Mr. Housing Bubble Part Trois

The Yale economist who predicted the internet bubble and prompted Alan Greenspan to utter the words “irrational exuberance” is now warning about the housing bubble. From Sunday’s Times:

"This is the biggest boom we've ever had," said Mr. Shiller…. "So a very plausible scenario is that home-price increases continue for a couple more years, and then we might have a recession and they continue down into negative territory and languish for a decade.

"It doesn't even attract that much attention," he continued. "There will be many people thinking it was a soft landing even though prices may have gone down in real terms by 40 percent."

Even if Mr. Shiller is right, there’s still time to cash out. According to another article in today’s Times, online bettor markets (which predicted a Bush victory and the new Pope, among other things), are now taking bets on real estate, and in the short run, things look good:

Now one of these markets has turned its gaze to a consumer activity that is a favorite discussion topic these days: real estate. And the bettors see no signs of a bursting bubble anytime soon.

San Diego? Prices will rise another 5 percent in the third quarter, according to the bettors at HedgeStreet, another Web site. New York? They will inch up 2 percent. In Los Angeles, they will jump 7 percent. In each of the cities, as in San Francisco, prices will be more than 10 percent higher than they had been a year earlier.

So, stop freaking and get flipping!