While many signs are pointing to a housing market recovery, Yale Economist Robert Shiller — who was among the earliest to call the housing bubble that burst in the late 2000s — isn’t convinced.
“His reasoning?” writes The Wall Street Journal’s Joe Light. “The home-price rebound, if that’s what it is, doesn’t yet have momentum — which Shiller’s research has found is the most powerful driver of home prices.”
Momentum is a much bigger force in the housing market than it is in the stock market, Light says, and Shiller isn’t sure there’s enough right now. “It could be [a bottom]. It’s a real possibility. I just don’t know,” Shiller says. One factor that makes Shiller hesitant is the amount of homes that are in foreclosure or close to it; if they hit the market, it could drive prices down. In addition, unemployment remains quite high, which can be a drag on housing.
Shiller says he wants to see home prices continue to rise through the fall and spring before he’ll be convinced we’re out of the woods.