Robert Shiller, the legendary Yale economics professor and co-founder of the S&P/Case-Shiller home price index index, was on CNBC this morning discussing the JOBS Act and the housing market.In regards to the stock markets rise over the past few years, he wonders about the sustainability and the fact that he does not quite feel that the general public is displaying the same optimistic views that the stock market is suggesting
The stock market is up since 2009 because of an extraordinary growth of earnings. The question to me is whether that’s sustainable. Some part of that was cost cutting. There are still risks about the future that are still weighing on them, like the risk of further declines in home prices. There are likely to be millions more evicted from their homes because of non-payment on their mortgages. There are things on the horizon that might disturb them. So the animal spirits are not back to the 2005 levels.
When asked about his feelings on the housing market, Shiller still seemed relatively concerned due to the Case-Shiller index’s steady drop over the past half-decade.
Our Case/Shiller home prices have been falling. Basically they have been falling ever since 2006 with a brief interruption after the first time taxpayer’s home credit. It is not going down at the rapid clip, but the problem is if they go down much more at all, we’re going to have a worse housing problem and it’s going to hurt the banks and the mortgage lenders.
Shiller thinks the outlook of the public should be a bit more positive than it currently is, but he also explains reasons to be cautious as well. While things are looking up in certain areas, the housing market could easily turn those positive feelings around.
Here’s the whole interview courtesy of CNBC.com.