Shiller: House Prices Still Way Too High

This certainly does not hold true in every market. Cost basis for building will ultimatly dictate home prices once we move beyond supply issues. Based on Shiller's comments, then we need to have a combined 50% reduction in construction labor, materiels, and land costs for this to become a fair reality. I agree, prices may come down more, but certainly in a disconnect from reality. Of course, I'm not speaking about certain hyper inflated markets.

Just tell me when professor....I have cash!

Tell me when professor....we have cash.

Next time anyone stops by just please tell them just to go home! This kind of negative reporting has gotten us here, so please have your guests shut the heck up now! "You can't handle the truth!" You're probably right, BUT who's truth is it anyway? Enough is enough! Ratings can't be this important. I've already blocked CNBC on the TV, please don't make me block Yahoo on my computer also.

Until a average worker can afford an average house near where they work without fancy financing options, housing is still overvalued and needs to drop.

I work for a big American company that employs thousands, and they decided to go with a 70/30 staffing policy (70% foreign and outsourced labor, 30% American, I know of some that are going to an “80/20” format, and the official HR policy is that we are not permitted to hire any Americans until we reach that quota), they worked us overtime like crazy, 80 - 90 hours per week for 3 years straight on a big project where they brought in foreigners to beef up staffing, we even had to cancel our vacations and didn't take the holidays that we were supposed to have. We were called into a meeting room in groups and told that if we didn't work those kind of hours and make those kind of sacrifices, we'd have to be let go instead, and if you have a problem with that, see manager so-and-so in the corner office so you can discuss that with him today, but if you did stick it out to help the company get through that difficult stage, there would be plenty of rewards and success and long term prospects with the company. A few months after the project was completed, a huge number of the Americans were called into a big meeting room and they were told their jobs were being eliminated. I saw about 125 Americans walk out of work that day, and the following Monday, a lot of foreigners showed up, and that eventually happened in several additional stages in what we call "waves," lots of pink slips. After seeing the way we worked and the way we all but abandoned our families to keep our jobs and gave up our vacations and holidays, when the surprise replacement of Americans happened, I was amazed, the foreigners that replaced our jobs, were the more vocal people there, they said after working with us and seeing what we'd gone through, after seeing how it was done, they'd lost all respect for that company and said they were cold blooded. Those Americans that were selected to train their replacements, were told they had to sign paperwork right then and there, no time to think about it, and no lawyers (despite there being HR and lawyers there for the company to oversee the process) you have to make up your mind right now and sign this form that says you won't sue us or come back on us in any way; if you sign this, you can keep your job training your replacement for the next several months, and you'd better think about your family. Some of these Americans were in their 20's and 30's, and had 4 or 5 year undergraduate computer science and graduate degrees. I kept tabs on the folks I used to work with, this is how it turned out for them after they lost their jobs due to outsourcing: 1. Dave spent 4 months trying to get a similar job, this is the second time his job has been eliminated due to outsourcing. He stocks shelves at a grocery store now, his family sold their house, moved into an apartment. He was going to move his family to another city where there were supposed to be some jobs, but then this recession occurred and very few if any folks are hiring right now. 2. Owen spent 2 weeks unemployed but couldn't stand being unemployed, said he felt like a bum, got a job selling plumbing supplies at a hardware store. At his age, early 50's, there are no "takers" in his former career field. 3. Randy ended up at Home Depot. He's still hoping to get a job in his old career field, but with all the outsourcing induced layoffs, almost everyone is telling him the same story, not hiring, and has been exacerbated by the current recession. 4. Steve bounced from 2 different employers and eventually found a job working on a shipping dock, he'll probably become a shipping dock supervisor after he gains some experience if he chooses to stay and not keep looking. I don't think he will move again, said that after having his job replaced for the third time by outsourcing, this is one of those jobs that'll be harder for a company to outsource. 5. Jennifer went to work as an assistant manager at one of her uncle's Burger King restaurants. 6. Keith developed diabetes and thanks to at least being carried on his wife's medical insurance, isn't in the poor house yet, he eventually ended up on disability. 7. John moved and found a programming job at a bank, but with the financial disaster that's unfolded, their stock hit the skids and they were bought out, what little he put in his 401k during those 3 years has been all but wiped out because they had a policy where a percentage of his 401k was locked up in the bank's stock, and he became unemployed again. He stocks shelves right now at Kroger, and will probably keep trying to find something closer to his old career field. 8. Ron moved his family to Northern Virginia after he landed a job with the government agency, works as an analyst for their computer systems. He does't do computer programming anymore, not permitted as it doesn't fit in with the companies policies, that's delegated to all outsourced labor. 9. Mary ended up deciding to opt for early retirement at age 60, she and her husband both piled away enough to "make it" through to age 65 when medicare and SS kicks in. Although the local and federal governments and businesses will probably miss the business and taxes they were collecting from the kind of incomes these folks used to make, they did all find work, those that wanted to keep working that is. Some moved their families, some sold assetts, some sold their homes, some won't ever go back to their highly skilled positions that they used to work, but most are working.

