In an interview this week with Yahoo! Finance, Yale economist Robert Shiller weighed in on the state of the US housing market, which has surged during Covid-time. Longtime readers may know that I’ve long found Shiller’s market analysis intriguing — especially because he has such a keen interest in the human customs and psychology that shape our markets, and those factors tend to be hard to quantify (which undermines the supposedly mathematical nature of trade). In this clip, Shiller talks a bit about some of the psychological factors that may be at work in the Covid-time housing boom — and where things may be going next. His bottom line? “Home prices are likely to be high for another year or two, and they will bring in a supply response and come back down. Not overnight, but enough to cause some pain.”
For context, this month, the S&P CoreLogic Case-Shiller New York Home Price NSA Index showed a housing price change in the New York City region of 12.3 percent (+) in the 12 months ending March 2021 — almost precisely corresponding to the year that followed the March 2020 Covid shut-down in New York City and its suburbs.