Schiller worries that jobs or the lack thereof introduces a wild card that could trigger an American lost decade in housing. "Employment has been slow to recover," he said. "This isn't what was predicted."
Historically, high unemployment isn't compatible with gains in housing prices because it creates financial anxiety. In turn, that makes people reluctant to make large purchases – especially a purchase as large as a house
"Real estate still faces risks," Shiller concluded.
That's not to say Shiller thinks the scenario outlined above is a foregone conclusion – he doesn't. He simply thinks it's too soon to say the recovery will be long-lasting.
Shiller's comments come just as the latest economic data showed home construction surged 12.1 percent in December, its fastest pace in over four years.
Read More: Home Prices Surge Despite Distress