Word: shiller
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Dates: during 2000-2009
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...latest economic news hasn't been encouraging. Gas prices reached an all-time high earlier this month. For the first time since 1991, quarterly home prices declined, according to the S&P/Case Shiller U.S. Home Price Index. And yet analysts were surprised by the unexpected rise in consumer confidence in the economy, reported this week in the Conference Board's Consumer Confidence Index...
...market for housing futures gets large enough, though, other sorts of financial products more useful to homeowners should crop up, says Robert Shiller, a Yale University economist who has been pushing the idea for 15 years. The grander vision, developed with Karl Case of Wellesley College, includes home-equity insurance. The idea is that companies will write those policies if there's a robust futures market for hedging risk. "Real estate is bigger than the stock market," says Shiller. Twenty trillion dollars big, in fact...
There have, however, been a couple of notable nonstarters. The London Futures and Options Exchange halted its property futures in 1991 four months into trading, after a scandal erupted over dummy trades. In 1993 the Chicago Board of Trade, with help from Shiller and Case, readied its own foray but then pulled the plug prelaunch. The nature of houses is an impediment, says Craig Pirrong, professor of finance at the University of Houston, because speculators crave volatility and home prices change slowly--and even within one city, there can be vast differences in values...
Trading volume at the Chicago Merc has been thin so far, with interest in Miami, New York City and Los Angeles far eclipsing Denver, Chicago and Boston. But a slow start is often the case with derivatives. Shiller, who helped design the housing-price indexes the Merc contracts are based on, points to S&P 500 futures, which were half-heartedly received in 1982 but today are a Merc staple. For housing futures, the exchange is already looking to add more cities and contracts past 2007; homebuilders who want to hedge new subdivisions have requested the longer horizon. The Chicago...
...than accept lowball offers. It happened in Boston in 1991, when condo prices tanked and two-thirds of the inventory was withdrawn for sale, says Chris Mayer, a Columbia Business School professor. Sellers then had to wait up to six years for prices to hit their previous peak. Robert Shiller, a Yale economist who has long warned of a bubble, thinks price stagnation (or worse) is here to stay but that Americans don't want to believe it. "People still expect double-digit gains," he says, citing surveys of homeowners...