Bubble Risk: Reading the Signals of High Home Sales

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June 24 (Bloomberg) -- Yale University Professor Robert Shiller examines a six year high in new home sales with Trish Regan and Michael McKee on “Street Smart.” (Source: Bloomberg)

Of case-shiller index.

Also with me, mike mckee.

Robert, you and i have spoken about this before.

You had some concerns.

Are you still concerned that housing is headed to another bubble?

I'm naturally worried, but i think home prices are still not high.

They have been going up at a good clip.

The latest data, i don't know how much to make of it, but it is showing some signs of weakening, particularly on a seasonally adjusted aces -- basis.

The compounded 10 index was unchanged.

What is your overall take echo are we on the mend?

Is this a good sign?

How do you interpret this data i? i don't think we need another housing bubble.

They are up something close to 20% since the bottom in 2012. i think that is good.

Prices are at a normal level.

Whether they keep going up is still a question.

Mike mckee, economist point to the housing market as the underpinning of the overall economy.

Obviously, it employs a lot of people, the housing sector itself via construction, home improvement, etc.

You cannot really have a real recovery without having a housing market that is on solid ground.

Janet yellen made that point at a press conference.

They are looking for housing to pick up this year.

We are not really sure what happened between the fall on the spring, whether it was just a lot of speculators in the fall buying houses, maybe private equity buying them in the red, or whether there was an increased interest in american public -- in housing by the american public and then dropped off over the winter because of slow rate, whatever.

In the last few weeks, we've gotten reasonably good news in that regard.

Builders are seeing signs that people really do want to buy houses now.

The household rate is picking up a little bit.

And some evidence that is picking up a little bit into housing as well.

Will that lead to a housing bubble?

May be.

I think the baby boomers are retiring and shifting to a younger age.

Maybe the younger people are more urban.

I worry about remote suburbs.

They have not shown as much price strength as houses and more connected areas.

-- in more can then fit -- as houses in more connected areas.

You look at this recovery and its connection to houses in certain areas.

In southwest florida, the housing recovery there.

I -- houses are still skyhigh in new york.

Looking across the country, where do you see the most opportunity for those looking to invest?

You want me to say who is going up the fastest?

I mean, san francisco looks bubbly.

It has got a practically the fastest.

Also, the survey showed earlier this year that san francisco has the highest expectations for home price increases.

I could say -- i could see that bubbling.

But you got to get out in time.

If you look at the history of home prices in san francisco, it a roller coaster.

Some could say, wow, i've made a ton of money on my house.

The problem is, if i want to sell my house, i have to put that much more money into another property.

Unless you are planning on leaving the particular area, whether san francisco, las vegas, or new york, where you see an appreciation.

The way it would use to work is people would build up some equity in their house and then use that to buy a bigger house, until equity became in and of itself the goal.

You have so much wealth created by the tech boom.

The city of san francisco has a three percent or so unemployment rate.

They are doing much better in a much different way than much of the country.

It is also geographically constrained.

On the radio show today, a builder was saying that he has been to 13 zoning hearings in the last two years and still has not gotten permission to build.

They have their own unique characteristics.

Bob and i were talking on the show earlier this morning about how we have gone from a nation of unique real estate markets to a single market in the 2008 timeframe, where everything collapsed and we are starting to differentiate again.

You are seeing different growth

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