NEW YORK -- A U.S. housing-market revival may prove illusory and the threat of further weakness remains, said Robert Shiller, a professor at Yale University and co-creator of the S&P/Case-Shiller index of property values.
“The housing market has been declining for something like six years now, it could go on, that’s my worry,” Shiller said Thursday .
“The short-term indicators are up now, it definitely looks better, but we saw that in 2009.”
The property market has shown signs of recovery and homebuilding has rebounded as low borrowing costs spur buyer demand, bolster prices.
Values rose 7.4 percent in November from a year earlier, the ninth straight increase and the biggest gain since May 2006, Irvine, California-based data provider CoreLogic (NYSE: CLGX) said last week.
“It’s a good housing market in the sense that mortgage rates are very low and prices have come down to normal levels, so yes, it’s a good time to buy if nothing bad happens,” Shiller said.
“But it’s also a very bad housing market in that most of the mortgages are being supported by the government, and we have the Fed and this buying program. It’s a very abnormal market. There’s a lot of uncertainty going forward.”
The average rate for a 30-year fixed mortgage fell to 3.38 percent in the week ended Jan. 17 from 3.4 percent, McLean, Va.-based Freddie Mac (OTC: FMCC) said. The average rate dropped to a record 3.31 percent in November.
The S&P/Case-Shiller index of property values in 20 cities increased an annual 4.3 percent in October, the biggest 12-month advance since May 2010, the group said on Dec. 26. The next report is due on Jan. 29.
Shiller, who spoke while attending the World Economic Forum’s 2012 annual meeting in Davos, Switzerland, also said that while global economic conditions are “a little better,” there are still risks to the recovery.
“We’ve been five years in a slow economy, and it could go quite a bit longer,” he said. “We’ve seen gross domestic product growth at sub-normal levels.”
He added, “I think we’re pretty far from irrational exuberance, maybe 50 years away.”