As the new reports are coming up a key gauge of home construction surged in November which in fact is the highest in nearly six years. Now, some experts have started saying that it is the indication that finally the construction sector is recovering. The U.S. housing starts rose 22.7% from October to a seasonally adjusted annual rate of 1,091,000 in November.
The Commerce Department said that it was higher than the 952,000 forecast by economists and brought the average pace of starts for the past three months to 951,000.
However, Robert Shiller, one of three American economists who won the 2013 Nobel Prize, is not happy about when he says that he has not yet sounding the alarm but increasing property prices is a major concern.
He also said that the recent sharp rise in equity prices in the U.S. is a dangerous development and in many countries stock exchanges are at a high level and prices have risen sharply in some property markets. The Nobel award winner economist also said that if it continues it could end badly as it could signal the building of a financial bubble.
Shiller though does not see any bubble in the U.S. housing property market, he says that the country went through the biggest housing bubble in U.S. history in the 2000s, and there is a knee-jerk reaction among some people who think maybe we are doing that again. That definitely shows that somewhere in his mind, he is comparing the current situation with the ones that existed a decade ago.
Brazil Seeing a Real Estate Boom Says Shiller
The 2013 Nobel Prize winner economist says that he felt a bit like in the United States of 2004 when he saw the real estate market of Brazil which burst later on and brought in several economic slowdowns that the U.S. is still not able to recover. He showed his concern about the investor sentiments he observed in Brazil’s property markets.
Brazil, the South American country which has been witnessing a real estate boom for quite some time can face a huge challenge as prices around the country are up 200 percent since 2008. In fact, the FipeZAP Index, which follows prices of Brazilian housing for sale or rent, says that real estate prices have shot up 230 percent in Rio de Janeiro since 2008.
A similar pattern is being seen in São Paulo where the prices of real estate have gone up by 188 percent.
To contact the reporter of this story: Jonathan Millet at email@example.com