6 Ways to Fix the Housing Market

Housing is dragging the nation's economy down. Here's how to prop it up.


In Shiller's opinion, avoiding similar crises in the future means ensuring that neither individuals nor banks are so exposed to real estate risk as they were during the housing boom. One measure he advocates is to have "preplanned workouts" built into mortgages, providing homeowners with an agreed-upon way to modify their terms. This is one lesson that the United States can learn from HAMP, he says: "[HAMP was] trying to encourage workouts, and banks thought, 'If we do some of these, then everyone's going to want a workout." The solution, says Shiller, is to allow banks to make these modifications a part of their business models. "Let's get the banks to plan the workouts and price them out and make a business of a mortgage that has a preplanned workout," he says.

  • Check out a roundup of political cartoons on the economy.
  • See a slide show of 6 ways to fix the housing market.
  • See a slide show of 9 cities where home values are holding strong.