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Eight Market Gurus Fill in the Blanks

Roben Farzad asks the experts about stocks, bonds, and the recovery, and then plays Mad Libs
Robert Shiller, economist and professor, Yale University
Robert Shiller, economist and professor, Yale UniversityPhotograph by Andrew Harrer/Bloomberg

Robert Shiller, Economist and Professor, Yale University, Co-Creator of the S&P/Case-Shiller Home Price Index
What do you make of the good news coming out of housing?
Well, it’s very hard to say. The problem is, I think that we’ve entered a new regime. We don’t have that much history. We had the biggest bubble in U.S. history, and we don’t know what to think about the aftermath of bubbles like that. We’ve come back down. People don’t know what real home prices have done. They think that they’ve trended upward all the time, but actually we’re kind of back at 1890 levels. So we haven’t had any up. … I’d have to look, whether it’s up a little bit from 1890. But if it’s up, the return is only a 0.1 percent per year or less, I think.

If you have been on your best behavior over the past 10 years, and you’re now eligible to take out a 30-year mortgage at under 4 percent, why wouldn’t you do that?
My advice to home buyers would be, yeah, if you want a home, I would do that. But I wouldn’t think it’s riskless, and I’m worried about the downtrend that we’ve seen. It could overshoot and go continuing down. You could also see it going back up. I’m sorry I can’t be more definite.