This column originally appeared on Real Money Pro at 8:38 a.m. EST on Jan. 28.NEW YORK ( Real Money) --
We're beginning to hear noises that we've reached a major turning point in the housing market -- and that, with interest rates so low, this is a rare opportunity to buy. But are such observations on target? It would be comforting if they were. Yet the unfortunate truth is that the tea leaves don't clearly suggest any particular path for prices, either up or down.... The bottom line for potential home buyers or sellers is probably this: Don't do anything dramatic or difficult. There is too much uncertainty to justify any aggressive speculative moves right now. If you have personal reasons for getting into or out of the housing market, go ahead. Otherwise, don't stay up worrying about home prices any more than you do about stock prices. I can't offer any clearer picture, and I don't see a solid basis for anyone else to do so, either. -- Dr. Robert Shiller, " A New Housing Boom? Don't Count on It," The New York Times (Jan. 26, 2013)
- A real estate recovery is under way (led by multi-family starts), but a full-blown housing recovery is probably a few years away.
- A 2013-2014 recovery in the housing market (and for the consumer in general) will be impeded by the fiscal drag of higher individual tax rates and lower government spending and possibly by higher interest rates.
- Construction activity represents a relatively small fraction of GDP -- its aggregate impact on domestic economic growth is being overstated by many.