Schiller: Housing could fall another 25%

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The housing bubble of the early 2000s was “unprecedented” and the “biggest in U.S. history,” according to Yale professor Robert Shiller.

As a result, he says “it’s very hard to forecast” where housing goes from here, now that it has officially fallen into double-dip territory, based on the S&P Case-Shiller Index.

Housing “might fall [another] 10-25% in the next few years,” but forecasting housing today is harder than predicting the weather, Shiller says. “I don’t see how anyone can quantify a forecast because it’s such an unusual event.”
In his latest books, The Subprime Solution and Reforming U.S. Financial Markets, Shiller argues the path to recovery is paved with financial innovation; 11 million homeowners under water is proof “they weren’t protected and need a way to hedge their housing risk.”

But “the economy is sick right now [and] I don’t have any miracle cure,” he admits.

Best known for his earlier works, Animal Spirits and Irrational Exuberance, Shiller is arguably the world’s foremost authority on financial bubbles. So if he can’t predict with any certainty where housing is going, what hope is there for the rest of the punditry?