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Yale economist Bob Shiller says in the weekend issue of Barron's that he's still looking for 20-30% housing price declines over the next 5-10 years -- including in untouchable cities like San Francisco and New York (and I'll include Vancouver):

... THE FUNDAMENTAL FACTOR TRIGGERING the price slump ahead is the fact that home prices have risen to levels far above construction costs, says Shiller. Such an anomaly can't persist for long, even in what he calls superstar cities like New York and San Francisco that boast a paucity of available land and severe zoning restrictions.

Throughout U.S. history, populations generally have moved to areas with lower housing costs when prices become elevated in hot areas. Then home prices reverted to construction-cost levels, even in the once-expensive markets. This, Shiller thinks, is likely to recur.

He gave a speech recently to an executive group at Bank of America headquarters in Charlotte, N.C. Many in attendance were expats from San Francisco, the bank's old hometown, and they told him they had adjusted to Charlotte just fine after being uprooted from every American's dream city. Clearly, migration remains the big leveler in real-estate markets.

Source: Yale's Shiller Calls for Further 20-30% Housing Price Declines