Robert Shiller, Case-Shiller Index co-founder, weighs in on the “strong” housing numbers from the Case/Shiller Index. Robert Shiller is finally a bit more optimistic on the housing market and thinks it could continue.
Robert Shiller video and transcript below
Quant ESG With PanAgora Asset Management’s George Mussalli
ValueWalk's Raul Panganiban interviews George Mussalli, Chief Investment Officer and Head of Equity Research at PanAgora Asset Management. In this epispode, they discuss quant ESG as well as PanAgora’s unique approach to it. The following is a computer generated transcript and may contain some errors. Q3 2020 hedge fund letters, conferences and more Interview . Read More
i want to get back to the key housing data out. Robert shiller records showing a record home month to month home rises, and the biggest increase in seven years. joining us is robert shiller, the professor of economics at yale university and president of schiller. you have not been especially sanguine on the housing, and certainly that flies in the face of the number and what it says. do you believe it? i am getting more optimistic. these were strong numbers. i think that for the next year, it is probably a safe bet they will keep going up. a lot of the people are flippers now, and i can’t tell them that they are wrong. i just don’t know about the longer term, but for the shortrun, it is looking solid at the moment. it is an older number, and it is for april obviously, and we have seen rates change in thattime. the release seems to indicate that in that environment people will shift to a.r.m.s and not necessarily a bad thing and is that true? well, i don’t know about. a. –arms, but they are still low, and people are juiced by the interest rates, because theybelieve they may go higher, but they want to buy because of themortgage ras. if you were ben bernanke, you say, wow, it is out of control and i have to raise the fed’s fund rate. well, he has to before too long. ben is probably congratuing himself that qe3 has worked. well, i mean, literally, i mean, there are just not enough homes, right? you can’t get the increase with the supply and the demand, and either too many homes off on thesidelines owned by the investors or the home builders can’t putthem up fast enough? that is the true, and always been true, and that is what made the boom happen. in the boom, home builders were going as fast as they could and a couple of years for the supply to come online. but where are we on theaffordability given this rise of rates particularly over the lastmonth or so, and the rise in home prices? are we nearing anything that would be, that would stop this continued growth?no. no, the affordability is still great, because home prices while they are down, while they are up over the last 14 months, they are still low and mortgage rates are still low. so this is still a good time to wi, i think. although the long run future is always unknown, but the immediate market looks good. robert, diana olick, our real estate correspondent points out in may, a month after the numbers, one-third of the home buyers were all cash, and does that worry you? yes, it does worry me. the sentiment is changing, and we are a more speculative market, and more flippers and more people who are not going to be stable home buyers, and that is why this thing could evaporate. peel should always remember that prices go both ways up and down, and they could go down. so someone buying now may not be so happy in 3 to 5 years. people got that message over the last ten years to a certain extent. not everyone. , are we going to start to see more affordability products from those who providemortgages? well, the one thing, and i don’t know what i do know is that we are likely to see more rentals. this is a trend. and more apartment living and more city living. those are trends that also threaten. and by the way, this boom is not uniform across all region, and it is also not as strong in the far out suburbs, so people are becoming more urban at the moment. robert, as someone who bought a house in the period, i have to tell you that i gave up trying to get a mortgage and trying to get the average down, and listen, i said, i will find another way and not a mortgage and a credit line, and robert, it is so hard to get a loan. there are people who find other wayso pay cash, because you can’t get a loan. well, some people can’t, right. it is tough.and even this is with tremendous government support for the mortgage market and this is another reason to be worriedabout the longer term, because we don’t have a healthy mortgage market. finally, robert, you know, this number, and we will see what the consumer confidence says in half an hour or so, but it is going to be used as a sign that consumers are more flush and times are good, and is that a logical extrapolation from this set of data? well, the consumer confidence has been rising both with the conference board and the michigan surveys for months now. i think that is a good sign, but the correlation historically is not that strong between consumer confidence and home prices. home prices are driven by lately people’s speculative sense of the market. and right now, peoplere looking and the prices are going up, especially like in california. it is a no-brainer. to buy a house now and sell it in 6 to 12 months, and that will probably work. markets are stronger. but in the longer run, where this confidence, what it means is harder to discern. yeah. robert, thank you so much for shedding light on the numbers and appreciate it very much.