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Protection Against a Housing Collapse

by Stuart Chaussee

I've been worried about the housing market for a couple of years. The enthusiasm, bidding wars, blind optimism and the simple fact that so many of my acquaintances think they're so darn smart because their houses are appreciating reminds me of the tech bubble of the late '90s. I'm certainly not the first to voice this opinion, but I'm definitely in the minority. The housing market in my Los Angeles County neighborhood is at least as frothy as the last one I can remember in the late '80s. This weekend I reread an April 2004 paper by Yale professor Robert J. Shiller titled "Household Reaction and Changes in Housing Wealth." Shiller, as you know, is the author of the 2000 bestseller Irrational Exuberance. That book hit stores just as the Nasdaq was rolling over from its top and was about to drag the major indices from peak-to-valley declines we...

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