Robert Shiller in the New York Times today makes a case for Why Home Prices May Keep Falling.

His argument centers on the idea that people decide to buy/sell/rent based on life factors which are years in the making and not very easily reversed. These can include major changes in life-stage (getting married, retirement), family considerations (job of spouse, continuity of kids’ schooling), or psychology (caution or fear from long past experiences).

The common message of Japan and the US in the 90′s are cited:

After the bursting of the Japanese housing bubble in 1991, land prices in Japan’s major cities fell every single year for 15 consecutive years.

Even if there is a quick end to the recession, the housing market’s poor performance may linger. After the last home price boom, which ended about the time of the 1990-91 recession, home prices did not start moving upward, even incrementally, until 1997.

It’s a simple message, but important to bear in mind. How would your decisions change in the next year if you could be reasonably certain that housing prices would not rise *at all* for the next 10 years?