What will Happen with House Prices?

by Calculated Risk on 5/13/2022 12:33:00 PM

Today, in the Calculated Risk Real Estate Newsletter: What will Happen with House Prices?

Excerpt:

Now let’s look at the year-over-year change for the same period in real terms (inflation adjusted using CPI-less shelter).

Note that in real terms, house prices declined during the stall periods in 1982 and 1991. In the early ‘80s, real prices declined 11% from the peak, even though nominal prices only declined slightly. Homeowners are only concerned with nominal prices, so they didn’t notice the real price decline.

In the early ‘90s, real prices decline almost 14% even though nominal prices declined 3%. Note that real prices were flat for several years in the mid-‘90s.

During the housing bust, real prices declined 35% compared to a 26% decline in nominal prices (this was a low inflation period).

The data seems to argue for the slow house price growth scenario,

Keep reading this article on Bill McBride - Calculedriskblog.

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