communist state. Last but not least, as stated by Fannie and Freddie's auditors and former management, there is no known way for them to ever remain profitable or even solvent without taxpayer bailouts every market downturn because there is no legitimate buyer of their loans. Even now, the Federal Reserve has bought their loans qith QE money in order for them to get enough liquidity to make even more bad loans.