“We’re creating a shadow inventory of homes that will be right back on the market as soon as the economy and the housing market begin to improve. … We could see a double-dip in the housing recession if that happens.”
– Columbia University professor of economics and Nobel laureate Joseph Stiglitz, on how real-estate speculation could prolong the recession.
In interviews with Bloomberg News, Stigitz and Yale University Professor Robert Shiller warn that flippers account for most of the rise in housing sales. Investors will likely return recently-purchased homes to the market once prices rise again, they say, choking off a recovery. Stiglitz predicts housing prices will start to stabilize in 2010, but he says that speculation and the worsening economy could delay it further.
“These speculators are preventing the market from crashing now, and when they get out it could fall again,” Shiller says.