Shiller: "Nobody is Predicting Back To the Races"

Case-Shiller Index co-author, Robert Shiller, recently spoke with FOX Business Network's Connell McShane about his predictions for the future of the housing market and about his guess that the next bubble will be in farmland.

Shiller said, “My firm, Macro Markets, does a survey of professional forecasters and median expectation is for flat to slightly declining until 2012 and then modest recovery. Nobody is predicting back to the races. Some are still predicting big drops, 10-15% in the next 5 years. I tend to weigh myself on the more pessimistic side.”

He added, ““We've seen a major financial shock and it's the kind of thing that could change public attitudes for a long time. I compare it to the Japanese experience after their housing bubble burst at the end of the 1980s and they had almost 20 years of urban land price decline since then and they're still going down.”

“I don't know that it would be that bad, but it's an interesting example to look at because this was such a big shock that it changes the way we think and changes our ideas about housing as an investment, about home ownership and changes the way Congress is looking at supporting the housing market through Fannie and Freddie, FHA, and mortgage interest deduction. All of these things are in balance right now. It's very hard to forecast because there are so many things that might change.”