In a new editorial in the New York Times, Robert Shiller discusses the current condition of the national housing market, and the public’s current perception of that condition. Shiller points out a recent uptick in housing values all across the nation. He notes with optimism that the majority of homeowners nationally still expect positive returns on their property investment, and furthermore, that homeowners are more optimistic now than they were a year ago. Shiller ends by attributing this renewed optimism not to the beginning of a prolonged recovery, but to increased calculation by homeowners, who are now trying to work the volatile market in their favor, rather than just ride it to inevitable success.
first tuesday take: Shiller is right in anticipating a prolonged housing recession. Temporarily increased optimism among owners is a positive sign, but is not to be mistaken for a real estate recovery. Any natural rise in home values in California is desirable, but it will be a slow decade-long (or longer) climb back to the top pricing in early 2006, and there may be more than one false start before that climb begins.
The first of these false starts for California, a sort of air bubble in an overall downward trend in pricing built around REO inventory, is depicted in the Case-Shiller index of property prices, last released in July. For a California-specific look at these three tiered prices, see first tuesday’s charts depicting the Case-Shiller tiered index of home values.
Re: “A bounce? Indeed. A Boom? Not yet.”, from the New York Times