I’m betting that a LOT of people fell into the trap of a house being an investment that would appreciate at a rate of 10-30% annually. They don’t want to look at their house dropping in value as that would lead them to take a cold, hard look in the mirror and either admit they were wrong, or admit they got taken. Neither is particularly appetizing, and telling your family that you gambled with their home and lost badly isn’t a good thing to have to face.
Also, Shiller’s discourse is only aimed at those who don’t already own a home. Dropping home values, even small ones, make it more difficult to sell a home and make the person poorer since they paid more for the home than they can currently sell it for.
