Photo: AP/Marcio Jose Sanchez
"Markets and government institutions are visibly struggling to respond consistently to an unprecedented rash of crises and conflicts, said Robert Shiller, a Yale University economics professor and the co-founder of MacroMarkets LLC, a financial technology firm that released the survey. "These struggles diminish confidence, which compounds the underlying economic stresses and lowers expectations."
The survey is based on 111 responses from a diverse group of economists, real estate experts, investment and market strategists, about the path of the Case-Schiller Home Price Index--a respected tool for gauging home prices, co-created by Schiller.
If the prediction is borne out, it would mean, essentially, a "lost decade" for the housing market. Home prices peaked in 2005, then fell by 7.1 percent between the middle of 2006 and the middle of this year.
Other recent predictions have been rosier. One study that used data from the Case-Schiller Index found that home prices are projected to increase by an average of 2.7 percent next year.
Until the housing slump ends, it will be difficult for the broader economy to sustain a recovery. That's because, having lost so much in housing wealth, consumers are reluctant to spend, and are having trouble getting loans. The resulting lack of demand is leading to weak economic growth and slow job creation.
- Robert Shiller