In Floyd Norris’ column this weekend titled After a Bumpy Ride, Back at Square One illustrates how housing prices are back to 2001 after adjusting for inflation.
During the period, the Standard & Poor’s Case-Shiller 20-city composite index of home prices rose almost 21 percent. The Consumer Price Index also rose almost 21 percent.
Now foreclosures are still rising, even as home sales and prices seem to have stabilized. If the worst is over, it will have been a wild ride that ended very close to where it began, but with many people much worse off for the experience.
The takeaway is that home price performance varies significantly by area so the national number doesn’t mean to much to your local market. However, it would appear that because the boom was born out of credit, the housing market may over correct.
Not relevant to post but who cares – aside: How social media are like sex