Shiller’s point though dependent on income growth is valid – it’s the silver lining our short-sighted political jesters fail to see: lower prices mean more people will actually be able to afford houses again.
Shiller is no doubt aware that incomes and jobs are on the decline as this bubble plays out, thus necessitating an even bigger drop in prices.
The question is when – most of us here have a target price in mind that we would consider buying at. For me, it’s still got a ways to go.
People bitter about prices dropping don’t understand that the value of their house is meaningless until they go to sell it. They either paid too much, can’t afford it now, or wish they had sold a year a half ago.
If you can actually afford your home long term, you have nothing to worry about.