Although you’d think that when a celebrated Yale economics professor is queried about home prices, he’d trot over to the whiteboard and start scribbling equations. If the prof in question is Robert Shiller—co-creator of the Case-Shiller U.S. National Home Price Index—all the more so. The Index has become the benchmark reference tracking residential real estate prices. When it comes to American home prices, Shiller is The Man.

So when the vaunted economist seeks to examine the factors best explaining the latest dramatic changes in Costa Mesa home prices, you expect to hear a lot about the inflationary effects of trillion-dollar government expenditures, the bond market’s inverse reaction to Fed funds management, etc., etc. You expect formulas with math symbols you haven’t seen since high school, strung together in convincing and incomprehensible sequences. What’s the reason why the pandemic triggered huge price increases?

The last thing you’d expect is a discussion of young couples’ feelings, hopes, and dreams. You wouldn’t think Professor Shiller would now be concentrating less on numerical analyses and more on patterns in Americans’ emotions—even on “their occasional flights of fancy.”

But for this month, at least, that’s what you’d find. The Shiller team’s latest research delves into the reasons for the long- and short-term expectations of the general homebuying public tracked through questionnaires collected annually from 2003 through 2021.

An overview of that research appears in the August edition of Yale Insights as “Do Homebuyers’ Expectations Align with Reality?” It summarizes the first draft of the Shiller team’s latest findings. Although the answer to the title’s question boils down to a less-than-satisfying ‘yes and no,’ some preliminary conjecture about people’s motivations could explain at least a portion of recent Costa Mesa home price movements.

As a rule, people tended to correctly recall price movements in their own areas for the past several months as well as to “rationally” gauge future increases or decreases for the coming year. But their long-term projections “seem to have more of a life of their own.” In the early 2000s, perhaps driven by envy-producing house-flipping stories on TV, projections were wildly optimistic. Then, during the decade-long recovery after the recession, the opposite held.

And then came the COVID-19 crisis, nicely summarized with, “Then the pandemic threw everyone for a loop.” The July 2020 survey characterized a homebuying public split on expectations, with an average home price rise expectation for the coming year of only 3.4%. The actual 20% rise remains to be fully understood—but one interpretation is that, rather than freezing people into inaction, fear of coronavirus motivated them “to do something to get rid of this anxiety.”

In today’s post-COVID market, would Shiller urge aspiring homebuyers to wait to see if home prices will slow down in the coming years? Hardly. “If you have your heart set on buying a home,” says Shiller, “go ahead.” We’d only add one more studious piece of advice: Call us!

We are built on a philosophy of Heritage & Hustle. The L3 is a full service real estate agency with a regional office located in the heart of #CostaMesa, offering a wide-array of custom services to meet their clients’ needs with roots in the community since 1976.  It’s L3 mission is to provide trusted, convenient, responsive service to ensure clients enjoy their real estate experience. The L3 was originally formed to offer personal, concierge-level service as an alternative to the large, nationally based real estate companies. From its small beginnings of only two employees, The L3 has grown to a full staff of 25 serving over 300 clients a year. The L3 is not limited to serving just its clients; it is also committed to serving the community. Not only has The L3 donated hundreds of hours to many area charities, they have also received the prestige of being named one of the #toprealestatecompaniesinCostaMesa  If you’re interested in #buyingorsellinginOrangeCounty, turn to the experts. Turn to The L3 and let them help you make your real estate buying or selling dreams come true. For more information or to get started on finding or selling your home contact The L3 today at 714-444-4663 or email us at


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