A very interesting take on things from Shiller and Feldstein
“The examples we have of past cycles indicate that major declines in real home prices — even 50 percent declines in some places — are entirely possible going forward from today or from the not too distant future,”
Falling real-estate values may undermine consumer spending by spurring households to save more and by preventing them from tapping home equity.
Because price gains were larger and more widespread this time compared with past speculative booms, the risk of “substantial” price declines is greater, wrote Shiller, who is also the chief economist and co-founder of MacroMarkets LLC. Shiller is also the author of Irrational Exuberance, in which he forecast the end of the tech boom in 2000....
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