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Dah Hui Lau (David)

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Robert Shiller: Mr. Worst-case Scenario

Posted on 07/22/2007 20:00:47 | Link | Post Comment

Robert Shiller is worried about your home's value, and that's not good. A finance and economics professor at Yale, Shiller proved he could see a crash coming with his book "Irrational Exuberance," which forecast the end of the 1990s stock bubble and hit bookstores in March 2000 - almost to the day the Nasdaq started to collapse.


Today, Shiller believes homes are roughly as overvalued as stocks were then and, once again, he's worth listening to.


Question: So how rich can you get on real estate?


Answer: From 1890 through 1990, the return on residential real estate was just about zero after inflation.


Question: Excuse me? That's all? Hasn't it been higher lately?


Answer: Since 1987 it's been 6 percent [or about 3 percent a year after inflation].

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