Why US Homebuyers Should “Delay” Purchases: Yale University Economist

Robert Shiller, a renowned economist at Yale University, states that the continued decline in home prices in the United States presents an opportunity for home shoppers who are sick.

House price declines are expected to accelerate this year as the Federal Reserve’s interest rate hike squeezes the US economy and forces sellers to ease the deal to buyers.

As a result, prospective homebuyers willing to put off their plans for six months or so can secure an affordable deal, according to Schiller, who co-developed the original methodology behind the closely watched S&P CoreLogic Case-Shiller National Home Price Index.

House prices are very high by historical standards. I’d like to extrapolate deflation to some extent. Schiller said during his appearance on CNBC.

“Maybe if you have the opportunity to put off the purchase, it might be a good time to do so. You might get it a little cheaper in another six months.”

Rising mortgage rates have reduced affordability in the US housing market after the massive price hike during the COVID-19 pandemic.

The average 30-year fixed rate mortgage rate was 6.42% over the past week, according to data from Freddie Mac.

The rate increased by 2% compared to the same week one year ago.

Sellers began lowering prices to entice cash-strapped buyers back into the market.

Robert Shiller is an economist at Yale University.
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Single-family home prices in the United States fell for the seventh straight month in January, down 0.2% from December, according to the latest S&P CoreLogic Case-Shiller National Home Price Index released Tuesday.

Shiller said he expects the US housing market to remain under pressure in the coming months.

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“This is the capitalist system with a central bank,” Schiller told CNBC.

“I think it does well most of the time and I wouldn’t mess with it too much. We have smart people at the Federal Reserve and a Treasury Secretary that I respect, Janet Yellen. They may have to accept a bit of a recession.”

Schiller acknowledged that there are other factors besides economic conditions that determine the “right time” for any buyer or seller to act, depending on their situation.

House for sale
Schiller said homebuyers can see discounts if they wait a few months.
Stephen Brashear

“Home buying is such a family decision, I hate to overreact,” Schiller added.

“We have a declining market right now, but there are costs to not selling at the right time, at the right time, or you could lose a home you liked to someone else. I don’t think it’s an easy answer to that question.”

In February, overall home prices in the United States posted a year-over-year decline for the first time since 2012, according to the National Association of Realtors.

The decline snapped a record streak of 131 consecutive months of gains.

The median sales price of previously owned US homes fell to $363,000 in February — down 0.2% from the same month a year ago, when the median price was $363,000.

Some economists have predicted big declines ahead for the housing market this year.

Earlier this month, researchers at the Dallas Federal Reserve warned that rates would need to correct by 19.5% to “bring the US in line with its fundamentals.”

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