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The Dismal Science

Economist Robert Shiller: Buying a house is 'a consumption choice,' not an investment

Robert Shiller, an economist at Yale, won a Nobel Prize in 2013 for his analysis of asset prices, and his name is half of the much-watched Case-Shiller Index of housing prices. It turns out, he's not too enthusiastic about home ownership, either as a lifestyle choice or an investment. Buying a house is "like a consumption choice, it's not really an investment," he tells Money magazine's Susie Poppick in the video below.

Renting, especially if you don't have a steady job or don't plan to be in the same place for 10 years, "is just going to make your life easier," he said. There are some instances in which buying makes sense, but home ownership is like parenthood, he added:

First of all, do you really want to buy a house? It's sort of like having a baby: You're going to be working, you're going to be worrying about this house. It's going to break down, you're going to get termites, you're going to have a snowstorm and have to get the roof shoveled, all these things. And then on top of that, it keeps needing painting and maintenance, and it's a headache. [Shiller, to Money]

As for whether we're now in a new housing bubble, Schiller said probably not. The market is "bubbly in places," like San Francisco, he said, but "it's not as enthusiastic as it was, say, in 2005." You can watch the entire short interview below. Peter Weber