Weigel

Doomwatch: Can House Prices Fall Even Further?

Seriously, forget about Sarah Palin’s e-mails and the penis of any particular member of Congress. If Robert Shiller is right, the 2012 election will boil down to “which Republican easily defeats Obama.”

Robert Shiller , the economist who co-founded the S&P/Case-Shiller index of U.S. home prices, said afurther decline in property values of 10 percent to 25 percentin the next five years “wouldn’t surprise me at all.”

… A model for the U.S. may be Japan , where home prices fellfor 15 years after that country’s real estate bubble burst inthe early 1990s, Shiller said.

“They lost close to two-thirds of their value,” Shillersaid. “Then they went up for one year in 2006 and then theystarted going down again.”

So: A lost decade that literally nothing we’re discussing right now can correct. Spending cuts? Not going to have an effect on house prices. The deficit? It’s a child of this crisis, not a parent.