Robert Schiller Sees Real Estate and Stock Markets As 'Somewhat' Overvalued (UMM, DMM)

Robert Schiller, Yale professor and the co-creator of the Macroshares Housing Up (NYSE: UMM) and Macroshares Housing Down (NYSE: DMM) ETFs believes the stock market (and in some areas the housing market) is overvalued.

Schiller has believed people in general recently have become way too speculative on residential housing as an asset class. He thinks long term housing price growth should be in the 1-3%/year range and closely tied to construction costs. For the past several years people have seen housing as a great capital appreciation tool.

Schiller did note however that in some markets (Florida and parts of the Southwest) prices are down enough to offer some long term investment opportunities.

On the stock market side, he sees overvaluation. Schiller stated the market now has a ‘normalized P/E’ of 20 vs. an average over time of about 15. This is above normal valuation, but not as expensive as it was in 2000 or 2007.

Schiller does not advise being 'completely out of the market' at current valuations, as historically returns were 'ok' from similar levels.