Bloomberg TV just hosted a debate on housing prices between PIMCO portfolio manager Mark Kiesel, who is bullish on housing prices, and Yale Professor Robert Shiller, who is bearish. Kiesel, who had just bought a house after six years of renting, believes that prices are headed up after declining a third from their 2007 highs.
He outlined other bullish stats including falling inventories and limited housing starts relative to household formation.
Shiller’s with Kiesel, but only for the summer. From the interview with Bloomberg TV:
Well, what’s happening right now is seasonal. We have a strong seasonal in housing, every summer prices go up. So I’m with Mark on the short run, prices are going to go up…. for a few months anyway.
The other thing is, some of those California communities, no offence Mark, they get a little bubble psychology, and we see a little improvement… there have been so many repetitions, California is the worst in terms of repetitions of bubble psychology.
Shiller goes on to add that the good scenario for housing is that it goes nowhere, as that’s been the historic long run trend. There are still abundant negatives for the market, like stubbornly high unemployment, a possible European blowup, and the fact that we’ve yet to resolve Fanny and Freddie.
Shiller also commented, though not on Kiesel’s situation specifically, that there may be a long term movement away from the idea that you need “a big McMansion in the suburbs”, and a shift to the urban environment.
We hear Newport Beach is lovely, but urban it’s not. Maybe Kiesel is having second thoughts after this encounter.