20% to 30% Price Declines Still Expected
Diana Heeb Bivona
Yale economist Bob Shiller was recently quoted in Barron’s as saying he still expects housing prices to decline an additional 20% to 30% over the next 5 to 10 years. That includes such historically well-performing cities like New York and San Francisco.
According to Shiller, the reason why is that home prices have risen far above construction costs. Shiller points out that past cycles have shown that people generally move to areas with lower housing costs when prices become elevated in hot areas. Then, home prices revert to construction-cost levels, even in the once-expensive market. He expects the same to again happen.
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