Your example assumes that had we "known" that house prices would "crash" then we could have avoided the market collapse. But this implies that house prices were the central cause of the problem. Sure this is the cozy consensus (but when was that ever right?) Leaving aside the dubious nature of Shiller's dataset ( it is way more pessimistic than the Census data and tracks the realtors' data of median distressed selling dominated prices too closely for comfort ) the problem was surely the "Insurance products" constructed on the back of the housing market. Even then, the crash was slow motion at best. We all saw the steady unravelling of the CDO squared markets. The meltdown in September October was much more to do with policy error - nationalising Fannie and Freddie thus bringing on the short equity long bond trade in all financials (with a "panic" buy of the CDS to trigger the downgrade/rights issue etc), then the banning of short selling, then the mugging of the WAMU bond holders, then the Lehman debacle that triggered the paralysis in the money market fund CP nexus that finally brought the real economy to a standstill. Just because the media and the economists think it was to do with the average value of a house in Michigan doesn't mean any of this was predictable. Hence the market was efficient, it reacted to a series of policy errors, not an economic forecast.