Robert Shiller says in the video below,
“Homeowners seem to be losing interest”, though he didn’t give evidence or details on why he thinks that – maybe the more-pedestrian price increases?
If he thinks homeowners/homebuyers are losing interest because sellers keep asking more, then I’d agree. The Case-Shiller Index for San Diego may be creeping up at roughly 1% per month, but list prices seem frothier.
But mortgage rates in the 3s will ignite the frenzy all over again!
Is that the Shiller who owns not one but two houses?
It just feels like Shiller is looking too hard for his next bubble call. Media attention can be addictive I figure.
I’ve always liked that Shiller tries to look at things analytically without getting too attached to the emotional part of it. The emotional component of asset prices is impossible to measure but it’s the key in bubbles. People use emotional arguments rather than analytic ones in bubbles to justify prices.
The question Shiller is answering isn’t in the video, but I interpret the “losing interest” comment as saying that general population of homeowners really isn’t all that excited about the 20% YoY gains. It’s nice but it’s not changing their behavior. It’s not triggering a bunch of move up buys. The equity isn’t being HELOCed to buy a new car or do a major remodel. The investors are excited about the gains though.
If the premise is that the investors were the ones that drove the prices up and the owner users just followed along because of the low interest rates. Then does that mean these investors might drive the prices lower if they see the momentum in prices stall. We don’t know but I think it’s a risk at the macro level.