Yale economics professor and Nobel laureate Robert Shiller said he does not think home prices will drop if the mortgage interest deduction is cut in the tax bill.
In a recent interview with CNBC, Shiller stated too that he doesn't think home prices will fall if the mortgage debt cap is changed from $1 million of debt to $500,000. "The general idea is it would push prices down if people are rational," and Shiller says when it comes to housing, they are not. According to Black Knight Financial Services, about 2.9 million borrowers have mortgages with an outstanding balance higher than $500,000.
"I tend to think it's not as great as you imagine because people are people, and I don't find that historically home prices have relied at all predictably to changes in things like interest rates," said Shiller, pointing to the huge boom in housing in the last decade. Interest rates didn't move at all during that time.
