Robert Shiller, who just became one of three people to be awarded the 2013 Nobel prize in economics, has a bigger claim to fame.
He predicted the housing bubble and even the 40 percent-or-so collapse in housing prices. His predication is documented in an August 2005 New York Times article.
Shiller helped create a closely watched gauge of housing prices, the S&P Case/Shiller Index.
In June of this year, he pointed to a potential new housing bubble in some of America’s largest cities.
“It is up 12 percent in the last year. This is a very rapid price increase right now, and I believe that it is accelerated somewhat by the Fed’s policy,” Shiller, a Yale economist, said.
Here’s a glimpse of his outlook on the housing market in 2005 from that now-widely-quoted N.Y. Times article:
Today, nine years after his lunch with Mr. Greenspan and five years after the markets finally did crash, Mr. Shiller is sounding the same warning for real estate that he did for stocks.
In speeches, in television and radio interviews and in a second edition of his prophetic 2000 book, “Irrational Exuberance,” he is arguing that the housing craze is another bubble destined to end badly, just as every other real-estate boom on record has.
These, in short, are his second 15 minutes of gloom. He predicts that prices could fall 40 percent in inflation-adjusted terms over the next generation and that the end of the bubble will probably cause a recession at some point.