The housing market might have hit its valley

Economists increasingly believe the U.S. housing market has finally reached its valley after a series of housing market day points were released this week, Bloomberg News reported. New-home sales exceeded expectations and price declines slowed, according to reports released yesterday, which both offered glimpses of hope for the market. The news organization also expects this week’s pending home-sales index to reach two-year highs. More importantly, according to some analysts, consumer confidence remained at a high level in April, and consumers are reporting that jobs are easier to find. [more]

Robert Shiller on CNBC Robert Shiller, professor of economics at Yale University and the co-founder of the Case-Shiller Home Price Index, told CNBC, in the video after the jump, that while the housing market may have hit bottom, it also might stay there for awhile.

“We might be at the endgame,” Shiller told CNBC’s Brian Sullivan, who tries to frame Shiller’s sentiment positively, saying his statements provide “a little optimism, I think.” But the professor is notably reluctant to rejoice. The housing market “could turn around; I just don’t see any scientific way to be assured [that it will],” he said. [more]

Click image to see the video

Professors Karl Case and Robert Shiller, founders of the Standard & Poor’s/Case-Shiller Index appeared on Bloomberg TV (click the image to see the video) to discuss the results of the most recent index, which showed a 3.3 percent decline in housing prices in February. Case said the U.S. housing market has already experienced a so-called “double-dip,” as housing prices plummeted from their 2006 highs, then rebounded briefly due to the homebuyer’s tax credit, and now the market has returned to previous lows. Case cited an “incredible decline” in households — “we’re not building any new houses, and yet vacancy rates are still going up,” he said — as a major area for concern. Meanwhile, Shiller said the 8.8 percent unemployment rate and the difficulties associated with getting financing are plaguing the market. Comments

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Most U.S. housing analysts now expect the market to hit bottom some time in 2012, marking yet another delay in the predicted rebound in nationwide home prices. According to the Wall Street Journal, a new survey by Robert Shiller’s MacroMarkets polled 111 economists and analysts, of whom just one one-third now believe home prices will rebound this year. When the company conducted the same survey last June, respondents predicted a 1.3 percent increase in home prices in 2011. Now, those respondents see that increase happening in 2012. [more]

Innovation is lacking in current government-led efforts to fix the ailing housing market, Yale economist and home price index guru Robert Shiller argued in a recent interview with Smart Money. Comparing today’s housing market to that of the end of the Great Depression, Shiller said that while the Roosevelt administration created a number of new institutions that have since stuck (a national convention of long-term mortgages, for one), the Obama administration is “not really developing new things for the longer-run.” He noted that this is especially problematic, given that the ideas that came into being after World War II — like the 30-year mortgage and Fannie Mae — are no longer working in the contemporary economic environment. “One of my proposals is that we go to a mortgage that is more flexible. I call it a continuous workout mortgage that would protect people against unemployment or declines in home prices,” Shiller said. [SmartMoney]

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Policy makers need to be more “inspirational” when designing solutions to the housing market crisis, according to Yale economist Robert Shiller, after whom the S&P’s Case-Shiller Home Price Index is named and which released its second quarter findings today. Shiller noted that it did not make sense to extend the homebuyer tax credit, and that the responses by the Bush and Obama administrations have amounted to “patches and bailouts,” he told the Wall Street Journal. Shiller believes that the solution lies in more “forward thinking” measures. One suggestion he offered was that mortgages should be indexed to inflation to allow for greater long-term certainty for borrowers. Another idea was that mortgage contracts in the future should include some kind of “preplanned workout,” detailing how a loan modification would proceed if the borrower fell behind on payments. Though the Obama administration has launched a debate on how to overhaul Fannie Mae and Freddie Mac, it’s not clear how much that debate will focus on ideas like those suggested by Shiller. [WSJ]

[more]

Policy makers need to be more “inspirational” when designing solutions to the housing market crisis, according to Yale economist Robert Shiller, after whom the S&P’s Case-Shiller Home Price Index is named and which released its second quarter findings today. Shiller noted that it did not make sense to extend the homebuyer tax credit, and that the responses by the Bush and Obama administrations have amounted to “patches and bailouts,” he told the Wall Street Journal. Shiller believes that the solution lies in more “forward thinking” measures. One suggestion he offered was that mortgages should be indexed to inflation to allow for greater long-term certainty for borrowers. Another idea was that mortgage contracts in the future should include some kind of “preplanned workout,” detailing how a loan modification would proceed if the borrower fell behind on payments. Though the Obama administration has launched a debate on how to overhaul Fannie Mae and Freddie Mac, it’s not clear how much that debate will focus on ideas like those suggested by Shiller. [WSJ]

[more]

Policy makers need to be more “inspirational” when designing solutions to the housing market crisis, according to Yale economist Robert Shiller, after whom the S&P’s Case-Shiller Home Price Index is named and which released its second quarter findings today. Shiller noted that it did not make sense to extend the homebuyer tax credit, and that the responses by the Bush and Obama administrations have amounted to “patches and bailouts,” he told the Wall Street Journal. Shiller believes that the solution lies in more “forward thinking” measures. One suggestion he offered was that mortgages should be indexed to inflation to allow for greater long-term certainty for borrowers. Another idea was that mortgage contracts in the future should include some kind of “preplanned workout,” detailing how a loan modification would proceed if the borrower fell behind on payments. Though the Obama administration has launched a debate on how to overhaul Fannie Mae and Freddie Mac, it’s not clear how much that debate will focus on ideas like those suggested by Shiller. [WSJ]

[more]

Given the current housing crisis, the long-term mortgage may be past its heyday, housing expert Robert Shiller told CNBC. “The 30-year
mortgage is outdated, the standard fixed-rate mortgage is outdated,
and it has to be improved,” said Shiller, co-creator of the S&P/Case-Shiller Home Price Index, which tracks home prices in the United
States. “People want a more modern vehicle, and that’s something we
need to think about next,” he added. Now that the finance reform bill
is almost complete, Congress may next be looking to revamp the housing market. [CNBC]

[more]

Given the current housing crisis, the long-term mortgage may be past its heyday, housing expert Robert Shiller told CNBC. “The 30-year
mortgage is outdated, the standard fixed-rate mortgage is outdated,
and it has to be improved,” said Shiller, co-creator of the S&P/Case-Shiller Home Price Index, which tracks home prices in the United
States. “People want a more modern vehicle, and that’s something we
need to think about next,” he added. Now that the finance reform bill
is almost complete, Congress may next be looking to revamp the housing market. [CNBC]

[more]