He sees bubble danger in areas where prices have recently zoomed (that’s not Greenwich) but doesn’t think continued high unemployment necessarily means prices will drop. I guess we’ll see.
U.S. home prices in August rose for the fourth straight month. The Standard & Poor’s/Case-Shiller composite index of home prices in 20 metropolitan areas rose 1.2 percent in August from July, topping the estimate of a 0.7 percent rise according to in a Reuters poll.
“The prominent fact that we are seeing with this data is that home prices are just zipping up,” Shiller said.
“It is entirely possible that even with the bad news we are getting, home prices could start a major increase,” he said.
Prices in the top 10 U.S. metropolitan areas gained 1.3 percent in August after a 1.7 percent rise the previous month, according to the S&P composite index.
Shiller said he does not agree with analysts who believe that rising unemployment will hurt home prices. The U.S. jobless rate reached a 26-year high of 9.8 percent in September.
“It is unlikely that we will have the major, colossal bubble we had a few years ago, but even in the Great Depression real home prices were rising with the unemployment rate above 12 percent,” he said. “Just because we have high unemployment does not mean the stock market cannot boom and the housing market cannot boom.
“What happens from here will depend on people’s animal spirits and speculative impulses,” Shiller said.