Home prices have been on a worrisome downturn, recently retreating to mid-2002 levels. In the latest read of the S&P/Case-Shiller home price index, home prices in the nation's 20 largest cities fell 4% in April from a year ago, when the home buyer's tax credit was boosting sales. On the other hand, the nation's most closely watched housing barometer shows that prices on a month-to-month basis rose in April for the first time in eight months.
What should homebuyers expect now? Is this the beginning of a turning point for the housing market? We checked in with the co-creator of the index, Yale professor Robert Shiller, for his outlook on the housing market. Shiller earned credibility as a pundit when, among other things, he called the housing bubble in 2006, just before prices started to tumble. Here are the bonus edited excerpts from his conversation with Kiplinger’s Personal Finance, exclusively available to our Facebook fans.
KIPLINGER: Alan Greenspan said last year that if home prices double dip, which they have now, that could bring on a double dip in the economy. What do the latest housing numbers forebode for the economy?
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
SHILLER: A lot of people have been staking their hopes on home prices going up. We’re at a tipping point. I want to know what happens in a couple of months. If the unemployment rate continues to move higher and if home prices don’t respond to the summer season, then it will look like a recession. Right now most forecasters are predicting something like 2% growth. That seems to me a respectable forecast. But I’m worried that it will deteriorate.
Is there a farmland bubble brewing now? Yes. Farmland is already expensive because it went up with home prices. But whereas home prices collapsed, farmland prices fell only a little bit because they don’t make any more farmland. But I think you could see a big bubble in farmland prices because the global demand for food is growing as the global population increases, weather patterns change and as consumers in emerging markets grow wealthier and demand higher-quality food.
For the rest of the interview, see PRACTICAL ECONOMICS: Robert Shiller Predicts Home Prices Will Fall Some More.
-
Stock Market Today: Have We Seen the Bottom for Stocks?Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
-
Is the GOP Secretly Planning to Raise Taxes on the Rich?Tax Reform As high-stakes tax reform talks resume on Capitol Hill, questions are swirling about what Republicans and President Trump will do.
-
The Economic Impact of the US-China Trade WarThe Letter The US-China trade war will impact US consumers and business. The decoupling process could be messy.
-
AI Heads to WashingtonThe Kiplinger Letter There’s big opportunity for AI tools that analyze MRIs and other medical images. But also big challenges that clinicians and companies will have to overcome.
-
The AI Doctor Coming to Read Your Test ResultsThe Kiplinger Letter There’s big opportunity for AI tools that analyze CAT scans, MRIs and other medical images. But there are also big challenges that human clinicians and tech companies will have to overcome.
-
The New Space Age Takes OffThe Kiplinger Letter From fast broadband to SOS texting, space has never been more embedded in peoples’ lives. The future is even more exciting for rockets, satellites and emerging space tech.
-
Rising AI Demand Stokes Undersea InvestmentsThe Kiplinger Letter As demand soars for AI, there’s a need to transport huge amounts of data across oceans. Tech giants have big plans for new submarine cables, including the longest ever.
-
What DOGE is Doing NowThe Kiplinger Letter As Musk's DOGE pursues its ambitious agenda, uncertainty and legal challenges are mounting — causing frustration for Trump.
-
A Move Away From Free TradeThe Letter President Trump says long-term gain will be worth short-term pain, but the pain could be significant this year.
-
Trump’s Whirlwind Month of Crypto MovesThe Kiplinger Letter The Trump administration wants to strengthen U.S. leadership in the cryptocurrency industry by providing regulatory clarity.
