Home prices to keep sliding with no bottom in sight

By Julie Haviv

NEW YORK (Reuters) - The U.S. housing market's skid is nowhere near over and could extend for another five or even 10 years, according to one of the most-watched housing economists.

Robert Shiller, a Yale University economist and co-developer of Standard and Poor's S&P/Case-Shiller Home Price Indices, told Reuters that declines in home values in the most vulnerable markets could well double the losses recorded thus far.

What's more, Shiller, who is also co-founder and chief economist of the financial firm MacroMarkets LLC, said predictions for a bottom within the next year or so are probably wrong, with price declines in 2008 possibly worse than those seen this year.

"There is a probability of a continuing decline for a period of years, bringing prices in many cities down in the 10s of percent," Shiller said in an exclusive interview.

"The bottom is hard to predict," he said. "I do not see it imminent and it could be five or 10 years too."

Shiller is famous as author of the best-selling book "Irrational Exuberance," which sounded alarms about overblown stock market valuations just before the dotcom bubble burst in early 2000. More recently he has been a leading voice of worry about what had been a red-hot residential real estate market until 2005, saying the market for houses had become infected with "an investor psychology."

"The housing situation that we got in is unique in history because there was an investor psychology that developed that was stronger than we have ever seen before," Shiller said. "We have seen housing bubbles many times in history, but they have been much more local than this one."

Areas most vulnerable to home depreciation are those that rose the most during the market's heyday, plus those at the center of the crisis in the subprime mortgage market, Shiller said. California and Florida are high on this list.