Bob Shiller on House Appreciation “It’s Different Now, We Can’t Trust Momentum”

Bob Shiller on House Appreciation “It’s Different Now, We Can’t Trust Momentum”

“I just don’t see evidence that people believe we are launching into a great new era” of home price appreciation,”that’s what we had in the early 2000s.” Simply put, he chides Faber and Cramer, “people are not so excited about the future,” in spite of record high stock prices (and surging home prices) as it seems the Fed’s plan was foiled again. In a fascinating to-and-fro, they note “we don’t want to go back to 2005,” even though “it would lift the economy” since “we know how that story ends.” The hedge funds and ‘investors’ proclaim themselves long-term investors, but Shiller notes “they are not, what they have learned there is short-run momentum in the housing market,” and will bail at the first sign of that ebbing, “it’s different now, we can’t trust momentum.”

More uncomfortable truths…

Real homebuyers are not as excited about the housing market as the price increases seem to suggest…”

“It’s more of an ‘unusual’ demand from investors that’s driving the market now…”

“…the market is driven more by psychology than affordability”

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