Tuesday, May 26, 2009

A Picture is Worth a Third of your Housing Wealth

Thanks to Vincent Reinhart and Nick Schulz, we have a new spiral figure of the US home prices up at The American's Enterprise blog.

The new spiral shows that US home prices in 20 major urban areas are down 31.4 percent from their peak in May of 2006. This rapid decline follows the bubble in housing prices that drove the 20-city index to increase 74 percent between January 2000 and December 2005, data for available five year changes are below.

While, it may not make sense for home prices to remain flat over time, in fact longer time series show real growth, there may still be room for prices to continue falling. The supply of new homes is falling, which may help to stabilize the price over time.

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