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[Jul. 19th, 2007|11:20 am] |
Brian Sullivan: Bob, you and I have talked in the past, you see declines of as much as 50 percent in some parts of the country.
Robert Schiller:
Well, home prices have more than doubled in many major cities - even
aggregates for the whole U.S. if you go back to the late 1990s, they've
doubled. And I don't see that as being explained by fundamentals. If
you look at rent or construction costs, they haven't done very much at
all. So, mean reversion, we call it. Things got out of line, there's a
good chance they'll come back.
Sullivan: What could save it thought? What could be the cure? More liquidity, maybe lower rates?
Shiller:
I don't know if we want more .... you see, high home prices are good
for people who already own them, but it's the misalignment of the
market. They've been building a lot of homes because of the high prices
and a correction is kind of inevitable. If the prices are out of line
with the costs and long-term demand, I don't think it's something we
can fix. I don't think it's going to be a disaster for the economy.
It's going to be uncomfortable - we'll go back to where we were five
years ago. |
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