Shiller Home-Price Index

Have you heard of the Shiller Home-Price Index? I hadn’t until I started to poke around, wondering about whether it was the right time to buy. Robert Shiller is a Yale Professor and academic economist who says that this is the biggest housing boom since records began in 1890. Here’s a good graphic to drive the point home:

Shiller Home Price Index

Since 1890, the index usually bounced between the 90s and 110s, maxing out in the 120s. So after more than a century we now see the index fly up to 185. That’s the 2005 figure. I’ve seen the 2007 figure clock in at about 160.

What you have to weigh here is whether after 110 years we’ve reached a new plateau or if the housing market will continue to correct downwards and find it’s way back to the historic norms of the index.

Nothing is for sure and sometimes the pattern is broken. But given the financial enormity of a mortgage, why not wait and see what happens over the next 4-8 months.


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