Interesting commentary here from Robert Shiller following this morning’s housing data which showed a 9.3% increase in year over year house prices. I think Shiller and I are on the same page here with regards to future home prices – we’re not super bullish, but we’re no longer bearish. In other words, we see house prices matching the rate of inflation in the years to come. Shiller says house prices are likely to be flat after inflation 10 years from now. I’ve explained my broader view in more detail here.
Here’s more from Dr. Shiller:
Still, Robert Shiller, co-creator of the index, is cautious. “There’s a lot of excitement in the housing market now but it might be just short term,” he tells The Daily Ticker.
Shiller says people don’t want to commute long distances because of relatively high gasoline prices and in the current “ideas economy,” many want to live in close proximity to others.
There are also demographic shifts: aging baby boomers who no longer enjoy working on the upkeep of their homes and the increase in single-person households.
When asked where this all leaves the housing market 10 years from now, Shiller says home prices will be “about where they are now” after adjusting for inflation.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.