America's house prices are falling even faster than during the Great Depression

[FourScore]

Through the floor
May 29th 2008
From Economist.com

America's house prices are falling even faster than during the Great Depression


AS HOUSE prices in America continue their rapid descent, market-watchers are having to cast back ever further for gloomy comparisons. The latest S&P/Case-Shiller national house-price index, published this week, showed a slump of 14.1% in the year to the first quarter, the worst since the index began 20 years ago. Now Robert Shiller, an economist at Yale University and co-inventor of the index, has compiled a version that stretches back over a century. This shows that the latest fall in nominal prices is already much bigger than the 10.5% drop in 1932, the worst point of the Depression. And things are even worse than they look. In the deflationary 1930s house prices declined less in real terms. Today inflation is running at a brisk pace, so property prices have fallen by a staggering 18% in real terms over the past year.




http://www.economist.com/displaystory.cfm?story_id=11465476

[mitchtv]

1. we just got offered 100K to by a loft

in Downtown LA ( they were desperately overpriced to begin with). i'd have to sell my home first good luck with that!

[hendo]

2. 100k in LA?

Isn't that a really good price? Hasn't LA always been insanely overpriced?

[mitchtv]

14. !00K to buy a loft

which starts at mid 400s to 700 , still not worth it. It is a rather deep discount, but still more than we want to spend

[Warpy]

3. House prices fell all through the 1920s

along with land prices. It was part and parcel of a protracted real estate crunch that left homeowners with little net worth and farmers not enough to borrow against to plant their crops.

Add to that the fact that most mortgages in the 20s were balloon mortgages that people had to refinance every few years or lose the house, and you have a recipe for disaster that we seem to have repeated with creative financing fueling our own housing bubble. Once refinancing is no longer possible, the bubble busts.

Just realize it took housing about 15 years to deflate completely, and only the advent of WWII jobs combined with the newfangled 30 year fixed mortgage allowed the market to recover.

Farmers fared worse, many losing their farms to what would later become Agribusiness.

[MadMaddie]

4. Well there you go stating Historical facts......

It is amazing to me that this administration and previous administrations (including Dems) could not look at the Historical facts and see that we were headed in the same direction.

This administration and the Republican Congress over over the last 20 years through their sheer stubborness has set this country back 20 years.

[Gman]

6. There's always a sense that

if they do the same thing but do it different or somehow better, the bad things won't happen again. But they're still doing the same thing so the end result is also the same. There's always a sense of "that was then, this is now".

[Gabi Hayes]

8. they knew EXACTLY what was happening. they didn't CARE.

they are OWNED by those who legally bribe them

did you see the thread about Schumer/Reid and the hedge fund managers, who now pay 15% taxes....DU link somewhere

both parties are high priced (in joe schmuck terms) hookers, mere cheap hoors to the oil companies, banks, insurance companies, etc., who buy them at DIRT cheap prices, in comparison to the largesse they lavish on them via the 'legislative' process

they ONLY represent them that pays their freight, read campaign contributions, and it's only getting worse, and will NEVER change, because they're the ones who pass the laws that keep things the way they are.

will it change...yeah....for the worse

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[Warpy]

9. This administration had a lot of help

The whole process started with Reagan, was slowed slightly under Poppy, continued apace under Clinton (the biggest Democratic disappointment in my life) and came to fruition with Stupid in office.

We'll be lucky if we're set back only 20 years. It's going to take a lot of will and hard work to set up the conditions for the next wave of industrialization--and the means to keep it here instead of being looted in the name of globalization.

I'm afraid we're in for a lot of years of very rough transition time in multiple systems in this country, housing being only one of them.

[tom_paine]

11. 20 years? Try 230 years? Try 800 years, if one counts the end of habeus corpus.

n/t

[El Pinko]

5. The graph in the pic is somewhat deceptive.

Since it only shows % change in price year-over-year, it doesn't really give an accurate picture of home prices, especially of how absurdly overinflated they were in the last decade.

This graphic is a bit more useful for understanding how unprecedented the rise in real estate prices was.





And of course, the reason for the rise in prices:







Without rising incomes for all economic quintiles, the soaring prices in homes were only good for people who had homes to sell. Millions of hardworking people who were unwilling to take out a no-interest teaser, liar loan or subprime loan were priced out of buying a home. Good riddance to the housing bubble. The very notion that we as a country hitched our national economic wagon to HOME PRICES instead of actual productive activities that produce WAGES for people is OBSCENE.

[lonestarnot]

7. Yikes! Edgier by the second.

[Beregond2]

10. Housing has been absurdly overvalued

for several years. Prices are just getting back down to something resembling reality. Anyone with half a brain could see it coming.

[Vinca]

12. It's actually a good time to buy if you can afford to.

My husband has been in a real estate-related business for almost 30 years and we've seen values go up and values come down. Never as bad as this, to be sure, but they will go back up again.

[Pale Blue Dot]

13. Who can afford to?

With rising gas and food prices, drops in real wages, and massive personal debt, I don't care how low home prices get. I see a lot of wishful thinking going on, and it frustrates me greatly.

[CRF450]

17. People like my brother can.

Making $50,000+ per year, delivering fuel to gas stations. Though he'd refuse to buy a house thats more than $150 grand.

[devilgrrl]

15. Oh, please with this shit. $25,000 off from $650,000 in L.A. isn't a bargain.

:wtf:

[FourScore]

16. Huh? Not sure what you're referring to with the $25,000.

The graph is showing percentages, not direct dollar value.

25-30% of %650,000 would be a great deal of money. Particularly if you bought high and need to sell now that it is so low. Those people are totally screwed.

[angstlessk]

18. just today I sold my home for 65,000 with a appraisal of 141,000 and a value from the city of 130,00

I only hope those who bought the house get a good return because we were at the end point of a balloon and did not qualify for a loan... I hope the housing market rebounds...we are left with enough cash to purchase a home for cash in another state.