Robert Shiller, Yale professor of economics and co-founder of the Case-Shiller Index, joins ‘Squawk on the Street’ to discuss rising rates and the impact on mortgage rates.

[REITs]

Q3 hedge fund letters, conference, scoops etc

Robert Shiller: Market confidence can be disrupted with market correction

Robert Shiller: Market boom’s been happening a long time, so investors getting ‘antsy’

Joe LaVorgna, chief economist at Natixis, and Robert Shiller, professor of economics at Yale University, discuss what is causing the recent market correction.

Robert Shiller: There Is An Uptrend In Housing, Stock Market

Economist Robert Shiller on the state of the U.S. economy and housing market. He says that there is an uptrend in housing, stock market.

Transcript

Robert Shiller joins us right now economist and Yale professor on the back of an interest rates that some might like because it shows a strong economy. But if you’re looking for a house around now it could get in the way how much of the way you think Robert?

Robert Shiller: Well I think when mortgage rates were low when they were exceptionally low that was driving helping drive the housing market. Now we’re getting back into more normal territory. I expect that it will be. It will be a weakener. There is some sense of weakness in the housing market notably the Case Shiller S&P CoreLogic Case Shiller indices that we work on are showing some are still going up but not quite as fast.

So what does that portend for next year. I mean obviously the the Federal Reserve has indicated and Jerome Powell the German has all but guaranteed a trend that will continue.

Robert Shiller: Right. So there isn’t much news coming out. You have to really look hard from the Fed. They’re on target to increase interest rates just as the inflation rate is tipping up above the target rate. So there they are eminently predictable which is a good thing.

Yeah I guess it would be you know for a lot of people the problem seems to be yeah interest rates going up can can lock some people out. But appraisals are still stingy I’m told. How much of a factor is that?

Robert Shiller: How much is a factor. Appraise… Well I suppose appraisers use comparable sales and they would be lower. So you have to correct for a trend. There is an uptrend in both the housing market and the stock market. Which has been going on for years. And the real question in my mind is what’s driving this trend. It’s not just Trump it’s also Obama because it’s been going on for so long. These trends do come to an end and sometimes they come to an abrupt end.

You know. Do you think we’re back to the giddiness that surrounded real estate before the meltdown. I mean I I I still see a lot of reticence on particularly the part of the young maybe for different reasons. I don’t see nearly as frothy as it was back then but I could be missing something. What do you say?

Robert Shiller: The frothiness I guess has a Greenspan quote is an understatement. The frothiness was extremely unusual in probably around 2005 2006. I don’t think we’ve ever had such a exuberant housing market maybe right after World War II. But when there was a housing shortage but other than that it is exceptional and then so also was the correction the decline in home prices after 2006 was the biggest we’ve ever seen in a short interval of time. So it’s that is unique. We shouldn’t always be fighting the last war. I don’t think we’re as exuberant or as bubbly now or at least not yet. All right.

Robert Shiller always great catching up. Thank you very very much.