Robert Shiller: Housing Improving, but Not Calling a Bottom [VIDEO]

Goldman Sachs may be bullish on a housing recovery, but Robert Shiller, S&P Case-Shiller Home Price Index co-founder, explains why it is “too soon to make that call.’

Videos with brief excerpts below followed by computer generated transcript:

Yale University economist and housing expert Robert Shiller says it’s still too soon to say housing prices have bottomed.

you don’t think housing is on the road to recovery? i think it might be. there are a lot ofsitive indicators. people tend to overreact to these. and if you look at the trend down since 2006, it’s a pretty strong trend that we have to see reversed. you know maybe, you know, i might call it later this year that we’ve reached the bottom. but i’m not ready yet. so this is an important note here. you’re considered one of the foremost experts on housing. robert shiller, as you sit here right now, you’re not willing to say that housing is back. well, we’ve seen four attempts at recovery ever since the subprime crisis. but it’s that seasonal. the seasonal has gotten stronger. it’s been growing, so nobody knows why. and during the summer season, the question is, will this continue through the fall and winter? we’ll wait and see. if that happens, then, you know, i believe in momentum in the housing market. and we are starting — it looks like upward momentum, but i think it’s too soon to call. what’s the tell then? what do you need to see before you’re willing to say that we’ve turned the corner for real? at least a solid year of price increases. and maybe other indicators, as well. but the other — it’s starting to look better. i have to admit. so, you know, for someone who is thinking of buying a home now, you also have to factor in that mortgage rates are at record lows. so, you know, i’m not telling people not to buy a house. well, the fed certainly wants

welcome back, will the fed’s new easy money policy boost the housing market? goldman thinks so, sees housing activity rising 20% to 30% over the each of the next few years and raising the price target on a number of stocks. these stocks have done incredibly well this year. the xhb, it’s up what? 47%. and then you look at a name like pulte, i look at this call and say it seems like a top in the market. we’re completely out — how long could you have said that, though? these builders have gone up and up and up, you could have thought that before. why not more? i’ve been long the home builders literally from january 1, we got long the end of december of last year, we’ve been long the entire way. yesterday i said on fast money halftime, i’ve been out of the home builders completely, and right now you’re looking for a small pu, 3%, 5%, which is starting to get lennar and toll today are down more than a percent. then i’ll be back in because long-term goldman laid out a great bullish report long-term housing. but i think a bit of a pullback and i’ll reset myself and look to ride the next wave up. sentiment was up today, this was kind of another one of those don’t fight the fed trades, was it not? absolutely, we’re talking about the home builders and you bring up a pulte, lennar, all of these have seen a lot of activity recently as a matter of fact, just a couple of days ago, yesterday, in fact, they were actually stretching out to january. so to murph’s point, they were no longer in the absolute near-term. they were pushing out to january. maybe buying a little bit of time, willing to ride this wave right now in housing as it maybe pulls back 2%, 3%, but then expecting to see much more out of some of these names. goldman may be bullish on a housing recovery, but not everyone agrees. robert shiller is an economic professor also co-founder of the s&p k. shiller price index. great to have you on halftime today. you don’t think housing is on the road to recovery? i think it might be. there are a lot ofsitive indicators. people tend to overreact to these. and if you look at the trend down since 2006, it’s a pretty strong trend that we have to see reversed. you know maybe, you know, i might call it later this year that we’ve reached the bottom. but i’m not ready yet. so this is an important note here. you’re considered one of the foremost experts on housing. robert shiller, as you sit here right now, you’re not willing to say that housing is back. well, we’ve seen four attempts at recovery ever since the subprime crisis. but it’s that seasonal. the seasonal has gotten stronger. it’s been growing, so nobody knows why. and during the summer season, the question is, will this continue through the fall and winter? we’ll wait and see. if that happens, then, you know, i believe in momentum in the housing market. and we are starting — it looks like upward momentum, but i think it’s too soon to call. what’s the tell then? what do you need to see before you’re willing to say that we’ve turned the corner for real? at least a solid year of price increases. and maybe other indicators, as well. but the other — it’s starting to look better. i have to admit. so, you know, for someone who is thinking of buying a home now, you also have to factor in that mortgage rates are at record lows. so, you know, i’m not telling people not to buy a house. well, the fed certainly wants you to go out and buy a house. obviously qe-3, can they lower rates any more? they’re already low. what impact will qe-3 really have on the mortgage market? well, we’ve seen a downturn in long-term mortgage markets ever since rates, ever since paul volcker. it’s been 30 years of down trend. if this — this could be at a record low, kind of hitting zero almost. real rates on mortgages are practically at zero now. so this could be a major turning point. i just don’t see calling it because i’d like to see more consistency in the evidence. you know, we have a weakness, the gdp numbers are down, you know, numbers, we see europe threatening, we see asia slowing. so it’s just too mixed to call this as a major turning point. i read a paper that you recently wrote that the title being the narrative of global weakening. you asked the question if we’re facing a long global slump or why don’t you answer that now? yeah, i wasn’t predicting a depression. but, you know, the great depression hung on longer than. we have the same interest, we have lower interest rates than the great depression. but we get into this economy where there doesn’t seem to be a generic opportunity. we have massive unemployment. and it discourages people. we get a negative talk so people stop spending. that’s a fundamental problem. and there’s nobody in the government who can fix that. we can try, you know, it’s good that the fed is trying these things. but it’s not a slam dunk that they can fix it. are we going into another recession? well, right now, we still have gdp growth. europe is in recession. but i’m optimistic that we are not going to do that badly right now, we could. but if there’s a crisis in the middle east, we have an oil price spike and go straight into a recession. or if we don’t fix the fiscal cliff, we go straight into a recession. so there are these uncertainties out there. it’s certainly a possibility. can you give us your view on the stock market? we’re at multi-year highs on all of the major averages. we have had this tremendous rally, the fed has now certainly, you know, obviously come in to play with how things could shape out from here. jeremy seagal was on this program yesterday, is looking for, what? dow 15,000? right. do you agree with that? you know, he has a 45% chance of being right. not quite — better than zero. you know, he’s a smart guy, i respect him a lot. but i don’t — nobody knows what the stock market is going to do. it’s notoriously difficult to forecast. and, you know, but my — i do try to forecast — i have this cyclically adjusted earnings price ratio i’ve been using for years to forecast stock prices and stock return. and it’s kind of high now at 22. but not super high. so if my model is still predicting something like 4% real return on the stock market, which is looking good in today’s market. so i think stocks are a reasonable thing to have in one’s portfolio. but whether it’ll reach 15,000, is anyone’s guess. you don’t agree with bill gross that the equity is dead or dying? no, i don’t think so. i think equity is the mainspring of our economy. and we should be proud of our — our stock market. robert shiller, we’re grateful for your time today, thanks so much for coming on halftime. my pleasure. all right.