Tuesday, June 3, 2008

AMERICA'S HOUSE PRICES ARE FALLING EVEN FASTER THAN DURING THE GREAT DEPRESSION

ECONOMIST 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.

5 Comments:

At June 3, 2008 7:40 PM, Anonymous Anonymous said...

"And things are even worse than they look."

Yes, of course. Above all else we must hope for housing prices to stabilize at a level beyond which people can actually afford them. Then things will be good. People funneling every penny into mortgage payments so they can't save for retirement or have any disposable income left over for the pleasures of life and the health of the rest of the economy. This will be heralded as good news.

I'm sick of the wrong-headed perspective on falling housing prices.

 
At June 4, 2008 1:09 PM, Anonymous Anonymous said...

EXTREMELY WELL-PUT, 740. THANK YOU!

 
At June 4, 2008 3:24 PM, Anonymous Anonymous said...

The sag in prices, if it exists at all, is only temporary. Real estate, real property, is a global commodity and will therefore retain its relative value to other global commodities. As the dollar continues to shrink in value, eventually housing will reflect the short-fall in buying power and prices will then soar through the roof, as it were. The trick will be holding onto the land long enough to benefit from the inevitable correction. Seldom mentioned during discussions that evoke the Great Depression is the fact that stocks generally recovered their full value within three or four years of the great crash of '29.

 
At June 6, 2008 9:51 AM, Anonymous Anonymous said...

3:24 sounds like all the flacks for the entire real estate/mortgage industry have sounded once a week since the problem began: Keep buying, it's about to turn around...keep buying, it's about to turn around...keep buying, it's about to turn around...

 
At June 6, 2008 10:29 AM, Anonymous Anonymous said...

You fail to fully comprehend.
It is not about keep buying.
It is about the deliberate devaluation of the dollar and its international consequences. Things like metals, food, and land tend to maintain consistent value over time in terms of relative buying power. Under the new pressures of the 'global economy', local devaluations of a commodity represent temporary aberrations due for eventual correction. As there is no international let up in the pursuit of property, it is more than likely domestic prices will soon reflect values internationally. That is to say, the average person will no longer be able to afford land and the prospects of a surviving middle class are nil. Therefore, if one is fortunate enough to presently own some property they ought to be making every sacrifice possible to maintain it if they hope to retain any semblance of financial security. Dollars in the bank are going to be worthless---they nearly are now.

It is also worth noting that farm prices have not shown downward trends and are very much on the rise.

 

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