Shiller might be right and he might be wrong. A house is worth what someone will pay for it - not necessarily what Shiller says it's worth.

Raise the taxes to 98% for above $500k? Sounds like someone who will never make above $500k.

We've lived the HIGH life and now we must live life.

And people are not willing nor are they able to pay the prices they are still asking for in L.A. You need to admit to that.

To mogleytheman, you pay off your own debt and take responsibility!

Mogley, are you kidding, or do you have absolutely zero grasp of economics. Raise tax rates to 98%, and watch the deficit skyrocket as people suddenly stop making any money to be taxed that heavily.

Shiller has no clue. He is just casting more doubt and gloom out there. Perhaps for their own purposes. My house has dropped from $140k appraisal to $97k appraisal in one year. So, according to Shiller, it needs to go to $45k. WTF his stats are only adding to the problem

A house is worth what someone CAN pay for it. there's a reason why people bought homes at 5 times their salaries. they cannot afford them. in the early 70's my parents bought a house, something like $20k. $35 years later, that house is now going for $200k. my salary has had to go up ten times in order to keep up. more or less. its insanity. fuel and utilities prices are going up, as well as land taxes cost of repairs and blah.. all this has to either come out of the value of the home, or my salary has to go up to csompensate. and it aint.

A house is worth what someone CAN pay for it. there's a reason why people bought homes at 5 times their salaries. they cannot afford them. in the early 70's my parents bought a house, something like $20k. $35 years later, that house is now going for $200k. my salary has had to go up ten times in order to keep up. more or less. its insanity. fuel and utilities prices are going up, as well as land taxes cost of repairs and blah.. all this has to either come out of the value of the home, or my salary has to go up to csompensate. and it aint.

There is a hsitorical ratio of housing prices to income. That ratio was way out of whack in 2005. It is still way too high and that is what Shiller is talking about.

It only makes sense given that property price run up was a direct result of 'creative' bank loans and not real property value increases. As a byproduct, easy money drove speculation and inflated the prices to a level that exceeds affordability by working families unwilling to carry 50% or more of their monthly spend in mortgage/prop tax payments. I think it still has a way to fall, to the days prior to easy money and more in line with sustainable salaries. I also hate the bad news, but feel that we just have to suffer through this hangover.

Mr Shiller does not have a clue what he is talking about. Every home builder today is selling their inventory for less than cost so how can we be looking at another 25% off of the current prices. Mr. Shiller should try building a home before making rediculous comments.

House prices will likely overshoot on the downside, just as they did on the upside. A 70% drop, peak to trough, would not be surprising to anyone who has studied long-term market history. Real estate fell 90% in many desirable locations in the 1930s.

"Professor Shiller, huh. Interesting name...... More negative BS" Umm... sorry, but the last BS with respect to home values was given by the NAR. Remember when they said that values would keep going up 15% a year for the next 25 years? You did not call that BS, did you?