A Yale Economist’s View on the Current Housing Market
Placid by definition means “not easily upset or excited.” It’s not a bad adjective for the housing and mortgage market — especially when being used by a Noble Prize-winning economist who helped create what some consider to be the foremost index for tracking home prices around the country.
Placid is something we will take, considering the inventory and affordability issues that first-time or entry level homebuyers continue to face.
Yale professor and economist Robert Shiller sees the housing market remaining “placid” for the near term. It seems like rates and projected rate increases might cause some flattening in homes prices, but demand will likely be sufficient enough to sustain current home prices and possibly more moderate price increases. That will keep sellers interested in selling and buyers who have the means, but are at the point where they can’t wait any longer, to enter the market.
It could be that millennials have aged sufficiently and they’ve reached the point in life where homeownership fits for them. It may be eight or ten years later than when mom and dad reached the life point, but they are finally there now.
It may also be that we are past the housing crisis and the recession that caused artificially low mortgage rates to be the norm and almost a consumer expectation. With mortgages rates more reflective of the economy and not particularly troubling to guys like Schiller — and inventory sufficient to meet more reasonable market demands — we are likely looking at a “placid” 2019. A year where maybe we start to see a new long-term “normal” developing in housing and mortgage markets.