Declines in Home Prices Could Triple

Economist see US in danger of recession; losses could last years
By Laurel Jorgensen,  Newser Staff
Posted Dec 31, 2007 5:00 PM CST
Traders Michael Arenson, left, and Mark Frank react in the Standard & Poor's 500 futures pit at the Chicago Mercantile Exchange in this Oct. 31, 2007 file photo. The Federal Reserve, confronted with surging...   (Associated Press)
camera-icon View 2 more images

(Newser) – A top economist says the US is in danger of slipping into a lengthy recession, the Times of London reports. Robert Shiller, who co-developed the index that measures home prices, says losses from the housing recession could triple over the next few years. “This is a much bigger issue than subprime,” Shiller says. “We are talking trillions of dollars’ worth of losses.”

Shiller says futures contracts indicate that some areas, such as Florida, California, and Las Vegas, could face losses of 35% in the next 5 years. “There is a good chance that this housing recession will go on for years,” he says. Last week’s bellwether index showed that October home prices dropped at the fastest rate in the past 6 years.