Robert Shiller on Why Home Prices Could Fall for Several Decades

robmatic

geneer wrote: »

yet on one side the outcome was the crash.

Seems to me that the "everyone is as bad as each other" meme is just another fall back position, with all the bias and lack of consistent logic that implies.

Yeah, there was a crash. Some of us waited until after the crash before we bought (I'm thinking about myself here).

So how does that affect the renting vs. buying calculations post-crash? Clearly there was a compelling case for you to buy?

Or are you still mentally stuck in the arguments you were having with people five years ago?

Batchy

In several years time my mortgage will be paid... and?

geneer

wotsthat wrote: »

There's some pretty big statements there - none supported by evidence.

What risky lending? Aren't repossessions and arrears quite low?

Economic collapse? Really - how would you define collapse?

Bubbles in both countries? What housing was in a bubble or still is?

Crashes in both countries? Depends where you are. London hasn't crashed and neither have more desirable cities in England and Scotland. Crash seems to be over-egging it a little.

Ah. Going for the old "demanding evidence for the self evident" tactic again Wotsthat?

Playing the "spam the discussion with pointless questions" card.

Some of us are savvy to that one you know.

To summarise, Wotsthat appears to be suggesting that risky lending, economic collapse, and housing bubbles did not occour in both the uK and Us.
Having turned the pointless question spamming into a statement, we can clearly so just how jaw droppingly ignorant of the facts wotsthat is.

wotsthat

geneer wrote: »

To summarise, Wotsthat appears to be suggesting that risky lending, economic collapse, and housing bubbles did not occour in both the uK and Us.

Risky lending did occur. But to what level? Certainly not enough to make a significant impact on repossessions or arrears. The numbers bear this out. Surely if we had all this risky lending even low interest rates wouldn't be able to protect the recipients.

There hasn't been an economic collapse and isn't supported by the facts. Were there shops available over Christmas? Did they accept your currency? What did you do for food? Did you have to scavenge for it or were there shops jammed to the rafters with it? How many power cuts have you had? I think I read somewhere that living standards have dropped to 2005 levels - not great but hardly an economic collapse.

There isn't a housing bubble in the UK. House prices 3.2% down last year - given the economic problems, lack of lending and higher deposit requirements that's nothing. Housing in the UK is supported by a shortage of supply and high rents. In some areas prices barely dropped during the 'crash'.

Darthvader

geneer wrote: »

http://www.fool.com/investing/general/2011/12/23/robert-shiller-on-why-home-prices-could-fall-for-s.aspx

No one knows what will happen, but it's not hard to argue that the housing market is nearing a bottom. Home construction is as unsustainably low today as it was unsustainably high during the bubble. The more builders like KB Homes (NYSE: KBH ) and Lennar (NYSE: LEN ) are beaten into submission today, the bigger the housing rebound will eventually become.
That's the good news. But here's a question few are asking: After the housing market does bottom, what you should expect from it going forward?
I asked Yale economist Robert Shiller -- of S&P/Case-Shiller housing index fame -- that question in an exclusive interview earlier this month. His answer might shock you: Not only do home prices, on average, not produce real returns over time, but history shows they could actually decline over the long haul.

If you look at history, these cycles in the UK property market usually last around 18yrs. Give or take a few years either side for stagnation.

The last bottom for UK property was in the 90's then we had a massive boom that took the usual around 18yrs now we have gone over the top and slowly heading down the other side. If you take the top around 2007ish then we are in for about 18yrs of a bear market in UK property. When you look at how big the boom was you get an idea what the bust coulod be like.

I can not see this property bear market lasting several decades, but maybe 2. Depends when interest rates get back up to more normal levels and all the repossessions are cleared out. Only then can we say we were near the bottom. But as for being anywhere near the bottom now, no way, we have only just gone over the top, and interest rates have not gone back up yet.

Generali

purch wrote: »

Well the S&P Case Schiller Indices have been around since the 80's, so he should have some idea what's happening out there :eek:

From memory, house prices rise in the US roughly with inflation typically. New houses depreciate as the house is basically disposable and is built with a finite life (as is the case in Aus and Japan).

Running_Horse

geneer wrote: »

After the housing market does bottom, what you should expect from it going forward?

It will probably bump along in the doldrums before taking off in a few years.

Darthvader

Running_Horse wrote: »

It will probably bump along in the doldrums before taking off in a few years.

Yes but we are still no where near the bottom yet, interest rates have not gone back to normal, this has to happen to clear out all the repossessions.

Conrad

Darthvader wrote: »

If you take the top around 2007ish then we are in for about 18yrs of a bear market in UK property.

I went through the early early 90's crash. I don't care what the stats tell you, every owner I knew that experienced a decline in value, had recovered all thier lost value by about 93 - 95. This was in the South East and also the Midlands.

18 years is utter nonsense. So many property people I deal with have been through more than one crash and are now worth millions. They mainly bought outside 'the ideal trough' moment of course.

You guys really do exist in some wierd academic parallel Universe.

Conrad

Darthvader wrote: »

Yes but we are still no where near the bottom yet, interest rates have not gone back to normal, this has to happen to clear out all the repossessions.

You need to read some books on economic predictions such as Future Babble. If there's one thing we know, the more definite the economic prediction, proportionally the more likely it is to be way off beam.

Your focus is far too narrow. I'll guarantee you we are bumping along bottom right now, maybe with the odd downward temporary drop. If Europe goes pop that could cause a further leg down but most economists say Europe had a 4 in 5 chance of not going tits - up.