“Home prices are declining a little bit,” Shiller says. “It's a worry that the support we've seen [via the tax credit] is not continuing and we're going to resume the downtrend.”
In his estimation, we are stuck in a liquidity trap: Despite rock bottom interest rates, people are still not spending because they are concerned about the future.
Shiller says it is definitely not the time to be bullish on real estate, “I think it is a risky bet. If we have more stress, if house prices continue to go down, as they've started to do just a little smidgen…if they go down another 5% that is going to put a lot of stress on financial institutions.”
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