The Economist's View features this look at a paper by Irrational Exuberance author Robert Shiller. Shiller has constructed a series of data on US housing prices going back to 1890. The resulting graph clearly shows that something out of the ordinary is going on with current US housing prices:
As you might imagine from looking at the chart, Shiller is not very convinced by those who argue that the fundamentals of the housing market are sound, and that, therefore, prices are either not in a bubble, or that they will decline in a slow crash or soft landing. Neither, however, is Shiller convinced that a sharp collapse of housing prices, and with them the US economy, is inevitable. The risk is certainly there, he says, but he seems cautiously optimistic that new risk-management tools, such as the Chicago Mercantile Exchange's upcoming futures market for real estate, will help manage the pain of a popping or deflating bubble.