March 13, 2007

BusinessWeek interviews Robert Shiller. Time magazine still has no idea there was a housing bubble.

Poor Time - they have to ignore the housing crash or else they look like the fool for their infamous "Home $weet Home" June 2005 cover. Nice to see BusinessWeek stay on top of the bubble and crash story, with this excellent interview with HP-hero Shiller - here's some snippets:

Where are home prices headed?

Looking at our national home-price index [the Standard & Poor's/Case-Shiller Home Price Indices], it appears that the boom is over. I think there's a good chance home prices will be down 10% to 30% over the next five years.

Developers are throwing in an SUV or granite countertops to lure buyers. Does this mean prices have fallen more than the data show?

Developers don't want to cut prices. They try to disguise [them]. The government's new-home price index doesn't take this into account.

What will bring the boom to an end?

Bubbles don't pop suddenly. The air comes out gradually. Booms end when prices start to fall, and then there are stories of buyer stupidity that are told and retold.

Was the recent rise in home prices the biggest housing boom in U.S. history?

In the sense that it was the most pervasive. We've had booms before, but they didn't capture the whole country. This one started out in the glamour cities, and then it spread from place to place.


chris g said...

BusinessWeek was ahead of the curve on the toxic loans too. I think it was either an August or September 06 magazine cover showing a giant snake wrapped around a house. Very fitting.

I Love Broadband over PowerLine said...

Stocks Tumble on Subprime Lender Worries
Tuesday March 13, 9:40 am ET
By Madlen Read, AP Business Writer

Dow, Nasdaq Fall in Early Trading As Investors Grow More Unnerved on Subprime Lender Troubles

NEW YORK (AP) -- Stocks fell sharply in early trading Tuesday as investors grew more unnerved that troubles for subprime lenders would reverberate in other parts of the economy.
Already heightened concerns increased after the New York Stock Exchange said shortly before the opening bell Tuesday it would immediately suspend trading in shares of New Century Financial Corp. and move to delist the stock. The company, which saw trading in its shares halted throughout Monday's session, on Tuesday disclosed more details on the raft of financial hurdles it faces.

Word from Accredited Home Lenders Holding Co. that it is grappling with a liquidity shortfall confirmed concerns that the sector's troubles are widespread. The company needs liquidity to retain or sell loans it originates.

The difficulty of subprime mortgage lenders, who make loans to those with poor credit, overshadowed a profit report from Goldman Sachs Group Inc. that came in well above Wall Street's forecast.

In the first hour of trading, the Dow Jones industrial average fell 76.42, or 0.62 percent, to 12,242.20.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 7.43, or 0.53 percent, to 1,399.17, and the Nasdaq composite index slid 13.64, or 0.57 percent, to 2,388.65.

Living on Tulsa time! said...

It never boomed here in Tulsa. Hurt and hardened to bubbles by the oil boom in the 80's, Tulsa never came off the bottom. It's not to say we can't be affected by the bust, it's just that we can't go down much. Our median price is $128,500. If our houses ever increased in value more than the (reported) CPI, it's considered a windfall!

Anonymous said...

I fear for Shiller. He knows too much. W is going to send the black helicopters to circle his home and drag him off to GITMO as a "person of interest". We need a brigade of average joe's willing to form a human chain around Shiller for his protection.

Anonymous said...

Maybe they haven't read todays newspaper or something!!!

Maybe they live in a bubble or something!!!

Earth to realty clerks, NAR and brokers, the sky is falling!!! Wake up!!! Smell the coffee!!!

Real estate is crashing big!!!

We are going back to 1997 values which made sense. This will be some ride. Sell while you can if you are in trouble.

Shakster said...

Told ya they were a FRAUD.IMO of course.NOT!!Hey ,it's every other HPers too right?

Paul E. Math said...

Shiller is Yoda when it comes to bubbles. And he's bang-on when he says that the decline will be in full swing when we all hear cautionary tales embarrassing to people who believed in a never-ending housing boom. The Casey Serin story is one example but many more are needed before we dispel the misguided widespread belief that everyone can make easy money simply by buying a house.